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MMTC Ltd Versus ACIT

2015 (3) TMI 639 - ITAT DELHI

Interest u/s 244A on the tax refund - as held by the ITAT that the benefit u/s 72A of the Act was to be granted in the assessment year relevant to the previous year in which the amalgamation takes place - since the scheme of amalgamation was to take effect from 01/04/1994, the benefit of tax credit was to be allowed to the assessee company for the A.Y. 1995-96 and not for 1996-97 as held by the CIT(A) in terms of his order passed u/s 154 - whether delay in proceedings is not attributable to the .....

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rs from legal infirmity. Respectfully following the decision of ITAT in the case of Power Finance Corporation Ltd. Vs. ACIT (2008 (12) TMI 432 - ITAT DELHI) and keeping in view the entirety of facts, circumstances and the relevant provisions of the law, we are of the considered opinion that it would serve the interest of justice if the matter is restored back to the file of AO with a direction to refer the issue regarding exclusion of period as prescribed in sub-section (2) of sec. 244A of the A .....

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in favour of assessee for statistical purposes. - ITA No. 1414/Del/2011 - Dated:- 2-3-2015 - Shri G.D. Agarwal And shri C.M. Garg JJ. For the Appellant : Sh. Ajay Vohra, Sr. Adv., Rohit Jain, Adv. & Deepashree Rao, CA For the Respondent : Sh. Gunjan Prashad, CIT-DR ORDER Per C.M. Garg, J.M. This appeal has been preferred by the assessee against the order of the CIT(Appeals)-VIII, New Delhi dated 20.01.2011 in Appeal No. 07/2009- 10 for A.Y. 1995-96. 2. Ground no. 1 & 9 of the assessee ar .....

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submissions on the same. 3. The AO has on facts and in the circumstances of the case and in law erred in not allowing interest u/s 244A of the Act on the tax refund of ₹ 663.12 lacs from 1/4/1995 (being the date of commencement of the assessment year) till 23/8/2007, (being the date on which the imgpuned order is stated to have been received by the CIT) a) particularly when there is no delay attributable to the appellant. b) The refund has arisen as a result of the order of ITAT giving ef .....

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interest on ₹ 74,357,749, after appropriating the difference of ₹ 3192511 towards the refund attributable to BIFR refund; and also 4.3 not allowing interest for the months of November, 1998, August 1999, and March, 2006 (on ₹ 54,700,000) 5. The AO has erred on facts and in the circumstances of the case and in law while calculating interest for the period September, 1999 to May 2000 at Rs. NIL by taking to the principal amount (on which interest is admissible) has been wrongly t .....

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ct as per ITNS 150 dt. 29.5.2000 forming part of order u/s 250/143(1)(a), whereas the ITNS-150 accompanying the impugned order starts with post section 143(1) orders only, thereby reducing the refund admissible to the Appellant. 7. The AO has on facts and in the circumstances of the case and in law erred in not complying with the mandatory provisions as contained in sec. 245 by not intimating the appellant in writing before setting off the refund against the amount payable under for different ye .....

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ustrial & Financial Reconstruction (BIFR). The said scheme was affected from 01/04/1994 i.e. beginning of the previous year relevant to the assessment year under appeal. According to the declaration u/s 72A of the I.T. Act, 1961 (for short the Act) pursuant to which it was ordered that notwithstanding anything contained in any provision of the Act, the accumulated losses and unabsorbed depreciation of amalgamated company viz. MITCO shall be deemed to be loss/depreciation of the assessee comp .....

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osses pertaining to MITCO which was subsequently withdrawn by the Department in terms of order u/s 154 of the Act dated 29/03/2004 the relief in terms of scheme of merger was restricted to the extent of ₹ 663.12 lacs for the year under consideration in this appeal. 4. Being aggrieved by the aforesaid action of the AO the assessee company carried the matter before CIT(A) and in terms of his order dated 22/07/2004 it was decided by the CIT(A) that the benefit of ₹ 663.12 lacs was in te .....

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ted 13/07/2007 it was held by the ITAT that the benefit u/s 72A of the Act was to be granted in the assessment year relevant to the previous year in which the amalgamation takes place. According to ITAT order (supra), since the scheme of amalgamation was to take effect from 01/04/1994, the benefit of tax credit was to be allowed to the assessee company for the A.Y. 1995-96 and not for 1996-97 as held by the CIT(A) in terms of his order passed u/s 154 of the Act dated 22/07/2004. While giving eff .....

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rgument of both the sides and carefully perused the relevant material placed on record before us, inter-alia, order of the AO, order of the first appellate authority, paper books submitted by the assessee and case was relied by both the parties. 8. Since the main issue is revolving around the provision of section 244A of the Act and the main contention of the assessee is that the delay in proceedings is not attributable to the assessee. Therefore, it was contended by the ld. Sr. Counsel for the .....

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2004 passed by the AO u/s 154 of the Act the assessee company was allowed relief out of income u/s 72A of the Act in A.Y. 1995-96 to the extent of 663.12 lacs and the CIT(A) vide order dated 22/07/2004 further allowed the benefit u/s 72A of the Act of equivalent income so as to allow tax credit to the extent of same amount for assessment year under consideration. The ld. Sr. Counsel vehemently contended that the CIT(A) wrongly reverse his own order dated 22/07/2004 denying relief u/s 72A of the .....

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e assessee company in regard to the interest u/s 244A of the Act is not covered either by clause (a) or (b) of sub-section (1) of sec. 244A of the Act. 9. The ld. Sr. Counsel further submitted that the CIT(A) wrongly justified the denial of assessee s claim of interest u/s 244A of the Act for the year under consideration on the basis of non charging of interest u/s 220(2) of the Act for A.Y. 1996-97 which was even otherwise not leviable according to the provisions of law. The ld. Sr. Counsel fin .....

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uble benefit and the delay was fully attributable to the assessee company as per sequence of events noted by the AO and the CIT(A) in the impugned order para 4.4 at page 3 to 7 of the impugned order. The ld. DR further submitted that as per provisions of section 244A(2) of the Act where any question arises as to the period to be excluded for the calculation of interest on refund, it shall be decided by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commission .....

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arties and vigilant perusal of the relevant material on the record, we note that in the present case the AO excluded the period at his own while processing the claim of the assessee for refund and interest thereon payable u/s 244A(1) of the Act. Under the express provisions of sec. 244A(2) of the Act the AO could not do so as it was outside of his jurisdiction and the question of exclusion of any period for the purpose of grant of interest u/s 244A(1) of the Act was necessarily and mandatorily t .....

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were right in ordering the exclusion of any period for computation of interest on refund u/s 244A(1) of the Act as it was outside the ambit of their powers. 13. At this stage it will be appropriate and relevant to reproduce provisions of section 244A of the Act to decide this controversy in a judicious manner, thus, said provision reads as under: 244A Interest on refunds : (1) Where refund of any amount becomes due to the assessee under this Act, he shall, subject to the provisions of this secti .....

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ssessment year to the date on which the refund is granted: Provided that no interest shall be payable if the amount of refund is less than ten per cent of the tax as determined under sub-section (1) of s. 115WE or sub-s. (1) of s. 143 or on regular assessment; (b) In any other case, such interest shall be calculated at the rate of one-half per cent for every month or part of a month comprised in the period or periods from the date or, as the case may be, dates of payment of the tax or penalty to .....

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ayable, and where any question arises as to the period to be excluded, it shall be decided by the Chief CIT or CIT whose decision thereon shall be final. (3) Where, as a result of an order under sub-s. (3) of s. 115WE or s. 115WF or s. 115WG or sub-s. (3) of s. 143 or s. 144 or s. 147 or s. 154 or s. 155 or s. 250 or s. 254 or s. 260 or s. 262 or s. 263 or s. 264 or an order of the Settlement Commission under sub-s. (4) of s. 245D, the amount on which interest was payable under sub-s. (1) has be .....

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ents for the assessment year commencing on the 1st April, 1989, and subsequent assessment years: Provided that in respect of assessment of fringe benefits, the provisions of this sub-section shall have effect as if for the figures 1989 , the figures 2006 had been substituted. 14. On vigilant perusal of the order of the ITAT Delhi E Bench in the case of Power Finance Corporation Limited vs. ACIT, we note that in the similar set off facts and circumstances the Coordinate Bench of this Tribunal dec .....

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eriod which is to be excluded as per provisions of s. 244A(2). Looking to the language used in s. 244A, it is very clear that the AO, considering the facts before him, will have to determine whether the assessee is entitled to refund or not and if he is entitled to refund then for what period he is entitled to interest and further where any question arises as to the period to be excluded the same shall be decided either by Chief CIT or CIT whose decision thereon shall be final. Here, in the pres .....

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is a mistake apparent from record. What was required to be done by the AO was to refer the matter either to Chief CIT or CIT for determination of period for which the assessee was not entitled to grant of interest u/s 244A(1). Ld. CIT(A) is also wrong in holding that the AO was right in excluding such period. No such authority is vested in AO to exclude period and if any question has arisen for exclusion of any period, the manner provided in sub-s. (2) has to be adopted by the AO. Thus, neither .....

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r to Chief CIT or CIT (as the case may be) to get it determined. We find that similar action of the Tribunal was upheld by Hon ble Kerala High Court in the case of Kerala State Civil Supplies Corpn. Ltd. Vs. Jt. CIT (2006) 200 CTR (Ker) 653 : (2006) 282 ITR 647 (Ker) wherein it was found by the Tribunal that the AO without referring the matter either to Chief CIT or CIT had excluded the period for grant of interest u/s 244A(1) and it was held that the order of the AO was to be set aside to enabl .....

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