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Sandvik Asia Limited Versus Commissioner of Income Tax (OSD) , Pune

2015 (11) TMI 752 - ITAT PUNE

Interest u/s. 244A - whether interest arising out of order giving effect by the Assessing Officer is consequential, therefore, it is not an appealable order? - Held that:- The order resulting in payment of interest u/s 244A of the Act is appealable. We are of the considered view that the Commissioner of Income Tax (Appeals) has erred in not adjudicating the appeal of the assessee on merits. We deem it appropriate to remit the file back to the Commissioner of Income Tax (Appeals) with a direction .....

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of Income Tax (OSD), Pune dated 24-03-2005 for the assessment year 1997-98. 2. In appeal, the assessee has raised the following grounds: Aggrieved by the order passed by the Commissioner of Income-tax (OSD), Pune [hereinafter referred to as 'the learned CIT(A)'], under section 250 of the Income-tax Act, 1961 ('Act') and based on the facts and circumstances of the case, Sandvik Asia Limited [hereinafter referred to as 'the Appellant'] respectfully submits that the learned .....

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t the Order Giving Effect passed by the Assessing Officer be considered as an appeal-able order and ground numbers (2) to (6) be disposed-off by the Hon'ble Income Tax Appellate Tribunal on their merits. 2. Excess interest collected under section 220(2) The learned CIT(A) has erred in effectively confirming the order of the Assessing Officer wherein excess interest charged under section 220(2) amounting to ₹ 1,408,646 (Rs66,253 charged vide his order dated 21 March 2000 plus ₹ 1, .....

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3(3). The Appellant prays that interest of ₹ 723,209 ought not to be withdrawn and the Appellant be granted refund of ₹ 723,209. 4. Short grant of interest under section 244A The learned CIT(A) has erred in effectively confirming the order of the Assessing Officer wherein interest under section 244A amounting to ₹ 2,414,502 (to be revised to ₹ 2,006,516 after considering refund of ₹ 407,987 granted in August 2003) has been short granted to the Appellant. The Appella .....

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e delayed interest The learned CIT(A) has erred in effectively confirming the order of the Assessing Officer not granting interest on the delay in granting the additional amount of interest of ₹ 2,414,502 {discussed in Ground No. 4 above). The Appellant prays that interest under section 244A be granted on refund of ₹ 2,414,502. The Appellant craves leave to add, alter, vary, omit, amend or delete one or more of the above grounds of appeal at any time before, or at the time of, hearin .....

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ombay High Court in the case of Caltex Oil Refining (India) Ltd. Vs. CIT reported as 202 ITR 375 (Bom), wherein the Hon'ble High Court while dealing with the provisions of section 214 has held that it is an appealable order. The ld. AR submitted that the provisions of section 244A and the provisions of section 214 of the Act, both relate to the payment of interest to the assessee. The ld. AR further pointed out that the decision of Hon'ble Bombay High Court has been followed in the cases .....

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Tax (Appeals) in holding that interest u/s. 244A arising out of order giving effect by the Assessing Officer is consequential, therefore, it is not an appealable order. The other grounds raised in the appeal of the assessee are either in support or consequential. 6. We find merit in the submissions of the ld. AR of the assessee. The Hon ble Bombay High Court in the case of Caltex Oil Refining (India) Ltd. vs. CIT (supra) while dealing with the issue whether order relating to interest u/s 214 of .....

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unt of income assessed, or (ii) to the amount of tax determined, or (iii) to the amount of loss computed, or (iv) to the status under which he is assessed. The first part of this clause deals with denial of liability. The decision of the Supreme Court referred to by learned counsel in Central Provinces Manganese Ore's case [1986] 160 ITR 961, also deals with a case where interest was levied on the assessee and the assessee was aggrieved by the levy of interest on him. The controversy there w .....

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est to the assessee on the excess amount of advance tax paid by him. Counsel for the assessee, however, placed before us another decision of the Supreme Court in CIT v. Wesman Engg. Co. P. Ltd. [1991] 188 ITR 327, where also a similar expression used in section 195(2) of the Act came up for interpretation and the Supreme Court held that denial of the liability will also include denial of partial liability or dispute in regard to the quantum. In our opinion, the controversy regarding interest und .....

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sment for the purpose of appeal under clause (c) of section 246. So far as the first part is concerned, we do not find much difficulty in view of the decision of the Supreme Court in M. Chockalingam and M. Meyyappan v. CIT [1963] 48 ITR (SC) 34. In this case the power of rectification was the subject-matter of scrutiny by the Supreme Court. By an order of rectification penal interest under section 18A of the old Act was enhanced. No opportunity of hearing as contemplated by section 35 of the sai .....

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preme Court said (at page 41): "We do not see what else it could be. The word 'assessment' is used in the proviso not as an equivalent of the tax calculated at the rate given in the Finance Act but the total amount which the assessee is required to pay. The proviso applies whenever the effect of the order is to touch the pocket of the assessee and in our opinion this was such a case ". In view of this decision, there is no scope for doubt that an assessment under section 143(3) .....

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terest under section 214 is a part of assessment and is deemed to be tax for the purposes of this Act including clause (c) of section 246. An appeal by an assessee aggrieved by an order of assessment made under section 143(3) or section 144 of the Act, either original or in consequence of an appellate order with a view to giving effect to the directions contained therein, objecting to the amount of interest payable by the Government under section 214 of the Act to the assessee as determined by t .....

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ppeal which was dismissed by an order dated 29th March, 1996 by the CIT [Appeal] holding that : "an appeal for claiming interest u/s. 244[1A] of the Act is not entertainable in a case where the order giving the appeal effect itself is not being challenged on any ground. However, it is noted that the refund has not arisen as a result of giving of appeal effect. The refund results because of adjustment of certain earlier refunds in earlier years. In such circumstances, in my opinion, the grou .....

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sing Officer could not have exercised jurisdiction except under section 143(3) of the Act. Reference in this regard may be made to the judgment in the case of Kooka Sidhwa & Co. vs CIT reported in [1964] 54 ITR 54 (Cal), wherein the following view was taken (page 62): "In my judgment, the forms of the orders passed under section 23(3) of the Income-tax Act, 1922, are not exhaustive. The effect or substance of the order should be looked into to decide whether an appeal lies. The order pa .....

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annot be taken away unless it is expressly provided." 12. The order passed by the CIT [Appeal] had virtually set aside the earlier order of assessment. Therefore, a fresh assessment was required to be made which the Assessing Officer did and directed refund but omitted to pass an order directing payment of interest. Therefore, it was an order passed under section 143[3] of the Act. It cannot be disputed that an appeal against an order passed under section 143[3] is permissible. It is altoge .....

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ant interest undersection 244 [1A] of the Act. The appeal was an appeal against the order of assessment undersection 143[3] of the Act in which the Assessing Officer omitted to grant interest which he should have done under section 244[1A] of the Act. Therefore, the question which has been posed on behalf of the Revenue does not, in our opinion, arise in the facts and circumstances of the case. 13. In any event, the views taken by the Madras High Court and the Bombay High Court are, according to .....

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efund due to the assessee. We are not able to accept the view of the Karnataka High Court that clause [f] of sub-section [1] of section 246 should be limited only to the case where the refund was granted earlier but was reduced by an order passed under section 154 of the Act. Since we are of the view that the interest forms part of the refund and where the interest is not granted in an order passed under section 154 of the Act, the order in substance and effect meant that the Income-tax Officer .....

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