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2016 (2) TMI 755 - GUJARAT HIGH COURT

2016 (2) TMI 755 - GUJARAT HIGH COURT - TMI - Adjustment of refund of other firms as payment under section 140A in the case of the assessee for the purpose of charging interest - Held that:- As is well known, the Income Tax Act provides detail provisions for granting interest on refund as well as charging interest on unpaid tax or tax paid after delay. Excess tax paid by one assessee cannot be offset against shortfall of tax of another assessee in order to curtail the interest liability of the d .....

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as “may”. Earlier, expression used “may” was substituted by the word “shall” giving clear indication of the intention of the legislature to make the collection of statutory interest mandatory by a peculiar device. CIT (Appeals) as well as the Tribunal, in the present case, made such mandatory requirement otios. The assessee had not paid the self assessed tax. To the extent of shortfall, it was liable to pay interest. Such interest liability could not have been waived by making adjustment of any .....

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e Appellate Tribunal is right in law and on facts in confirming the order passed by the Commissioner of Income Tax (Appeals) directing that the refund of other firms should be adjusted as payment under section 140A in the case of the assessee for the purpose of charging interest? 2. This question arises in following background: We are concerned with the assessment year 1988-89. There were search in the premises of three sister concerns including the assessee-company. During such search, all the .....

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ax of the assessee and the same as having been paid in terms of Section 140A of the Act. The Assessing Officer refused to grant such prayer. In appeal before the Commissioner (Appeals), however, when the assessee repeated such request, the appellate Commissioner observed as under: 4.1 I have given a careful consideration to the submissions of the learned counsel and have gone through the facts. It is true that merely on filing a return of Income a refund is not created. Refund is created only wh .....

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as disclosed by the 3 concerns of the same group and tax payable on such income was duly paid. Thereafter, on the basis of the relevant information collected from the seized documents, there were inter se verification in the disclosed income between the 3 concerns with the result that in 2 concerns the tax has been paid in excess whereas in one concern there was shortfall. Ultimately in the two concerns refunds were created. In my view, having regard to the overall facts the refunds ultimately c .....

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we find that since it is a matter of three cases of the same group, therefore, for the sake of convenience, the assessee requested to adjust the refunds of the other two firms as the payment of tax u/s. 140A of the Act. The CIT(A) has relied upon the aforesaid finding in the interest of justice for which the revenue should not have any grievance. Accordingly, we are not inclined to interfere with the finding recorded by the CIT(A). 4. It is in this background that the Revenue has sought and has .....

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n if they happened to be sister concerns of the assessee firm, had paid tax in excess of their liability, would not enable the Assessing Officer and consequently the CIT(Appeals) as well as the Tribunal to make adjustment of some tax paid in excess by another assessee. The Income Tax Act simply does not recognize any such inter assessee adjustments. As rightly observed by CIT(Appeals), the refund is payable not merely on filing of the return but upon processing such return and the Assessing Offi .....

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