TMI Blog2005 (4) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... and considered not necessary to state again. The A/R vehemently argues stating that as per the decision of the Hon'ble Gujarat High Court in D.J. Works v. DCIT Chamanlal S. Patel v. CIT and Anr., where the High Court has held that interest should be allowable on the delayed payment of interest. With utmost respect, I would state that I beg to differ from the decision of the learned High Court. The provisions of the Act both in Section 214 as well as any other section, which either charges or allows interest to the assessee, states that simple interest should be charged/allowed. If interest on interest is allowed then it will result in a compound interest, which is not within the scheme of the Act. Apart from that there has to be equity both for charging or allowing interest. The Department does not charge interest from the assessee on the interest due to default, likewise, charging interest on late payment of refund and interest cannot be allowed to the assessee. The assessee has no basis for such a claim and petition under Section 264 does not lie, as there is no order prejudicial to the interest of the assessee. The petition is rejected. 2. Mr. Khaitan, learne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nied. Therefore, a writ in the nature of mandamus should be issued. (b) He drew attention of this Court to the provisions contained in Section 156 of the Income Tax Act which provides that when any amount is due to the revenue be it on account of tax or interest a demand shall be made which is payable within 30 days and in case such payment is not made within 30 days then interest is payable under Section 220 of the Income Tax Act. He submitted that if a demand based on interest can attract further interest and the revenue can thus recover interest on interest it would be violative of Article 14 to say that such a right to recover interest on interest is open to the revenue but the same right is not open to the citizen. He, therefore, submitted that an order as prayed for should be passed. Mr. Mallick, learned senior advocate appearing for the revenue made the following submissions: (a) Neither Section 214 nor Section 244 of the Income Tax Act does contain any provision for payment of interest upon interest. (b) A writ in the nature of mandamus can only be issued for the purpose of complying with a provision of law. If there is no provision of law directing the revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e learned Counsel appearing for the parties, this Court is of the view that its task has greatly been diminished in this case by the Judgment of the Apex Court in the case of Commissioner of Income Tax v. Narendra Doshi, reported in 254 ITR 606. The question as to whether the Revenue can be made liable to pay interest was before Their Lordships and Their Lordships opined that the question had rightly been answered in the affirmative. It would be appropriate to notice the judgment in extenso which reads as follows: The question that the High Court was called upon to answer read thus: 'Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was justified in law in upholding the order of the Deputy Commissioner of Income Tax (Appeals), Indore, directing to allow interest on interest, when the law points for grant of simple interest only? It is answered in the affirmative and in favour of the assessee, relying upon the Judgments which laid down that interest was payable on the excess amount paid towards income tax. The Tribunal, whose decision the High Court affirmed, had relied upon the decision of the Gujarat High Court ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of a principle. If that is a principle then that principle is equally applicable to Mr. Mallick's client because Revenue is the same throughout the territory of India and on the top of that Their Lordships have also said that the question was rightly answered. 10. I also find lot of substance in the submission of Mr. Khaitan that Revenue cannot say that they can recover interest on interest based on Sections 156 and 220 of the Income Tax Act but they are not liable to pay interest on interest because the statute does not provide for such payment. Equality is in the fabric of our Constitution. When the State itself is entitled to recover interest on interest then State is also liable to pay interest on interest. 11. The submission of Mr. Mallick that the equity has no manner of application in taxation matters certainly held the field at one point of time but has since been fading its colour. It is an age old rule of equity that unjust enrichment should be prevented. Legal recognition to this principle has been given in Sections 68 to 72 of the Indian Contract Act. This principle was applied in the case of Mqfatlal Industries Ltd. and Ors. v. Union of India and Ors., in ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Sharda, . Their Lordships held as follows: There is no merit in this appeal. Considering what has been stated by the appellant in its own written statement filed before the National Consumer Disputes Redressal Commission, we express our surprise that it should have filed this appeal at all. Learned counsel for the appellant now desires to confine the appeal only to the interest that has accumulated because of the stay order that was passed at the appellant's instance by this Court. In the order of the National Commission it is stated that the respondent had claimed compensation for having being compelled to live in rented accommodation from 1982 till 1994 at the rate of ₹ 1600 per month. Instead of making that award, the National Commission directed the appellant to pay interest at the rate of 18% per annum on the amounts that had been deposited by the respondent from time to time from 1979 onwards till a new plot could be allotted to him and possession, thereof could be delivered. Given the facts, we see no justification in interfering with that direction and, consequent upon the dismissal of the appeal and the vacation of the stay order, that direction must now b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore, the assesse was entitled to interest in terms of Section 244 of the Act. A similar view has been taken by the Gujarat High Court in D.J. Works v. Deputy CIT and Chiman Lal S. Patel v. CIT though with different conclusions. Above being the position, we answer the question in the affirmative, in favour of the assessee and against the Revenue. 18. The exercise strictly speaking was not necessary because I already with an arm of the Judgment of the Apex Court in the case of Narendra Doshi. But in deference to strenuous submission made by Mr. Mullick I thought it was worthwhile. 19. For the aforesaid reasons, this writ petition succeeds. The order dated 09.09.97 is set aside and the Department is directed to reconsider the matter in the light of the law laid down by the Apex Court in the case of Commissioner of Income Tax v. Narendra Doshi, reported in 254 ITR 606. There shall, however, be no order as to costs. Mr. Mallick, learned Senior counsel, prayed for stay of operation of this order. The operation of this order shall remain stayed for a period of three weeks hence. Let xerox certified copies of this Judgment be supplied to the parties urgently if applie ..... X X X X Extracts X X X X X X X X Extracts X X X X
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