TMI Blog2013 (4) TMI 980X X X X Extracts X X X X X X X X Extracts X X X X ..... ppreciating that the issue did not arise out of the said CIT (A) s order. b. The CIT (A) erred in confirming the action of AO in withdrawing BPI of ₹ 16,48,83,258 on securities purchased prior to previous year relevant to AY 2000-01 and sold in the previous year relevant to AY 2000-01 when the allowance was on the basis of the stand of the Department in this regard. c. The CIT (A) ought to have directed AO to allow BPI of ₹ 16,48,83,258 which pertained to securities purchased in the previous years relevant to the following AY when the BPI paid on the purchase of securities was disallowed by the appellants and claimed as a deduction in the years in which such securities were sold, in accordance with the Department s stand in the matter. AY Amount of BPI (Rs.) 1993-94 1,72,603 1997-98 7,65,375 1998-99 2,69,83,521 1999-00 13,69,61,759 16,48,83,258 ========== 3. The CIT (A) ought to ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amounts. It was further submitted that this amount of ₹ 16,48,83,258 has been claimed in the return of income and the claim was accepted by AO in his order dated 27th March, 2003 under section 143(3) which was in accordance with the Department s stand in the matter and these amounts had not been allowed in the aforesaid AYs when the securities were purchased. 3.2 It was further submitted that upto the AY 1999-00 in accordance with the Department s stand, BPI paid at the time of purchase of securities was added back and claimed as a deduction in the years in which such securities were sold. This being an accepted position, the matter was not in dispute or agitated in appeal. Therefore, ₹ 16,48,83,258 pertaining to securities purchased prior to previous year relevant to AY 2000-01 has been disalowed in the resepctive years of purchase and claimed in previous year relevant to AY 2000-01 being the year of sale. 3.3 The learned CIT (A) dismissed the contentions by stating as under: 3.2 I have considered the facts and perused thematerial on record. I find that the claim of broken period of interest was allowed by the CIT (A) in the appellant is own case for this ye ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Broken period interest paid of ₹ 16,48,83,258 disallowed in the prior years in respect of the securities which were sold during the previous year ended 31st March, 2000 has been claimed as a deduction . 4.1 Referring to the above and various orders on the issue, it was submitted that the amount of ₹ 30,36,72,909 was contested before the CIT (A) who allowed the amounts as a deduction. The claim of the above amount is with reference to the interest paid in respect of securities purchased during the year ending as on 31st March, 2000 which is entirely different from the claim of ₹ 16,48,83,258 on which the claim was not made in earlier years as stated above. Since those securities on which BPI was not claimed in the interim years were sold, these amounts of BPI becomes part of cost of acquisition of the securities sold during the year and accordingly, AO has examined and allowed the amount originally, therefore the rectification proceedings are not correct. 4.2 On clarification about the amount mentioned by AO under section 154 order that the reconciliation was made only to the extent of ₹ 2,76,06,599, the learned Counsel referred to the statement ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hased during the year which was originally not claimed as deduction in the year, but subsequently they are allowed as revenue expenditure. The amount of ₹ 16,48,83,258 was BPI not claimed and also not allowed in respective years at the time of purchase. These amounts could have been allowed as a revenue expenditure in the resepctive AYs had there been any claim as revenue expenditure. Thus the BPI not claimed or allowed becomes cost of acquisition of those securities when sold. Therefore, on examining the record and the statements filed before AO while explaining the position year wise, we are of the opinion that these amounts were not allowed as deduction in the year of purchase, therefore, they are become part of the cost of acquisition of the securities sold during the year. It was rightly allowed by AO originally in the year under section 143(3). There is no need to withdraw the above amount and accordingly the contentions of assessee are allowed. Ground No.2 is allowed. 5. Ground No.3 pertains to the claim of interest under section 244A on the refund that was withheld by AO. Assessee submitted that due to withholding of refund and non granting of timely interest on th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given, but no interest on refund has been given to the assessee along with that. This interest was retained by the Department for a period of ranging up to 17 years in respect of various assessment orders. It was under these circumstances, the Hon'ble Supreme Court has held that the assessee has been deprived of an amount of ₹ 40 Lakhs for no default its own for the paid ranging up to 17 years without any compensation whatsoever from the Department. Under these circumstances under the general principles of law the Court has held that withholding of interest was also unjustified as this had become part of the refund due to assessee along with tax; interest on this amount was also payable. Therefore, Hon'ble Supreme Court has allowed the interest as compensation and not interest on interest as per provisions of IncomeTax Act, 1961. The Ahmedabad Tribunal in case of Gujarat Sate fertilizers Chemicals Ltd v DCIT (ITA 2348-2349/Ahd/2004)(AY1995-96) dated 31-07-2006 has discussed the decision of Sandvik Asia Ltd. vs. CIT (2006) 280 ITR 643 (SC) and dismissed the assessee s claim of interest on interest. The Income-tax Authorities can pay interest on interest if the stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Such a situation has not happened in the present case as the amount of interest is calculated and refunded along with the refundable tax amount. Similarly in the case of appellant also refund was issued with interest under section 244A of the Act hence, Therefore as per the ratio laid down by Hon'ble High Court of Delhi interest on interest cannot be granted in this case. Moreover, the order under appeal is passed under section 154 of the Act; hence such debatable issue cannot be decided under section 154 of the Act. Similarly, the decisions of Tribunal as referred above (supra) by the AR are also distinguishable as in the said decisions the Tribunal have no occasion to consider this aspect that the Hon'ble Supreme Court has granted compensation only under the general principle of law on account of equity for wrongfully detention of fund of the particular appellant for more than 12-17 years and not interest on interest under the provisions of IncomeTax Act, 1961. The Hon'ble Supreme Court has not held that section 244A provide such provision of interest on interest. If theses, facts had been brought to their notice their decision would have been otherwise. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X
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