TMI Blog2022 (10) TMI 1107X X X X Extracts X X X X X X X X Extracts X X X X ..... ee has filed an appeal before the CIT(A) on 26.03.2014 and during the course of appellate proceedings, the assessee took an additional ground of appeal for the first time before the Ld. CIT(A) vide its letter dated 04.10.2016 stating that TUFS subsidy which has been received by the assessee from the Ministry of Textiles is exempt from tax and should be reduced from the assessed income. CIT(A) vide order admitted the additional ground of appeal and held that the TUFS subsidy received by the assessee company from the Ministry of Textiles, Government of India be treated as capital receipt and directed the AO to reduce the amount of TUFS subsidy received during the year from total assessed income. Therefore, the assessee shall be eligible for interest on the refund amount with effect from 04/10/2016 (and not from 01/04/2011) till the date of grant of refund. We make it clear that for the prior period to 04/10/2016, it shall not be eligible for interest as the delay is attributable to the assessee. The time period taking by the ld CIT(A) in disposing off the appeal cannot be attributed to the assessee and the said period cannot be excluded. Admittedly, the assessee has already bee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment proceedings were thereafter completed by the Assessing officer under section 143(3) vide order dt. 28/02/2014 wherein the assessed income was determined at Rs. 84,01,25,935/- after making certain additions and disallowances. 3. Being aggrieved with the order of the AO, the assessee filed an appeal before the Ld. CIT(A) on 26.03.2014 challenging the action of the AO in making the aforesaid additions and disallowances. Further, during the appellate proceedings, the assessee took an additional ground of appeal before the Ld. CIT(A) vide its letter dated 04.10.2016 stating that TUFS subsidy of Rs. 10,39,49,181/- which has been received by the assessee from the Ministry of Textiles is exempt from tax and should be reduced from the assessed income. 4. The Ld. CIT(A) vide order dt. 28/01/2019 deleted the additions/disallowances made by the AO in the order so passed under section 143(3). Further, the ld CIT(A) admitted the additional ground of appeal taken by the assessee to treat TUFS subsidy as capital receipt. On merits, the ld CIT(A) following the decision of the Hon ble Punjab and Haryana High Court in case of CIT vs Sh. Sham Lal Bansal (ITA No. 472/2010 dated 17.01.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessee. 8. Against the said findings of the Ld. AO, the assessee again went in appeal before the Ld. CIT(A) and it was contended that the provision of Section 244A(2) are not applicable to the facts of the case as delay in finalization of the proceeding is not attributable to the assessee. It was submitted during the appellate proceedings that a similar issue had arisen in case of M/s Vardhman Textiles Ltd. Vs. DCIT, Ludhiana (ITA No. 1264 to 1267/CHD/2019 103- 106/CHD/2020 dated 30.07.2021) where the Tribunal has decided the matter in favour of the assessee holding that interest under section 244A(1) is allowable from the date when taxes have been paid and it was submitted that in the present case the interest under section 244A(1) is allowable with effect from 01/04/2011. The Ld. CIT(A) referring to the decision passed by the Coordinate Bench in case of M/s Vardhman Textiles Ltd. Vs. DCIT (supra) has held that the facts of the case under consideration are almost identical to the facts of the case decided by the Tribunal vide its order dt. 30/07/2021 and therefore following the decision of the Coordinate Bench, the AO was directed to allow the interest under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 00 and thereafter, there are subsequent decisions of various High Courts which have been referred and followed by the Coordinate Bench in case of M/s Vardhman Textiles Ltd. Vs. DCIT (supra). It was accordingly submitted that there is no infirminity in the order of the ld CIT(A) and the same should be upheld. 11. We have heard the rival contentions and purused the material available on record. It is a matter of record that the assessee has raised an additional ground of appeal before the ld CIT(A) wherein the TUFS Subsidy has been claimed to be exempt from tax. The claim of TUFS subsidy being exempt from tax has thus been raised for the first time during the appellate proceedings and such a claim was neither made while filing the return of income or anytime during the course of assessment proceedings. There is also no dispute that the assessee has since been held eligible for refund of taxes on account of TUFS Subsidy which has been held to be capital receipt by the order of the ld CIT(A) and which has subsequently been upheld by the order of the Coordinate Bench. It is also a matter of record that by virtue of appeal effect order passed by the AO, the taxes already paid and depo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se of CIT vs. Assam Roofing Ltd. (supra) where, briefly, the facts of the case were that the assessee filed its return of income showing transport subsidy received by it as taxable income. In the note below the computation of income it was stated by the assessee that transport subsidy is not a revenue receipt rather it is a capital receipt. Thereafter the return was processed and assessment was completed under section 143(3) and at no stage of assessment proceeding, any objection was raised to the effect that transport subsidy is not taxable. Thereafter the assessee filed an appeal raising the aforesaid issue which was decided in its favour by the Ld. CIT(A) and the transport subsidy was directed to be deleted from the total income of the assessee as determined by the AO. Pursuant to the aforesaid order of the Ld. CIT(A), the AO passed an appeal effect order deleting the transport subsidy from the total income of the assessee and the amount of refund along with interest was allowed to the assessee under section 244 A of the Act for the period starting from 01/04/1992 to 06/12/1994. Subsequently proceedings under section 263 were initiated on the ground that interest on the refundab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich the refund has become due. Viewed from the said perspective, the expression proceeding in sub-section (2) may take within its ambit an appeal proceeding consequential to which refund may have become due. It was further held by the Hon ble Gauhati High Court this aforesaid view would find support from the decision of Hon ble Punjab Haryana High Court in National Horticulture Board case (supra) and thereafter it referred to the findings of the case in National Horticulture Board and drawing support from the same, it was held that in the present case, the assessee itself declared the amount of transport subsidy received by it to be taxable and voluntarily paid the taxes. No claim to the contrary was raised in the course of assessment proceedings. It is only in the appeal filed that the issue was raised and by the appellate order dt. 27/10/1994, the assessee s contentions were upheld. Consequently the order deleting the transport subsidy from the total income and for consequential refund was passed by the AO on 13/12/1994. It was held that in the above circumstances, it cannot but be held that the assessee was responsible for some delay in grant of refund. The refund being cons ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as regards the interest from 09/04/1999 till the date of refund when the application for rectification was allowed, the matter was decided by the Hon ble high Court in favour of the assessee holding that a conjoint reading of the provisions of Section 244A shows that the assessee is entitled to receive interest on the amount of refund at the rates prescribed in clause (a) and (b) of sub section (1) of section 244A. The rationale underlying this provision is to compensate the assessee in lieu of the deprivation of his property right by virtue of unlawful collection of tax. If the proceedings resulting in the refund are delayed due to reasons attributable to the assessee then the period of delay has to be excluded from the period for which the interest is payable. In other words, if the assessee is responsible for the delay in the finalization of the proceedings on the basis of which he becomes entitled to refund, then the period of delay is to be excluded from the total period for which interest becomes payable. There is nothing in the plain language of sub section (1) and sub section (2) of section 244A that the assessee can be deprived of the interest in respect of the period duri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd thereafter any adverse conclusion drawn thereon being challenged before the appellate authorities and higher judicial authority. The entire process, therefore, of assessment and appeals culminates in the determination of true and correct income on which the assessee was required to pay its taxes. Any claim allowed to the assessee at any stage whether made for the first time or whether taken up in appeal only underlines the position that no taxes were required to be paid by the assessee on the said claim at all. Therefore, in such circumstances the refund generated on account of the same, having been retained by the State unlawfully is entitled to be compensated with interest for the entire period for which it is so retained. It was further held by the Coordinate Bench that the State is entitled to only taxes due on the correct taxable income and it is the duty of the Department to determine the true and correct income and guide the assessee in the process. They are not and cannot be entitled to take the benefit of the ignorance of the assessee and collect undue taxes. Therefore any taxes mistakenly paid and unlawfully retained by the State have to be compensated with interest on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in refund and the question of payment of interest on such refund arose for consideration. And on appeal the Tribunal came to the conclusion that the delay cannot be attributed to the assessee and therefore directed the payment of interest. The Hon ble Bombay High Court upheld the findings of the Tribunal holding that there is no allegation or material on record to suggest that any of the proceedings hit the assessee s appeal before the Tribunal or remanded the proceedings before the Commissioner (Appeals) whether in any manner delayed on account of the reasons attributable to the assessee. 22. In case of CIT vs South Indian Bank Ltd (supra), the assessee had not make any claim for deduction of provision of bad debts in the original return. But before completion of the assessment, the assessee had made such a claim which was rejected by the AO which in appeal was allowed by the Commissioner pursuant to which the assessee became entitled to refund. In the said background, the Revenue argued that the assessee would not be entitled to interest in view of Section 244A(2) of the Act. The Hon ble Kerala High Court did not agree with the view so taken by the Revenue and held that subsec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Act. 24. It goes without saying that the decision of Hon ble High Court is binding on the Tribunal and other authorities under its superintendence throughout the territories in relation to which it exercises its jurisdiction. Where divergent views are rendered by different High Courts, an inferior authority under one of such High Courts, is bound to follow its jurisdictional High Court notwithstanding that other view of the non-jurisdictional High Court may sound more appealing on an individual level vis-a-vis the view of the jurisdictional High Court. The principle of following a view in favour of the assessee when contrary views are available, applies to the authorities acting under a neutral High Court, namely, which has not expressed any opinion either for or against on a particular matter. Once the jurisdictional High Court decides a particular issue in a particular manner, that manner has to be mandatorily followed by all the authorities acting under it so long as it holds the field and is not reversed by the Hon ble Supreme Court. In case of Baradakanta Mishra vs. Bhimsen Dixit AIR 1972 SC 2466, the Hon ble Supreme Court held that It would be anomalous to suggest that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be followed. The said principle, we find looking at the decision arrived at in the impugned order perhaps needs to be addressed and re-iterated again. Reference in this context may be made to the decision rendered by the Apex Court in the case of East India Commercial Co. Ltd. V Collector of Customs, AIR 1962 (S.C) 1893 where it was held as far back as in 1962 that the law declared by the highest court in the state is binding on authorities or Tribunals under its superintendence and they cannot ignore it. For addressing the position of the High Court, reference may be made to the decision of the Apex Court in the case of Baradakanta Mishra v. Bhimsen Dixit AIR 1972 SC 2466 wherein the Court held that it would be anomalous to suggest that a Tribunal over which a High Court has superintendence can ignore the law declared by it and if a Tribunal can do so, all the subordinate courts can equally do so, for there is no specific provision as in respect of Supreme Court, making the law declared by the High Court binding on subordinate Courts. The court further observed that it is implicit in the power of supervision conferred on a superior Tribunal that all the Tribunals subject to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the State or territories on which the court has jurisdiction. In other States or outside the territorial jurisdiction of that High Court it may, at best, have persuasive value for other High Courts. However, as far as the ITAT is concerned, a lone decision of any High Court of the country being higher in hierarchy in the scheme of things becomes a binding precedent for the ITAT wherever the Bench of the ITAT may be situated. However, at the same time in the face of the decision of the jurisdictional High Court no amount of stretching of the doctrine of stare decisis, can judgments of one High Court be given the status of a binding precedent so far as other High Courts or Tribunal within their territorial jurisdiction are concerned. It is well settled that any such attempt will go counter to the very doctrine of stare decisis and also the various decisions of the Supreme Court which have interpreted the scope and ambit thereof. The issue as far as the present proceedings are concerned, can be said to have been addressed by the said decision. In the facts of the present case, we have a decision of the jurisdictional High Court which stands in the eyes of law and we also have a deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court of the territory in which they function requires that they restrain in the use of proper expression while following or not following the decision of the High Court. 4.5. The Apex Court way back in 1984 addressed in cler terms in Bishnu Ram Borah and Another vs. Parag Saikia Ors. AIR 1984 SC 898 held that the board of Revenue any other subordinate tribunal is subject to the writ jurisdiction of the High Court under Article 226 of the Constitution. Just as the judgments and orders of the Supreme Court have to be faithfully obeyed and carried out throughout the territory of India under Article 142 of the Constitution, so should be the judgments and orders of the High Court by all inferior courts and Tribunals subject to their supervisory jurisdiction within the State under Arts. 226 and 227 of the Constitution. The Board of Revenue cannot refuse to carry out the directions of the High Court. (1961) 1 SCR 474, Foil. (Para 12) 4.6 In this genre, it may not be out of place to refer to the oft quoted decision of the Bombay High Court in the case of CIT Vs Thana Electricity Supply Ltd. (1994) 206 ITR 727 (Bom) or alternately in the genre of cases being cited, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f binding precedent only in the State or territories on which the court has jurisdiction. In other States or outside the territorial jurisdiction of that High Court it may, at best, have only persuasive effect. By no amount of stretching of the doctrine of stare decisis, can judgments of one High Court be given the status of a binding precedent so far as other High Courts or Courts or Tribunals within their territorial jurisdiction are concerned. Any such attempt will go counter to the very doctrine of stare decisis and also the various decisions of the Supreme Court which have interpreted the scope and ambit thereof. The fact that there is only one decision of any one High Court on a particular point or that a number of different High Courts have taken identical views in that regard is not at all relevant for that purpose. Whatever may be the conclusion, the decisions cannot have the force of binding precedent on other High Courts or on any subordinate courts or Tribunals within their jurisdiction. That status is reserved only for the decisions of the Supreme Court which are binding on all courts in the country by virtue of article 141 of the Constitution. 4.7 Similar to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se - and is the subject matter of an appeal can furnish no ground for not following it unless its operation has been suspended by a competent court. If this healthy rule is not followed, the result will only be undue harassment to assessee and chaos in administration of tax laws. 4.8 The said principle has been re-iterated over the years in a number of cases. Reference may also be made to the decision of the Apex Court in the case of Bhopal Sugar Industries vs. Income Tax Officer, Bhopal [AIR 1961 SC 182] wherein at page 622 it was held ; (a) If a subordinate tribunal refuses to carry out directions given to it by a superior tribunal in the exercise of its appellate powers, the result will be chaos in the administration of justice and we have indeed found it very difficult to appreciate the process of reasoning by which the learned Judicial Commissioner while roundly condemning the respondent for refusing to carry out the directions of the superior Tribunal, yet held that no manifest injustice resulted from such refusal. 4.9 It may also be appropriate to refer to the recent decision dated 28.03.2017 of the Apex Court in CIT(A) No.2315/2007 in the case of DCIT Vs M/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid decision are extracted hereunder : 11. Even though it is a debatable issue but as Gujarat High Court in the case of Ahmedabad Mfg. Calico (P) Ltd. (supra) had taken a view that it is capital expenditure which was subsequently followed by Alembic Glass Industries Ltd. V. CIT (supra) and the registered office of the respondent assessee being in the State of Gujarat, the law laid down by the Gujarat High Court was binding. (See Taylor Instrument Com. (India) Ltd. v. Commissioner of Income Tax - (1998) 232 ITR 771, Commissioner of Gift Tax v. J.K. Jain - (1998) 230 ITR 839, Commissioner of Income Tax v. Sunil Kumar - (1995) 212 1TR 238, Commissioner of Income Tax v. Thana Electricity Supply Ltd. - (1994) 206 ITR 727, Indian Tube Company Ltd. v. Commissioner of Income Tax Ors. - (1993) 203 ITR 54, Commissioner of Income Tax v. P.C. Joshi B.C. Joshi - (1993) 202 ITR 1017 and Commissioner of Income Tax, West Bengal, Calcutta v. Raja Benoy Kumar Sahas Roy - (1957) 32 ITR 466). Therefore, so far as the present case is concerned, it cannot be said that the issue was a debatable one. 12 . In view of the above submissions, in our considered view the order passed by the CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... petitioner-company on allegations that it had violated conditions of licence and illegally disposed of goods and thereby committed an offence punishable under the Customs Act. The High Court confirmed the order of acquittal passed by the trial Court holding that it cannot be said that a condition of the licence amounted to an order under the Act and, therefore, no offence was committed by the company. The High Court also passed an order directing the seized goods to be sold and the sale proceeds to be deposited in the Court. After those proceedings, a notice was issued by the Collector on the company to show cause why the amount should (not) be confiscated and penalty should not be imposed. It was contended on behalf of the company that once the High Court decided that the breach of condition of licence could not be said to be a breach of order, the Collector had no jurisdiction to issue show-cause notice. It was submitted that the decision of a High Court on a point was binding on all subordinate Courts and inferior tribunals within its territorial jurisdiction. The notice was, therefore, liable to be quashed. The precise question before the Hon'ble Supreme Court was as to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Officer, Aurangabad AIR 1984 SC 892, Bishnu Ram Bohra vs. Parae Saikia AIR 1984 SC 898). In our opinion, submission of the learned counsel for the petitioner is well founded and deserves to be upheld. It is not even the case of the Department that the decision of this Court in Bharat Textiles Works (supra) has been stayed by the Hon'ble Supreme Court. Hence, so far as this Court is concerned, the point is concluded. It is settled law that unless and until decision is reversed by a superior Court, it holds the field. It also cannot be gainsaid that the second respondent is an inferior Tribunal subject to supervisory jurisdiction of this Court and this Court can exercise jurisdiction over him by in yoking Art. 227 of the Constitution. In our considered view, therefore it was not open to the second respondent to ignore the decision of this Court or to refuse to follow it on a specious plea of verdict being not accepted by the Department and that matter was carried further and was pending before Supreme Court. In Baradakanta vs. Bhimsen Dixit AIR 1972 SC 2465, when a member of superior judicial service functioning as Commissioner of Hindu Religious Endowments, Orissa, r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tional High Court in the case of Hemla Embroidery Mills P.Ltd. (supra) which decision stands in the eyes of law as on date. Accordingly, the grounds raised by the assessee is allowed. Said order was pronounced in the open Court at the time of hearing itself. 26. In light of aforesaid discussions, we are bound to follow the view taken by the Hon ble jurisdictional Punjab Haryana High Court in case of National Horticulture Board vs Union of India (supra). The ld. AR failed to draw our attention towards any other subsequent decision rendered by the Hon ble Jurisdictional High Court in favour of the assessee on this issue. 27. Further, it is noted that the decision of the Hon ble Jurisdictional High Court in case of National Horticulture Board vs Union of India (supra) was not brought to the notice of the Coordinate Chandigarh Benches in case of M/s Vardhman Textiles Ltd (supra) and, the same was therefore not considered though the decisions of other non-jurisdictional High Courts were considered. Therefore, we are unable to follow the decision of the Coordinate Bench in face of the decision of the Hon ble Jurisdictional High Court which is binding on us as discussed above. It ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
