2017 (10) TMI 578 - AT - Income Tax

Compensation for issuing delayed refund - Claim of interest payable by the Revenue - Held that - Section 214 does not provide for payment of compensation by the Revenue to the assessee in whose favour a refund order has been passed. See Gujarat Flouro Chemicals case 2012 (8) TMI 740 - SUPREME COURT - Decided against assessee.

Summary

Issues:
Appeal against CIT(A) order under section 154 of the Income Tax Act, 1961 for A.Y. 2005-06; Non-granting of compensation for delayed refund.

Analysis:
1. Appeal against CIT(A) Order:
The appeal before the Appellate Tribunal ITAT Ahmedabad arose from the order of the CIT(A)-XI, Ahmedabad, dated 01-11-2013, in proceedings under section 154 of the Income Tax Act, 1961. The assessee contested that the CIT(A) erred in points of law and facts in rejecting the claim for compensation regarding a delayed refund of ?37,360.

2. Non-Granting of Compensation for Delayed Refund:
The primary issue revolved around the non-granting of additional compensation of ?37,360 on interest receivable under section 244A of the Income Tax Act for A.Y. 2005-06. The assessing officer had initially granted a refund to the assessee, but the CIT(A) dismissed the appeal based on the decision of the Hon'ble Supreme Court in the case of CIT vs. Gujarat Flouro Chemicals, which overruled the earlier decision in the case of Sandvik Asia 280 ITR 643.

3. Decision and Rationale:
The CIT(A) based his decision on the premise that the delay in granting interest under section 244A was not inordinate and did not cause irreparable damage to the appellant. Citing the Supreme Court's ruling in the Gujarat Flouro Chemicals case, it was concluded that section 214 of the Income Tax Act does not provide for compensation by the revenue, leading to the dismissal of the appeal by the Appellate Tribunal.

4. Appellate Tribunal's Verdict:
After considering the contentions and the Supreme Court's decision in the Gujarat Flouro Chemicals case, the Appellate Tribunal upheld the CIT(A)'s decision. The Tribunal found no grounds to interfere as the Supreme Court had clarified that no compensation was mandated under section 214 of the Act. Consequently, the appeal of the assessee was dismissed, affirming the CIT(A)'s order.

In conclusion, the Appellate Tribunal ITAT Ahmedabad upheld the CIT(A)'s decision regarding the non-granting of compensation for a delayed refund, based on the Supreme Court's ruling in the Gujarat Flouro Chemicals case, which clarified the absence of a provision for compensation under section 214 of the Income Tax Act.