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2017 (11) TMI 988 - AT - Income TaxGrant of interest / compensation on the delayed payment of interest u/s 244A - Held that - There is an inordinate delay of more than 10 years in payment of balance amount to the assessee, hence, in the light of the decision of the Hon'ble Supreme Court in the case of CIT Vs. Gujarat Flluro Chemicals 2013 (10) TMI 117 - SUPREME COURT the assessee is otherwise entitled for the compensation from the Revenue for inordinate delay in the payment of interest. We accordingly direct the Revenue to pay compensation in the shape of simple interest on the amount due at the rate at which the assessee otherwise would have been entitled to, on the delayed payment of excess tax paid. In view of this, these appeals of the assessee are treated as allowed.
Issues Involved:
1. Condonation of delay in filing appeals. 2. Entitlement to interest/compensation on delayed payment of interest under Section 244A of the Income-tax Act, 1961. Detailed Analysis: 1. Condonation of Delay in Filing Appeals: The appeals were barred by limitation for a period of 18 to 24 days. Separate applications for condonation of delay were filed. Considering the submissions made and the shortness of the delay period, the delay in filing the appeals was condoned. 2. Entitlement to Interest/Compensation on Delayed Payment of Interest under Section 244A: The core issue was whether the assessee was entitled to interest/compensation on the delayed payment of interest under Section 244A of the Income-tax Act, 1961. The assessee, engaged in the business of carriage of goods, was issued refunds due to excess tax deducted at source, but interest under Section 244A was not paid. The assessee's application under Sections 154/155 for interest was denied by the Assessing Officer on the grounds that the delay was attributable to the assessee. The CIT(A) initially directed the AO to refer the matter to the Commissioner, who subsequently directed the AO to allow interest to the assessee. Upon further appeal, the CIT(A) rejected the assessee's claim, relying on the Supreme Court's decision in 'CIT Vs. Gujarat Fluoro Chemicals' (2014) 1 SCC 126 (SC), which held that only the interest provided under the statute could be claimed, not interest on such statutory interest. The CIT(A) noted that the Supreme Court in 'Sandvik Asia Ltd. Vs. CIT' (2006) 150 Taxman 591 (SC) did not lay down the correct law and that the matter was referred to a larger Bench. In the appeal before the ITAT, it was noted that the Supreme Court in 'CIT Vs. Gujarat Fluoro Chemicals' clarified that compensation could be awarded for inordinate delays, not interest on interest. The ITAT referred to 'CIT Vs. H.E.G. Ltd' (2010) 189 Taxman 335 (SC), which held that interest on refunds becomes an integral part of the amount due and payable, thus not constituting interest on interest. The ITAT agreed with the assessee's argument that the term "any amount" in Section 244A includes both the principal and the interest component. It was emphasized that the interest component, when unpaid, becomes part of the amount due, upon which interest under Section 244A is payable. The ITAT concluded that there was an inordinate delay of more than 10 years in the payment of the balance amount to the assessee, thus entitling the assessee to compensation for the delay. Judgment: The ITAT directed the Revenue to pay compensation in the form of simple interest on the amount due, at the rate applicable for delayed payment of excess tax paid. Consequently, all the appeals preferred by the assessee were allowed.
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