2020 (8) TMI 823 - HC - Income Tax

Interest u/s 244-A - delayed payment of excess tax paid - Monetary limit to maintain appeal - Whether ITAT was right in law in directing the department 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 without appreciating the fact that assessee was duly paid interest u/s 244A on delayed refund upto the date of issue of refund? - HELD THAT - As decided in M/S. HEG. LIMITED 2009 (12) TMI 35 - SUPREME COURT the interest on the delayed refund becomes part of the principle amount and the delayed interest includes the interest for not refunding the principle amount. Accordingly, it also includes the interest on the delayed refund. Revenue Authorities have been directed vide Notification dated 08.08.2019 to file appeals in income tax cases before the High Court where the monetary limit is less than ₹ 1.00 crore and where it is above the said amount, that shall not be a subject matter of appeal before the High Court. But in the Notification dated 11th July, 2018, there is an exception to the effect that in certain circumstances, an appeal should be contested on merits notwithstanding the fact that the tax effect entailed is less than ₹ 1.00 crore. Monetary limit to prefer an appeal before High Court is less than ₹ 1.00 crore, but if there is a valid question, where an Order, Notification, Instruction or Circular is to be challenged as illegal or ultra vires, an appeal could be filed before the High Court. In the present case, no such exception is available to the appellant. Appeal dismissed.

Summary

Issues:
1. Interpretation of Section 244-A of the Income Tax Act regarding interest on delayed refunds.
2. Validity of the direction issued by the ITAT to pay compensation in the form of simple interest.
3. Applicability of the judgment in Commissioner of Income Tax vs. HEG Ltd. to the present case.
4. Jurisdiction of the High Court in appeals based on monetary limits.
5. Relevance of exceptions for filing appeals before the High Court.
6. Comparison with a similar case adjudicated by the court.

Issue 1:
The appellant contested the order of the Assessing Officer regarding the payment of interest under Section 244-A of the Income Tax Act for delayed refunds. The appellant argued that interest was not paid as claimed due to delays attributable to the assessee. The CIT(A) and the CIT upheld the decision, leading to an appeal before the ITAT, which directed the revenue to pay compensation in the form of simple interest. The appellant challenged this direction, citing the absence of a provision for such compensation under the Act.

Issue 2:
The ITAT's direction to pay compensation in the shape of simple interest was challenged by the appellant, contending that no provision exists in the Income Tax Act for such payments. The appellant argued that the ITAT erred in directing the department to pay compensation without appreciating that the assessee had already been paid interest under Section 244-A on the delayed refund until the date of issue.

Issue 3:
The court referred to a judgment by the Supreme Court in Commissioner of Income Tax vs. HEG Ltd., which clarified that interest on delayed refunds becomes part of the principal amount. The court emphasized that the delayed interest includes the interest for not refunding the principal amount, thereby supporting the assessee's entitlement to interest for the delay.

Issue 4:
The court examined the jurisdiction of the High Court in appeals based on monetary limits, noting that exceptions exist for challenging orders, notifications, instructions, or circulars deemed illegal or ultra vires. In this case, no such exception applied, and the court dismissed the appeal based on the lack of a valid question challenging the legality of the order.

Issue 5:
The court highlighted the relevance of exceptions for filing appeals before the High Court, emphasizing that challenges to illegal or ultra vires orders could warrant an appeal despite monetary limits. The absence of such exceptions in the present case led to the dismissal of the appeal.

Issue 6:
The court referenced a similar case, Pr. Commissioner of Income Tax vs. M/s Ambuja Darla Kashlog Mangoo Transport Co-operative Society, decided previously, indicating that the court was not persuaded to take a different view. The court dismissed the appeal, reserving liberty for the appellant to seek further remedies.

This comprehensive analysis of the judgment covers the interpretation of Section 244-A, validity of the ITAT's direction, application of relevant judgments, jurisdiction of the High Court, exceptions for filing appeals, and comparison with a similar case.