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TMI Blog2017 (8) TMI 527X X X X Extracts X X X X X X X X Extracts X X X X ..... filed cross-appeals for the above-mentioned assessment year. Assessee, a public limited company, engaged in the business of manufacture and sale of steel filed his return of income on 10/12/1985, declaring total income of ₹ 14.85 crores. The AO completed the assessment, u/s.143(3) of the Act, on 28/03/1988. 2. Vide its application dated 01/09/2016, the assessee has requested for admission of additional grounds. In its application it was stated that these grounds involved pure question of law, that same did not require the bringing on record or establishment of any new facts. During the course of hearing before us, the Authorised Representative(AR)stated that both the additional grounds were pure question of law. The Departmental Representative(DR) left the issue to the discretion of the Bench. After going through the additional grounds, we find that same do not require establishing of new facts. Therefore, we admit additional grounds raised by the assessee. 3. Effective ground of appeal is about withdrawal of interest, u/s.244 of the Act, amounting to ₹ 23.91 crores, for the year under consideration. In this case assessment order, u/s.143 (3) was completed on 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect matter of any doubt, that the order passed by the AO was not without jurisdiction to rectify a mistake apparent from the record. Finally, he rejected the plea of the assessee that order was bad in law. He further observed that the basic dispute was regarding excess interest granted by the AO u/s.244 and 214 of the Act. He referred to the case of HEG Ltd. (324/331) of the Hon'ble Supreme Court and held that the decision squarely applied to the facts of the case, that in that matter dispute was about interest not granted in respect of the amount of TDS (of ₹ 45.73 lakhs), that refund was granted after a period of 57 months, that Hon ble Court had decided that there could be no claim of grant of compound interest or (interest on interest ) u/s.244A or 244 of the Act, that the AO had calculated excess interest and had withdrawn it, that the facts and figures were not available in the chart prepared by AO, that the correctness of computation made by the AO, could not be commented upon, that the assessee had highlighted certain discrepancies in its submissions, that same were to be verified from the records. He directed the AO to follow the decision of the Hon ble Apex Cour ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9, dtd.22/7/2016). The DR supported the order of the FAA. 6. We have heard the rival submissions and perused the material available on record. The basic issue to be decided is as to whether the AO has rightly withdrawn the interest by his order, dated 28/3/2013. The AY. under consideration is 1985-86, therefore, we have to consider the provisions of the Act prevalent at that time. We find that in the case of Cibatul Ltd. (supra), the matter has been decided as under :- 2. For the assessment was year 1976-77, the Income-tax Officer, by an order dated October 16, 1976, passed under section 143(3) of the Income-tax Act, 1961 (hereinafter referred to as the Act ) , computed the total income of the petitioner at ₹ 92,54,730 and tax thereon was assessed at ₹ 53,44,670. The petitioner had paid ₹ 67,77,554 as advance tax and tax deducted at source was ₹ 909. Therefore, the sum refundable was worked out at ₹ 14,33,856. Earlier, by an order dated May 29, 1976, passed under section 141A of the Act, the Income-tax Officer had actually refunded ₹ 18,97,404. As the amount actually refunded was more, the Income-tax Officer raised a demand for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in pursuance of an order of assessment was not in excess of the amount which the assessee was liable to pay under the Act or that excess paid by him was less then what was determined earlier. As the amount of interest payable under section 244(1A) is not made refundable, the Assessing Officer does not have any power to withdraw the same. Therefore, the order passed by the Inspecting Assistant Commissioner and the demand notice issued by him in this case are without any authority of law and illegal. XXXXX 9. What is submitted by learned counsel for the assessee is that section 244(1A) deals with a situation where, as a result of an assessment order, the assessee is required to pay tax, which is subsequently found in any appeal or other proceeding under the Act to be in excess of the amount which the assessee is liable to pay as tax under the Act. In such as situation, the Central Government is required to pay to such assessee interest on the amount so found to be in excess. The interest becomes payable from the date on which such amount was paid to the date on which the refund is granted. We are not referring to the proviso to section 244(1A), as that is not necessary fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that, under section 244(1A), the Government is required to pay interest to the assessee even though further appeal or proceeding is contemplated or taken by the Department. If the Legislature had a final determination of appeal or proceeding in mind, it would have expressed itself in a manner which would have brought out its intention clearly. The Legislature has made the Central Government liable to pay interest on the amount found to be in excess as a result of an order passed in appeal or other proceedings even where further appeal or proceedings could be resorted to. If it had intended otherwise, it would have certainly made a provision for stay or postponement of such liability during pendency of further appeal or other proceeding. Therefore, the contention raised by learned counsel for the Revenue in this behalf cannot be accepted. 12. It is also difficult to appreciate how the interest paid under section 244(1A) would become refundable under section 143 as it stood at the relevant time. 13. Even under section 156 of the Act, the interest paid under section 244(1A) cannot be ordered to be refunded. That section provides that when any tax, interest, penalty, fine ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under :- 4. The brief facts relating to the issue are that the assessee became entitled to higher refund than originally granted to it. The assessing officer, while computing the interest payable on the enhanced amount of refund, reduced the tax portion as well as interest element from the total refund due and accordingly computed interest on the remaining amount. According to the assessee, the interest element should not be deducted and only the tax portion of the refund alone should be deducted and accordingly the interest should be granted on the enhanced refund. Though the AO originally accepted the submissions of the assessee, but by passing the impugned rectification orders, he reduced the amount of interest already granted u/s 244A of the Act. 5. The learned AR submitted that the Assessing Officer had originally granted refund to the assessee along with interest. Subsequent to the passing of order by Income Tax Appellate Tribunal, the refund due to the assessee got enhanced. While, calculating the interest payable on the enhanced refund, the Assessing Officer deducted the interest already granted to the assessee from the tax portion of the refund due and according ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ndered in the case of CIT Vs Tata Power Co. Ltd. in ITA No.1560/M/2013. Accordingly, the learned AR submitted that the orders passed by learned CIT(A) on merits have to be upheld, since they are in accordance with the decision rendered by the Hon'ble Jurisdictional Bombay High Court. 8. On the contrary the learned DR placed strongly reliance on the assessment order. 9. We have heard the parties and perused the record. We find merit in the submission of the assessee that the issue sought to be rectified u/s. 154 of the Act is a debatable issue, since an identical issue has been decided in favour of the assessee by the co-ordinate bench of Tribunal Tata Power Co. Ltd. (Supra). The very fact that an identical issue has travelled up to the level of Tribunal would show that the said issue is a debatable one. The Hon'ble Supreme Court in the case of T.S.Balram ITO Vs. Volkar Bros.(supra) has held that the decision taken on a debatable point of law shall not constitute a mistake apparent from record. Accordingly we are of the view that the impugned rectification orders are liable to be I.T.A. No.5388- 5396/Mum/2014 I.T.A. 5373-5377/Mum/2014 A.Y. 1985-86, 1986-87, 198 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in case of Tata Power Co. Ltd. (supra). Therefore, respectfully following the decision of the co-ordinate bench of the Tribunal in assessee's own case as well as the decision of the Hon'ble Jurisdictional High Court in Tata Power Co. Ltd. (supra), we direct the Assessing Officer to re-calculate interest of refund under section 244A, after reducing the tax element only. As far as the decision of the Hon'ble Supreme Court in Sandvik Asia Ltd. (supra), in our considered opinion, it has no relevance to the present case as the interest claimed by the assessee is a statutory interest. Therefore, grounds no.1 and 2 raised are allowed. From the above it is clear that interest u/s. 244A could not be withdrawn in absence of clear cut provision in the section for the year under consideration. It is also a fact that the proceedings to withdraw the interest were initiated u/s. 244(1A) whereas vide rectification order dated 28/03/2014 the Assessing Officer had withdrawn the interest invoking provision of section 244(3) of the Act. Thus in our opinion the appeal of the assessee has to be allowed on Jurisdictional issue as well as on merits. Effective Ground of appeal raise ..... X X X X Extracts X X X X X X X X Extracts X X X X
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