9911796707
TMI Blog2019 (11) TMI 1001X X X X Extracts X X X X X X X X Extracts X X X X ..... present case, admittedly, the claim for refund is crystallized only after decision of the Tribunal and the application is made by the assessee to the CBDT for condonation of delay. Under these undisputed facts, we find no infirmity in to the order of the Ld. CIT(A) rejecting the claim of the assessee. However, before parting, we wish to clarify that from the facts of the present case, it cannot be inferred that delay was solely attributable to the assessee. In our view, the revenue authority should settle the claim of the refund expeditiously to avoid unnecessary litigation and harassment to the tax payer. The grounds raised in this appeal are dismissed. - ITA Nos.696 to 698/Ind/2016 - - - Dated:- 19-11-2019 - Shri Kul Bharat, Judicial Member And Shri Manish Borad, Accountant Member For the Appellant : Shri S.C. Bagadiya, Sr. Adv. For the Revenue : Shri Rajeeb Jain, Sr. DR ORDER PER KUL BHARAT, J.M: This bunch of three appeals by the assessee pertaining to assessment years 1973-74, 1974-75 1975-76 against the order of Commissioner of Income Tax(Appeals)-I, Indore dated 18/0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the assessee s vide application dated 13.08.2008 made a request for giving effect to the orders of the Ld. CIT(A) and the Tribunal. The Assessing Officer vide order dated 27.02.2008 passed an order u/s 154 of the Act. 3. Against this the assessee has preferred an appeal before the Ld. CIT(A) who after considering the submissions dismissed the appeal by observing as under: The assessee is claiming interest on interest on two grounds namely there was inordinate delay by the department in issuing the refunds to the assessee and also because the ratio given by Hon'ble Supreme Court in Gujarat Fluoro vs. CIT was not applicable as in this judgment Hon'ble Hon'ble Supreme Court did not consider earlier three judge judgment in the case of CIT vs. NarendraDoshi. Assessee s first claim is there was inordinate delay in this case by the department. By assessee s own admission out of provision for gratuity of ₹ 34.34 lac, ₹ 10.56 was not paid by the assessee before 31.03.1977. As the assessee did not pay the amount of provisions, the AO rightly invoked provisions of section 40A(7)b). Since the provision made was o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n interest in I.T.A.T. s order also. The order u/s 154 was passed on 20.8.2007 giving interest on the principal as per the provisions of section 244A. As per the grounds of appeal before CIT(A) the only ground of appeal was the AO erred in not allowing interest on refund as a result of CBDT order u/s 119(2)(c). The assessee had not asked for interest on interest in the grounds of appeal before Ld. CIT(A). It was because of this reason the CIT(A) asked to the AO to give interest as per law. Section 244A provides for interest on principal. There is no provision of interest on interest in Income Tax Act. So it can be said that there was no delay on part of the department till 2007 when interest on refund u/s 244A was given, rather the delay was always on the part of the assessee first in depositing the provision for gratuity then in seeking condonation of delay from CBDT and finally in filing appeal before CIT(A). In view of this the first argument of the assessee fails. Now coming to Hon'ble Supreme Court decision in the NarendraDoshi case, in this case the issue before the court was interest payable u/s214(1) of the Act. S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sic facts, submission of the appellant on these facts and the relevant case laws are submitted in this synopsis. 2. For the Asst. Year 1973-74 the provisions of Income Tax Act relating to gratuity liability was as per section 40A (7) which required: i) making of provisions for gratuity liability ii) creating an irrevocable trust fund iii) payment of 50% of gratuity provision amount before 31.3.76 and iv) payment of balance 50% amount before 31.3.1977. 3. The appellant made a provision of ₹ 31.34 lacs towards gratuity liability in this year, an irrevocable trust was created on 18.12.1975, application to CIT was made on 26.12.1975, an amount of ₹ 17.52 lacs was also deposited by 31.3.1976. However, in the succeeding year the appellant could deposit only an amount of ₹ 3.26 lacs before March 1977. The balance amount could not be deposited due to reasons beyond control of the appellant, namely that due to order of the State Govt. the bank refused to release the amount required for such deposit although money was available in the account of the appellant. Consequently, after ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... port of its claim for interest on interest as compensation. 8. Since the A.O. refused to grant interest on refund, the appellant was required to file appeals before CIT (A). Due to a technical oversight, the appeals were not signed by the competent person but were signed by another officer of the company. The appellant applied for withdrawal of these appeals and consecutively filed duly signed appeals also. CIT (A) by order dt. 1.12.2004 allowed withdrawal of this appeal no. 285. Copy of this order is enclosed and marked as Annexure 5. 9. On the next day i.e. 2.12.2004 the duly signed appeals which had already been filed along with application for condonation of delay were allowed by CIT (A) holding that the appellant was entitled to interest on refund as per law. A copy of this order is marked Annexure 6. 10. The Revenue did not accept this order and challenged it before the ITAT. By order dt. 6.10.2006 ITAT dismissed the departmental appeal. A copy of this order is marked Annexure 7. The mater was not taken in further appeal by the Department and the order for grant of interest according to law became final. In other words ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thereby entitling the appellant to interest on interest. ii) That, the claim for interest on interest was tenable in law in the light of 3 Judges judgment in the case of CIT Vs. Narendra Doshi and subsequent judgment of 2 Judges in the case of Sandvik Asia. It was also submitted that subsequently, the case of Gujrat Fluro V/s CIT failed to take into account the earlier judgment in the case of CIT Vs. Narendra Doshi and it did not even overrule the judgment in Sandvik Asia but only sought to explain it. Therefore the judgment in Gujarat Fluro had to be read subject to 2 earlier Supreme Court judgments. III. Findings of CIT (A): a) That, the Assessing Officer did not make any mistake in disallowing the whole gratuity claim of ₹ 31.34 lacsinspite of deposit of ₹ 20,79,031/-. Since the ITA order granting relief to the extent of actual payment was only passed in 1992, therefore, there was no delay on the part of the department. b) That, CBDT had condoned delay u/s 119(2)(c ) on 16.7.1999, therefore there was no delay on the part of assessee upto September 1999. c) That, the app ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther there is any delay on the part of the appellant in this matter: As per CIT (A) there was delay on the part of appellant. Firstly, in depositing the provision amount of gratuity. In this connection, it is submitted that as per law 50% of gratuity amount was required to be deposited by 31.3.76 and the same has been duly deposited. In the second year, the balance 50% amount could not be deposited in full but only partly, due to refusal of bank to release the amount inspite of there being funds in the account of the appellant. Thus, this delay could not be said to be a delay on the part of the appellant. 3. The second delay mentioned in the order of CIT (A) is in seeking condonation of delay from CBDT. In this connection it is submitted that it was only on 11.8.1992 by Annexure 2 that Tribunal gave relief to the extent of payment namely ₹ 20,79,031/- that the appellant could move CBDT for condonation of delay in depositing the balance amount, thereafter the application remained pending before CBDT due to procedural steps. Invariably CBDT sought response of department to this application which was als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nexure 3 was only issued 2 years after the A.O. had passed order Annexure 4 on 22.6 .2000. Although, the appellant was entitled to interest according to law on the amount of refund, the A.O.by order Annexure 4 refused to grant interest on refund. This mistake was required to be got corrected by filing appeal before CIT (A) which was allowed on 2.12.2004. Instead of admitting the mistake and complying with the order, the Revenue chose to challenge the order before Tribunal which dismissed the departmental appeal. This judgment of Tribunal was accepted by the department and was not challenged before the High Court. Thus, the department wrongly refused claim of interest under order Annexure 4 and wrongly contested the matter not only before CIT (A) but even before ITAT thereby causing further delay. Even after order of CIT (A) and ITAT the appellant was required to make various approaches to the department as per Annexure s 8,9 and 10 . Since 2007, the claim of the appellant for interest on interest is pending before the department i.e., for more than 11 years by this time. Form the above, it is clear that there has been inordin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ords the grant of interest on interest in Sandvik Asia was in the nature of compensation. Supreme Court in the case of Gujarat Fluro (copy enclosed marked asAnnexure 17) did not refer to CIT Vs Naraendra Doshi and did not over rule Sandvik Asia s case, but merely expressed that Supreme Court had granted compensation in that case looking to the circumstances of the case. The law is well settled that if there is a 3-Judges judgment of the Supreme Court, it cannot be overruled or passed by any subsequent Bench of 2 or 3 Judges. In the event of a conflict between two judgments of 3-Judges Benches, the earlier one has to be followed. A passing reference was made to section 244 (A) but the case was not decided on that basis. Thus, in Gujarat Fluro case Supreme Court has not held that interest on interest cannot be granted as compensation but inferentially held that it could be granted only as compensation. From the above, it is clear that the order of CIT (A) is erroneous on facts as well as law. 6. Ld. Departmental Representative (Ld. DR) opposed the submissions and supported the orders of the authorities below. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pon to answer read thus: Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in upholding the order of the Deputy Commissioner of Income-tax (Appeals), Indore, directing to allow interest on interest, when the law points for grant of simple interest only? It answered it in the affirmative and in favour of the assessee relying upon the judgements which laid down that interest was payable on the excess amount paid towards income-tax. The Tribunal, whose decision the High Court affirmed, had relied upon the decision of the Gujarat High Court in the case of D.J. Works Vs. Deputy CIT (1992) 195 ITR 227, which had been followed by the same High Court in Chimanlal S. Patel V. CIT (1994) 210 ITR 419. These decisions hold that the Revenue is liable to pay interest on the amount of interest which it should have paid to the assessee but has unjustifiably failed to do. The Revenue has not challenged the correctness of the two decisions of the Gujarat High Court. They must, therefore, be bound by the principle laid down therein. Following that principle, t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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