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TMI Blog2019 (11) TMI 1001X X X X Extracts X X X X X X X X Extracts X X X X ..... d or amend the aforesaid grounds of appeal at any time on or before the date of hearing of the appeal." Further, the assessee submitted on 19.11.2019 "1. That the ground no.1 in the Memo of appeal originally reads as under: "that the Ld. CIT(A) erred in dismissing the assessee's claim for interest for which assessee was eligible on account of gross and unreasonable delay in granting the refund" 2. That an application was made on 21.03.2017 to amend the aforesaid ground No.1 reads as under: " That the Ld. CIT(A) erred in dismissing the assessee's claim for interest on interest and/or to pay compensation for delayed payment for which assessee was eligible on account of gross and unreasonable delay in granting the refund." 3. That consequent to insertion of section (1A) in section 244(A) appellant desires to further amend the said ground No.1 as under: "That the Ld. CIT(A) erred in dismissing the assessee's claim for interest on interest and/or Additional interest for which the assessee is eligible as per sub-section (1A) of Section 244(A) and/or to pay compensation for delayed payment for which assessee is eligible on account of gross and unreasonable delay in granting t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en by the department in 2000. The AO did not allow interest u/s 244A. the AO passed the order on 1.7.2000 but the assessee filed an appeal against the order on 13.1.2003 i.e after a delay of two year and five months, obviously it was again a delay on the part of the assessee. The assessee filed an appeal before the CIT(A) seeking interest u/s 244A. There was only one ground of appeal before the CIT(A) that the AO erred in not granting interest on refund. CIT(A) passed order directing the AO to allow interest as per the law. CIT(A) did not direct the AO to give interest on interest. The department was of the view that the appeal before Ld. CIT(A) against order giving effect to CBDT's order was not maintainable. So department filed appeal before I.T.A.T. against the order of CIT(A) directing the AO to grant interest as per the law. The grounds of appeal field by the department before I.T.A.T. was as under: i) In entertaining the appeal as the issue involved was of non-appealable nature. ii) The appellant craves leave to add or deduct or otherwise amend the above ground of appeal. I.T.A.T. vide its order dated 06.10.2006 dismissed department's appeal. In the order I.T.A.T. h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ich provides for interest on refunds under various contingencies. We clarity that it is only that interest provided for under the statute which may be claimed by an assessee from the Revenue and no other interest on such statutory interest." In view of CIT vs. Gujarat Fluro Ltd. of the Apex Court it is held that no interest is payable on interest determined u/s 244A of the I.T. Act 1961." 4. Against this the assessee is in present appeal. 5. The only effective ground is against rejecting the claim of the assessee for granting interest on interest on the delayed refund. Ld. counsel for the assessee reiterated the submissions as made in the brief synopsis. For the sake of clarity, the brief synopsis of the assessee is reproduced hereunder: The 3 appeals namely appeal nos. 696, 697 & 698 for the Asst. Years: 1973-74, 1974-75 & 1975-76 respectively raised common questions and therefore documents relating to the Ist Asst. year i.e., 1973-74 are being annexed for ready reference, while documents for the other 2 years are also available on record and may kindly be referred to, if required. Likewise, various calculation sheets are not being filed but only basic facts, submission of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fect to this order on 22.6.2000. Copy of this order is enclosed and marked as Annexure 4. Although the AO had decided refund of principal amount by order dt. 22.6.2000 however even this refund was only issued on 27.3.2002 i.e., after nearly 2 years. A perusal of this order dt. 22.6.2000 at internal page no. 3 would show that the appellant had already been made to pay an amount of Rs. 6 lacs towards demand for the Asst. year 1973-74. While allowing refund of the amount, the A.O.held that the appellant was not entitled to any interest on this refund. The A.O. also referred to the judgment reported in 188 ITR 137 that 'interest ordinarily is as reckonable compensation when there is retention of the amount due, particularly for an unduly long period'. A.O. also referred to an English judgment that : 'interest is damages due to delay in payment of money'. The appellant also relies on these observations in support 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 an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ithdraw its common appeal by order dt. 29.3.2010. Soon thereafter 3 separate appeals were filed on 21.6.2010 which were ultimately decided by the impugned order of CIT (A) dt.18.3.2016 which is under challenge in the instant appeal. Copy of order of CIT (A) impugned in the appeal is enclosed and marked as Annexure 13. 16. In the appeals before the CIT (A) out of which the recent appeal to the Tribunal arises, the only question was with regard to payment of interest on interest in any form to the appellant. II. Submissions of the appellant before CIT (Appeals): i) That, there was inordinate delay in issuing refund to the appellant, 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he first question that arises is whether there is any delay in making the refund. The appellant has given breakup of delay in its letter dt.20.8.07 to the CIT along with the working out chart, a copy of which is already annexed as Annexure 10. A perusal of this chart clearly brings out the delay in making the refund to the appellant. 2. Whether 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 namel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the initial stage. The appellant had been claiming interest on refund according to law. 6. The refund due to the appellant on account of CBDT order Annexure 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 depa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me 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. Ld. D.R. placed reliance on the judgement of Hon'ble Supreme Court of India in the case of CIT Vs. Gujarat Fluoro Chemicals (2014) 42 taxmann.com 1 (SC). 7. In ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest 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, the question has as we find, been rightly answered in the affirmative and in favour of the assessee. The civil appeal is dismissed. No order as to costs." 10. From the above, it is clear that Hon'ble Apex Court did not rule on the correctness of the decision directing the payment of interest on interest o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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