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TMI Blog2013 (4) TMI 980X X X X Extracts X X X X X X X X Extracts X X X X ..... ated 16th July, 2004 without appreciating that the issue did not arise out of the said CIT (A)'s order. b. The CIT (A) erred in confirming the action of AO in withdrawing BPI of ₹ 16,48,83,258 on securities purchased prior to previous year relevant to AY 2000-01 and sold in the previous year relevant to AY 2000-01 when the allowance was on the basis of the stand of the Department in this regard. c. The CIT (A) ought to have directed AO to allow BPI of ₹ 16,48,83,258 which pertained to securities purchased in the previous years relevant to the following AY when the BPI paid on the purchase of securities was disallowed by the appellants and claimed as a deduction in the years in which such securities were sold, in accordance with the Department's stand in the matter. AY Amount of BPI (Rs.) 1993-94 1,72,603 1997-98 7,65,375 1998-99 2,69,83,521 1999-00 13,69,61,759 16,48,83,258 ========== 3. The CIT (A) ought to have held that the appellants had suffered loss of revenue on account of interest under section 244A on the refund that was rightly due as well as potential income it would have earned on interest if it would have received it on time". 2. Grou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded back and claimed as a deduction in the years in which such securities were sold. This being an accepted position, the matter was not in dispute or agitated in appeal. Therefore, ₹ 16,48,83,258 pertaining to securities purchased prior to previous year relevant to AY 2000-01 has been disalowed in the resepctive years of purchase and claimed in previous year relevant to AY 2000-01 being the year of sale. 3.3 The learned CIT (A) dismissed the contentions by stating as under: "3.2 I have considered the facts and perused thematerial on record. I find that the claim of broken period of interest was allowed by the CIT (A) in the appellant is own case for this year vide appeal order No.CIT (A)(XXXI/JtDIT3/IT-97/03-04/04-05 dated 16.7.2004 holding that broken period interest of ₹ 30,36,72,909 paid on securities purchases during the year is allowable in the year of purchase. Accordingly the disallowance mae by AO was allowed as deduction. This decision was given after ocnsidering te decision of the Hon'ble Bombay High Court in the a 1 own case for AY 1988-89 and also in the case of Citi Bank 264 ITR 18 (Bom.), AO however, in the order giving appeal effect to CIT (A) has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as on 31st March, 2000 which is entirely different from the claim of ₹ 16,48,83,258 on which the claim was not made in earlier years as stated above. Since those securities on which BPI was not claimed in the interim years were sold, these amounts of BPI becomes part of cost of acquisition of the securities sold during the year and accordingly, AO has examined and allowed the amount originally, therefore the rectification proceedings are not correct. 4.2 On clarification about the amount mentioned by AO under section 154 order that the reconciliation was made only to the extent of ₹ 2,76,06,599, the learned Counsel referred to the statements submitted to AO vide letter dated 23.01.2008 and referred to the column pertains to AY 2000-01, 2001-02. He submitted that the amounts pertaining to AY 2000-01 are correctly stated at ₹ 16,48,83,258 whereas AO has taken the amounts from AY 2001-02 column which are as under: 1996-97 - ₹ 1,17,84,459 1997-98 - ₹ 17,46,875 1998-99 - ₹ 24,38,333 1999-00 - ₹ 1,16,36,932 Total - ₹ 2,76,06,599 =========== 4.3 It was his submission that even though assessee has given complete chart from AY 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... old during the year. It was rightly allowed by AO originally in the year under section 143(3). There is no need to withdraw the above amount and accordingly the contentions of assessee are allowed. Ground No.2 is allowed. 5. Ground No.3 pertains to the claim of interest under section 244A on the refund that was withheld by AO. Assessee submitted that due to withholding of refund and non granting of timely interest on the refunds, they have suffered the loss of interest/ potential income that they would have earned on the funds that were not made available on time. A refund of ₹ 20,87,41,336 (including interest under section 244A of ₹ 10,38,61,015) determined vide order under section 154 became due to assessee on 30th June, 2008 but was granted/adjusted on 28th August, 2008. If these funds were at assessee's disposal on 30th June, 2008, they would have earned income on ₹ 20,87,41,336 plus interest from that date till 28th August, 2008 (being date of grant of refund cheque of ₹ 8,08,37,519 (after adjusting ₹ 11,75,17,715 against the demand for the AY 2004-05 and deducting tax at source of ₹ 1,03,86,102). 5.1 Before the CIT (A), theassessee relied ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion and not interest on interest as per provisions of IncomeTax Act, 1961. The Ahmedabad Tribunal in case of Gujarat Sate fertilizers & Chemicals Ltd v DCIT (ITA 2348-2349/Ahd/2004)(AY1995-96) dated 31-07-2006 has discussed the decision of Sandvik Asia Ltd. vs. CIT (2006) 280 ITR 643 (SC) and dismissed the assessee s claim of interest on interest. The Income-tax Authorities can pay interest on interest if the statute provides for the same and not otherwise. The CIT (A) as an appellate authority, it is not a Court of equity. It has therefore, to act as per provisions of Income- Tax Act, 1961 and if a benefit or relief is not available to an assessee under the provisions of the Act it cannot be granted on the ground of equity or the general provisions of law as can be granted by High Court or the Supreme Court in their writ jurisdiction. The Courts have inherent power to grant compensation for wrongful detention of the money. However the Income- Tax Act, 1961 has no provisions to grant such compensation. Therefore I am of the view that the appellant is not entitled to interest on interest as it has not been provided under section 244A of the Act. Reliance is placed on the decision i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n only under the general principle of law on account of equity for wrongfully detention of fund of the particular appellant for more than 12-17 years and not interest on interest under the provisions of IncomeTax Act, 1961. The Hon'ble' Supreme Court has not held that section 244A provide such provision of interest on interest. If theses, facts had been brought to their notice their decision would have been otherwise. Therefore, with due respect to above facts and following the Third Member decision of the Hon'ble' Ahmadabad's Tribunal and the Hon'ble High Court, I hold that the appellant is not entitled interest on interest under section 244A of the Act as there are no provisions in Income- Tax Act, 1961 by which Income-tax Authorities can grant such compensation. In the light of these facts, this ground of appeal is dismissed" 5.3 Referring to the orders of AO and the CIT (A) it was the submission of the learned Counsel that assessee was entitled for interest on interest for the broken part period as per the orders of the Hon'ble Supreme Court. It was further submitted that in assessee's own case in ITA Nos. 3789, 3790 and 4182/Mum/2010 dated 27th April, 2012 ..... 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