IN HIGH COURT OF HIMACHAL PRADESH, SHIMLA. ITA No. 3 of 2020 . .P Decided on: 27.08.2020 Pr. Commissioner of Income Tax ...Petitioner H Versus of M/s Solan District Truck Operators Transport Co-op. Society Respondent Coram: Hon ble Mr. Justice Tarlok Singh Chauhan, Judge. ou Hon ble Ms. Justice Jyotsna Rewal Dua, Judge. Whether approved for reporting? 1 C For Petitioner : Mr. Vinay Kuthiala, Sr. Advocate with Mr. Diwan Negi, Advocate. (Through Video Conferencing) h Tarlok Singh Chauhan, Judge ig (Oral) This appeal is directed by appellant H against order dated 7.08.2019, passed in Miscellenous Application No. 10/CHD/2019 in ITA No. 277/CHD/2017, dated 31.10.2017-A.Y. 1996-97 by Income Tax Appellate Tribunal Division Bench, Chandigarh, (for short, ITAT ). ::: Downloaded on - 01/09/2020 10:49:19 :::HCHP 2 2. case of appellant is that respondent Society-assessee filed return of income for assessment . year 1996-97 on 25.6.1997, which was processed under .P Section 143 (1) of Income Tax Act, (for short Act ). further case of appellant is that for assessment H years 1996-97 to 1999-2000, certain refunds arising out of of excess TDS were issued in favour of assessee. However, interest under Section 244-A of Act was not rt paid in respect of some of refunds, while in case of some other refunds, interest was paid for shorter period ou than what was claimed by assessee. It is averred in appeal that interest was refused on ground that C delay in issuing refund was attributable to assessee. Against order of Assessing Officer refusing to grant h interest under Section 244-A of Act, assessee filed ig appeal before CIT(A) Solan. CIT (A), Solan H dismissed appeal on ground that question as to whether any part of delay was attributable to assessee is question to be decided by Chief Commissioner or Commissioner of Income Tax under Section 244-A(2) of Act. Then, matter was referred to Commissioner of Income Tax, Railway Board Building, Mall, Shimla (hereinafter to be referred as CIT ). ::: Downloaded on - 01/09/2020 10:49:19 :::HCHP 3 CIT vide its order dated 24.10.2008, dismissed appeal while exercising its powers under Section 244 of . Act and Assessing Officer was directed to pay interest .P to assessee from July 1997 to February 1999 on refund of RS. 2,85,658/-. Thereafter, Assessing Officer issued H refund of Rs. 1,82,165/- on 31.01.2009. It is further averred of in appeal that subsequently, assessee filed application under Section 154 of Act on 15.02.2010, rt requesting therein to allow interest on delayed interest on refund. Assessing Officer vide its order dated ou 30.06.2011 (Annexure P-2) rejected application of assessee. C 3. Being aggrieved by aforesaid order of Assessing Officer, assessee filed appeal before h Commissioner of Income Tax (Appeals), (hereinafter to be ig referred as CIT(A) , Faridabad, and CIT (A) vide its H order dated 05.10.2016 (Annexure P-3) dismissed appeal of assessee, while relying upon judgment of Hon ble Supreme Court in case titled as Commissioner of Income Tax, Gujrat vs. Gujrat Fluoro Chemicals, reported in (2014) 1 SCC 126. It is further averred that aforesaid order of CIT(A) was again challenged by assessee before ITAT, by way of ITA No. 277 to ::: Downloaded on - 01/09/2020 10:49:19 :::HCHP 4 279/CHD/2017. appeal of assessee was allowed by ITAT vide its order dated 31.10.2017 (Annexure P-4) . directing revenue to pay compensation in shape of .P simple interest on amount due at rate at which assessee otherwise would have been entitled to, on H delayed payment of excess tax paid. of 4. Being aggrieved by aforesaid order, Revenue challenged same by way of Miscellaneous Application rt before ITAT, Chandigarh, which came to be dismissed by ITAT vide its order dated 7.08.2019 (Annexure P-A) ou being misconceived and not maintainable and also on ground that there is no error apparent on record. C Hence, by way of this appeal, appellant/Revenue has approached this Court against aforesaid order dated h 7.08.2019, as aforesaid. ig 5. following substantial questions of law arise H for consideration in this appeal: i. Whether Hon ble ITAT was right in law in directing department to pay compensation in shape of simple interest on amount due at rate at which assessee otherwise would have been entitled to without appreciating fact that assessee was duly paid interest u/s 244A on ::: Downloaded on - 01/09/2020 10:49:19 :::HCHP 5 delayed refund upto date of issue of refund? ii. Whether Hon ble ITAT was right in . .P law in ignoring fact that there is no provision under Income Tax Act for payment of compensation on delayed H refund and interest paid and hence against Statute? of Iii. Whether circumstances of case Hon ble ITAT on Misc. Application filed by Department rt erred in holding that issue cannot ou be decided u/s 254(2) of Act and only remedy is to file appeal before Hon ble High Court? C 6. Learned Senior Counsel for appellant submits that there is no provision under Section 244-A of h Act in respect of payment of interest on delayed ig refund. To substantiate his submission, he has placed H reliance upon judgment dated 18th September, 2013, passed by Hon ble Supreme Court in case titled as Commissioner of Income Tax, Gujarat vs. Gujarat Fluoro Chemicals, reported in (2014) 1 SCC 126, wherein it has been held that in case of inordinate delay in payment of compensation by way of interest, it is only that interest provided for under Statute which ::: Downloaded on - 01/09/2020 10:49:19 :::HCHP 6 may be claimed by assessee from Revenue and no other interest on such statutory interest can be claimed. . He further submits that direction issued by ITAT in .P impugned order is contrary to ratio laid down by Hon ble Supreme Court in aforesaid judgment. He H prays that impugned order passed by ITAT may be of set aside. 7. We have heard learned Counsel for rt appellant and have carefully perused material placed on record. ou 8. As far as submission of learned Senior Counsel for appellant to effect that there is no C provision under Section 244-A of Act in respect of payment of interest on delayed refund is concerned, h Hon ble Supreme Court in judgment cited by learned ig Counsel for respondent in case titled as H Commissioner of income Tax Vs. HEG Ltd, supra, has elaborated words any amount . It is apt to reproduce to reproduce relevant portion of aforesaid judgment herein:- next question which we are required to answer is-what is meaning of words refund of any amount becomes due to assessee in Section 244A? In present ::: Downloaded on - 01/09/2020 10:49:19 :::HCHP 7 case, as stated above, there are two components of tax paid by assessee for which assessee was granted refund, . namely TDS of Rs. 45,73,528 and tax paid .P after original assessment of Rs. 1,71,00,320. Department contends that works H any amount will not include interest which accrued to respondent for not of refunding Rs. 45,73,528 for 57 months. We see no merit in this argument. interest component will partake character of rt amount due under Section 244A. It becomes integral part of Rs. 45,73,528 ou which is not paid for 57 months after said amount became due and payable. As can be seen from facts narrated above, C this is case of short payment by Department and it is in this way that h assessee claims interest under Section 244A ig of Income-tax Act. Therefore, on both aforestated grounds, we are of view H that assessee was entitled to interest for 57 months on Rs. 45,73,528. principal amount of Rs. 45,73,528 has been paid on December 31, 1997 but net of interest which, as stated above partook character of amount due under Section 244 A. ::: Downloaded on - 01/09/2020 10:49:19 :::HCHP 8 9. In view of ratio laid down by Hon ble Supreme Court in judgment supra, interest on . delayed refund becomes part of principle amount and .P delayed interest includes interest for not refunding principle amount. Accordingly, it also includes H interest on delayed refund. of 10. We find that Revenue Authorities have been directed vide Notification dated 08.08.2019 to file appeals rt in income tax cases before High Court where monetary limit is less than Rs. 1.00 crore and where it is ou above said amount, that shall not be subject matter of appeal before High Court. But in Notification C dated 11th July, 2018, there is exception to effect that in certain circumstances, appeal should be h contested on merits notwithstanding fact that tax ig effect entailed is less than Rs. 1.00 crore. It is apt to H reproduce para-10 of said Notification herein, which reads as follows: 10 Adverse judgments relating to following issues should be contested on merits notwithstanding that tax effect entailed is less than monetary limits specified in para 3 above or there is no tax effect. ::: Downloaded on - 01/09/2020 10:49:19 :::HCHP 9 (a) Where Constitutional validity of provisions of Act or Rule is under challenge, or . (b) Where Board s order, Notification, .P Instruction or Circular has been held to be illegal or ultra vires or (c) Where Revenue Audit objection in H case has been accepted by Department, or of 11. In light of above, it can be said that though, monetary limit to prefer appeal before High Court is rt less than Rs.1.00 crore, but if there is valid question, ou where Order, Notification, Instruction or Circular is to be challenged as illegal or ultra vires, appeal could be filed C before High Court. In present case, no such exception is available to appellant. h 12. Similar question of law has already been ig determined by this Court while adjudicating ITA No. H 20/2019, titled as Pr. Commissioner of Income Tax vs. M/s Ambuja Darla Kashlog Mangoo Transport Co-operative Society, decided on 25.11.2019 and we have not been persuaded to take different view. 13. In view of aforesaid observations, we find no merit in appeal. Hence, same is dismissed. ::: Downloaded on - 01/09/2020 10:49:19 :::HCHP 10 14. It is made clear that observations made herein above shall not be treated as precedent. However, liberty . is reserved to appellant to seek appropriate remedy. .P 15. Pending application(s), if any, stands disposed of. H (Tarlok Singh Chauhan) Judge of August 27, 2020 (Jyotsna Rewal Dua) (pankaj) rt Judge ou C h ig H ::: Downloaded on - 01/09/2020 10:49:19 :::HCHP Pr. Commissioner of Income-tax v. Solan District Truck Operators Transport Co-op. Society