Madras High Court
Commissioner Of Income Tax vs M/S. Tvs Electronics Ltd on 6 December, 2021
TCA.Nos.656, 657, 658 & 659 of 2010
IN THE HIGH COURT OF JUDICATURE AT MADRAS
DATED : 06.12.2021
CORAM :
THE HONOURABLE MR. JUSTICE R. MAHADEVAN
and
THE HONOURABLE MR. JUSTICE MOHAMMED SHAFFIQ
TCA.Nos.656, 657, 658 & 659 of 2010
and
MP.Nos. 1, 1 & 1 of 2010
Commissioner of Income Tax
Chennai ... Appellant in all Tax Case Appeals
Vs
M/s. TVS Electronics Ltd,
"Jayalakshmi Estates",
29, Haddows Rd,
Chennai. ... Respondent in all Tax Case Appeals
Appeals preferred under Section 260A of the Income Tax Act, 1961,
against the order of the Income Tax Appellate Tribunal, Chennai “C” Bench,
dated 30.10.2009 in I.TA.No.2303/Mds/2008, I.TA.No.2304/Mds/2008,
I.TA.No.224/Mds/2009 and I.TA.No.225/Mds/2009.
For Appellant : Mr.M.Swaminathan,
Senior Standing Counsel
assisted by Mrs. V.Pushpa,
Junior Standing Counsel
in all cases
For Respondent : Mr.R.Venkatanarayanan
Mr.Subbaraya Iyer in all cases
https://www.mhc.tn.gov.in/judis
TCA.Nos.656, 657, 658 & 659 of 2010
COMMON JUDGMENT
(Judgment of the Court was delivered by R.MAHADEVAN, J.)
These tax case appeals have been filed by the appellant/Revenue,
challenging the order dated 30.10.2009 passed by the Income Tax Appellate
Tribunal, Chennai 'C' Bench, in I.TA.No.2303/Mds/2008, I.TA.No.2304/
Mds/2008, I.TA.No.224/Mds/2009 and I.TA.No.225/Mds/2009 respectively,
relating to the assessment years 2000-01 and 2001-02.
2. On 20.08.2010, T.C.A Nos. 656 and 657 of 2010 have been
admitted by this Court on the following substantial question of law:
“Whether on the facts and circumstances of the case the
Tribunal was right in holding that the reopening of assessment
was not valid in law and thereby setting aside the reassessment
proceeding?
3. On the same day namely 20.08.2010, T.C.A Nos. 658 and 659 of
2010 have been admitted by this Court on the following substantial questions
of law:
“(1) Whether on the facts and circumstances of the case,
the Tribunal was right in holding that the revenue's appeal is
infructuous?
(2) Whether on the facts and circumstances of the case
assessee is entitled for deduction under section 35(2A)?
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TCA.Nos.656, 657, 658 & 659 of 2010
(3) Whether on the facts and circumstances of the case, the
Tribunal was right in holding that the direction to the Assessing
Officer by the commissioner of income Tax (Appeals) with
respect to 244A interest on refund was justified?
(4) Whether on the facts and circumstances of the case, the
Tribunal was right in holding that the interest under section
234D is not leviable on the assessee?
4.1 Today, when the matters were taken up for consideration, the
learned counsel for the appellant/Revenue as well as the respondent/assessee
jointly submitted that the substantial question of law raised in TCA Nos.656
and 657 of 2010 and the substantial question of law Nos. 1 and 2 in TCA.Nos.
658 and 659 of 2010 are covered in favour of the assessee; and the fourth
substantial question of law in TCA Nos.658 and 659 of 2010 is covered in
favour of the Revenue, by judgment dated 19.03.2019, passed in
TCA.Nos.1457 and 1458 of 2008, the relevant passage of which, is usefully
extracted hereunder:
"4.Mr.M.Swaminathan, learned senior standing counsel
for the appellant – Revenue, has submitted that since the
assessee did not produce the requisite approval of the Scientific
Research undertaken by him for the period in question though
such approval was available for the period prior to Assessment
Year 2003-2004 and for the period subsequent to it, the
mandatory condition of producing the approval for the
Assessment Year in question was not complied with by the
Assessee and therefore, the learned Tribunal erred in allowing
such weighted deduction of expenditure incorporated under
Section 35(2AB) of the Act.
5.On the Second Question of Levy of Interest under
section 234D of the Act on the excess refund made to the
Assessee along with the Assessment intimation sent to him
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TCA.Nos.656, 657, 658 & 659 of 2010
under section 143(1) of the Act, the learned senior standing
counsel for the Revenue drew our attention to a judgment of
this court in the case of Commissioner of Income Tax v. Fisher
Sanmar Ltd, (2014) 361 ITR 296 (Mad), wherein, a Division
Bench of this Court held that if the regular assessment of the
Assessee is made after the amendment of provisions of Section
234D of the Act w.e.f. 01.06.2003, then, the provisions of
Section 234D for levy of interest on the excess refund amount
would become applicable, even though the assessment period
may be prior to the said date of amendment.”
“7. We do not concur with the submission made by the
learned Senior Standing Counsel for the Revenue
Mr.M.Swaminathan on the First Question of allowability of
weighted deduction to the Assessee under Section 35 (2AB) of
the Act since the requisite approval for the project on which
expenditure was incurred by the Assessee on Scientific
Research was approved for the period prior and even
subsequent to Assessment Year 2003-2004. In the case before
us, we are of the opinion that the said condition of approval
stood substantially complied with. The Assessee had contended
before the authorities below that approval from the Ministry
concerned of the Central Government for the year in question
was also under active consideration and awaited.
8. The Assessee cannot be punished for the bureaucratic
delay in giving such approval for the year in question, which
was in the hands of the Department concerned of the Central
Government itself. On the very fact that for the period anterior
and posterior to the year in question such approval was very
well on the record of the Revenue, the weighted deduction for
the expenditure incurred on the Scientific Research could not
have been disallowed by the authorities below and, therefore,
the learned Tribunal, in our view, rightly held such Scientific
Research expenditure to be allowable under Section 35 (2AB)
of the Act. Therefore, first two Questions of Law are answered
in favour of the Assessee and against the Revenue.
9. As for the Question of Levy of Interest under Section
234D of the Act, though computation of interest will depend
upon the appeal effect order to be passed, the quantum of net
payment is to be determined accordingly, after allowing
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TCA.Nos.656, 657, 658 & 659 of 2010
weighted deduction under Section 35 (2AB) of the Act, as
indicated above. The provisions of Section 234D of the Act
have been held applicable for Assessment Year 2003-2004 in
question in terms of the decision of the Co-ordinate Bench of
this Court in the case of Fisher Sanmar Ltd., cited supra.
Accordingly, Questions of Law Nos.3 and 4 are answered in
favour of the Revenue and against the Assessee.
10. Appeals of the Revenue are allowed in part, as above.
No costs."
4.2 In the light of the above judgment, which squarely applies to the
facts of the present case, the substantial question of law in TCA Nos.656 and
657 of 2010 relating to reassessment proceedings for deduction under section
35(2A) and the substantial question of law Nos.1 and 2 in TCA Nos.658 and
659 of 2010, are answered in favour of the assessee and against the Revenue
and the fourth substantial question of law in TCA Nos.658 and 659 of 2010 is
answered in favour of the Revenue and against the assessee.
5.1 In addition, the learned counsel for the appellant / Revenue fairly
submitted that the third substantial question of law raised in TCA.Nos. 658
and 659 of 2010 is covered by the decision of this court in Commissioner of
Income Tax v. Upasana Finance Ltd (2021) 129 taxmann.com 253
(Madras), wherein, this court placed reliance on the judgments of the supreme
court in Commissioner of Income Tax, Gujarat vs. Gujarat Fluoro
Chemicals (2014) 42 taxmann.com 1 (SC) and the Division Bench of the
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TCA.Nos.656, 657, 658 & 659 of 2010
Delhi High Court in CIT v. Indian Farmer Fertilizer Co-operative (2016)
71 taxmann.com 37, to the legal proposition that “the only amount which an
assessee aggrieved by delayed payment can legitimately claim under the
statute, is interest and that, no other interest on such statutory interest is
payable”; and “to the extent it directs payment of any sum over and above
interest payable under section 244A(1) to the assessee cannot be upheld” and
accordingly, decided the issue in favour of the Revenue.
5.2 For better appreciation, the relevant passage of the judgments
referred to above, are extracted hereunder:
Supreme Court in Gujarat Fluoro Chemicals (supra)
"6. In our considered view, the aforesaid judgment has
been misquoted and misinterpreted by the assessees and also by
the Revenue. They are of the view that in Sandvik Asia Ltd's
case (supra), this Court had directed the Revenue to pay interest
on the statutory in case of delay in the payment. In other words,
the interpretation placed is that the Revenue is obliged to pay
an interest on interest in the event of its failure to refund the
interest payable within the statutory period.
7. As we have already noticed, in Sandvik Asia Ltd.'s
case (supra) this Court was considering the issue whether an
assessee who is made to wait for refund of interest for decades
be compensated for the great prejudice caused to it due to the
delay in its payment after the lapse of statutory period. In the
facts of that case, this Court, had come to the conclusion that
there was an inordinate delay on the part of the revenue in
refunding certain amount which included the statutory interest
and therefore, directed the Revenue to pay compensation for the
same not an interest on interest.
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TCA.Nos.656, 657, 658 & 659 of 2010
8. Further, it is brought to our notice that the
Legislature by the Act No.4 of 1988 (w.e.f.01.04.1989) has
inserted Section 244A to the Act which provides for interest on
refunds under various contingencies. We clarify 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."
Delhi High Court in Indian Farmer Fertilizer Co-operative case (supra):
“8. In Sandvik Asia Ltd (supra), the Court admittedly
was dealing with facts prior to the insertion of Section 244A.
Therefore, it would be inappropriate for this court to consider
that judgment now as binding authority. More importantly,
Sandvik Asia Ltd (supra) was explained by the larger Bench i.e.,
three Judge Bench decision in Gujarat Fluoro Chemicals
(supra) where the supreme court categorically held that the only
amount which an assessee aggrieved by delayed payment can
legitimately claim under the statute is interest and that “no
other interest on such statutory interest” is payable. This ruling,
in the opinion of this court, rendered by a larger Bench, would
have to be followed as opposed to the ratio in H.E.G Ltd (supra)
where the Supreme Court had expressed a contrary opinion by
indicating that the interest component towards the delayed
payment of the tax refund would partake of the character of the
'amount of due' under section 244A. In other words, H.E.G Ltd.
(supra) seems to suggest that there would be dues on bar,
refund and delayed interest. Clearly, that view has not been
approved in Gujarat Fluoro Chemicals (supra). It was urged
during the hearing that India Trade Promotion Organisation
(supra) has become final since the revenue's appeal was
withdrawn. This court is of the opinion that such detail
notwithstanding, the law declared in Gujarat Fluoro Chemicals
(supra) is binding and permits no deviation”.
5.3 Following the aforesaid judgments, the third substantial question
of law involved in T.C.A. Nos. 658 and 659 of 2010 is answered in favour of
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TCA.Nos.656, 657, 658 & 659 of 2010
the Revenue. Accordingly, the orders passed by the Income Tax Appellate
Tribunal are set aside and the matter is remitted back to the Assessing Officer
for fresh consideration, in the light of the ratio laid down by the supreme court
in Gujarat Fluoro Chemicals (supra) and pass orders, after giving notice to
the assessee.
6. All the Tax Case Appeals are disposed of in the above terms. No
costs. Consequently, connected miscellaneous petitions are closed.
(R.M.D., J.) (M.S.Q., J.)
06.12.2021
Index : yes/no
Internet : yes/no
av
To
1. The Income Tax Appellate Tribunal,
Chennai “C” Bench
2. Commissioner of Income Tax
Chennai
https://www.mhc.tn.gov.in/judis
TCA.Nos.656, 657, 658 & 659 of 2010
R. MAHADEVAN, J
and
MOHAMMED SHAFFIQ, J
av
& 659 of 2010
06.12.2021
https://www.mhc.tn.gov.in/judis
