Sutlej Industries Ltd. vs The Commissioner of Income Tax and Others

These appeals by the Assessee under Section 260A of the Income Tax Act, 1961 (''Act'') are directed against the common order dated 10th March 2003 passed by the Income Tax Appellate Tribunal (''ITAT'') in ITA Nos. 6199 and 6200/Del/1997 for the Assessment Years (''AYs'') 1994-95 and 1995-96 respectively.

In both the appeals, the questions of law already stand framed by the Court. As far as ITA No. 493 of 2003 is concerned, by the order dated 14th January 2004, the following question was framed:

"What would be the date for reckoning the interest on refund under Section 244A(1) (b) ?"

As far as ITA No. 120 of 2004 for the AY 1995-96 is concerned, by the order dated 14th September 2004, the following question was framed:

"For the purpose of calculating interest on refund under section 244A (1) (b) what would be the date from which the interest is to be awarded."

However, after hearing learned counsel for the parties, the Court is of the view that for both the AYs, the questions that arises for consideration require to be reframed as under:

(i) Is the Assessee entitled to interest under Section 244A of the Act on the amount of self assessment tax paid, which as a result of an assessment, has become refundable to it under the Act?

(ii) If the answer to question (i) is in the affirmative, whether interest is to be paid from the date of payment of such self- assessment tax or from some other date?

From the side of the Assessee, reliance has been placed on the decision of a Division Bench (DB) of this Court in the Assessee''s own case for AY 1998-99 in CIT-III v. Sutlej Industries Ltd. , [2010] 325 ITR 331 (Del.). Reliance is also placed on the decisions of in CIT v. Vijaya Bank, , [2011] 338 ITR 489 (Kar), the Bombay High Court in Stock Holding Corporation of India Ltd. v. CIT , [2015] 373 ITR 282 (Bom.), the Madras High Court in CIT v. Cholamandalam Investment & Finance Co. Ltd. , [2007] 294 ITR 438 (Madras), and Rajaratna Mills Ltd. v. CIT [2015] 64 Taxmann.com 89(Madras) and the Punjab and Haryana High Court in CIT v. Punjab Chemical & Corp. Protection Ltd., [2015] 231 Taxman 312. Reference is also made to the background to the insertion of Section 244A in the Act, as well as to Circular No. 549 dated 31st October 1989 issued by the Central Board of Direct Taxes (''CBDT'').

From the side of the Revenue, reliance is placed on the decision of the Supreme Court in CIT v. Gujarat Fluoro Chemicals , [2014] 42 Taxmann. com 1(SC) and of the DB of this Court the CIT v. Engineers India Ltd. , [2015] 373 ITR 377(Del.)

It must be noticed that the questions that arose for consideration both in Sutlej Industries (supra) for AY 1998-99 and Engineers India Ltd. (supra) were identical to the issues that arise in the present appeals, viz., whether the Assessee is entitled to interest on refund of self assessment tax and further, if so, the date from which such interest would be payable? The said questions were answered in favour of the Assessee by a DB of this Court in Sutlej Industries (supra) for AY 1998-99. However, in Engineers India Ltd. (supra) another DB of the same strength has answered the question against the Assessee and has distinguished the decision in Sutlej Industries (supra).

It is urged on behalf of the Revenue that the judgment in Engineers India Ltd. (supra) being latter in point of time should be followed by this Court, particularly in view of the decision of the Supreme Court in Gujarat Fluoro Chemicals (supra) which was delivered by the larger Bench of the three learned Judges.

On closer examination, it transpires that the decision of this Court in Sutlej Industries (supra) for AY 1998-99 was in also part of the batch of cases which were before the larger Bench of the Supreme Court in Gujarat Fluoro Chemicals (supra). A perusal of the order of the Supreme Court shows that it took note of the insertion of Section 244A in the Act with effect from 1st April 1989 and clarified 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". The above clarification by the larger Bench of the Supreme Court does not answer the questions that arise either in the present cases or in the earlier case involving the same Assessee for AY 1998-99, viz. CIT-III v. Sutlej Industries Ltd. (supra) one way or the other. The larger Bench of the Supreme Court in Gujarat Fluoro Chemicals (supra) remanded the matters which were placed before it to the concerned Benches for decision. It is noticed that the Revenue''s appeal in the Supreme Court against the decision of this Court in Sutlej Industries (supra) for AY 1998-99 is still shown as pending. Consequently, the Court is of the view that the decision of the Supreme Court in Gujarat Fluoro Chemicals (supra) not having answered the questions that arise one way or the other, cannot itself be the justification for distinguishing the earlier decision of the DB of this Court in CIT-III v. Sutlej Industries Ltd.(supra) for AY 1998-99.

In the facts and circumstances of the case, the Court is of the view that the subsequent decision in Engineers India (supra) by a DB of the same bench strength cannot co-exist with the decision in Sutlej Industries Ltd. (supra) and that there is a conflict brought about as a result of the two decisions which cannot be resolved except by referring it to a larger Bench of the three learned Judges of this Court.

Consequently, the questions re-framed by the Court by the present order as indicated in para 4 above, are referred for decision to a larger Bench of three learned Judges. The papers be placed before Hon''ble the Chief Justice for appropriate orders.