High Court Of Delhi
Escorts Ltd. vs. CIT
Section 244
Asst. Year 1968-69
S.B. Sinha, C.J. & A.K. Sikri, J.
IT Ref. No. 245 of 1983
30th April, 2002
Counsel Appeared
S.K. Aggarwal, for the Petitioner : S.K. Jha & R.C. Pandey with Ms. Premlata Bansal, for the Respondent
JUDGMENT
S.B. SINHA, C.J. :
The short question which arises for consideration in this reference made by the Tribunal, Delhi Bench ‘E’ under sub-s. (1) of s. 256 of the IT Act, is as follows : “Whether, on the facts and in the circumstances of the case, the Tribunal had erred in not allowing interest under s. 244 on the entire amount of refund irrespective of the fact that the informations required by the ITO for giving effect to the order of the AAC was furnished after the expiry of the period mentioned in the said section.”
2. The basic fact of the matter is not in dispute. The assessment year in question is 1968-69. The assessee is a company. The assessment was completed by the AO on or about 25th March, 1972, in terms whereof it was held that a sum of Rs. 3,01,634 was still payable as income-tax. The said demand, however, later on was reduced to Rs. 2,93,931 by reasons of two rectificatory orders, dt. 11th May, 1972, and 16th Oct., 1973. An appeal was preferred thereagainst by the assessee and by a judgment, dt. 30th Oct., 1975, the appeal was allowed in terms whereof the assessee obtained relief to the extent of Rs. 3,07,022. As regards assessee’s claim to relief under ss. 80G and 80J of the said Act (a claim to development rebate), the appellate authority asked the ITO to carry out the directions contained in the said appellate order. The AO, pursuant to or in furtherance thereof, by an order dt. 29th Aug., 1977, made reassessment in terms whereof the total income of the assessee stood computed at Rs. 41,28,437. The AO inter alia, held that the assessee was entitled to carry out its deficient claim under s. 80G in respect of industrial undertaking to the extent of Rs. 1,15,953. However, it was observed that the assessee has failed to furnish evidence on certain points so as to enable the AO to carry out the directions of the Appellate Assistant Commissioner (‘AAC’ for short) wherefor he was asked to produce evidence. The assessee furnished relevant information and material in bits upto 8th June, 1977, whereupon the said claim was allowed. Pursuant to the aforementioned order dt. 29th Aug., 1977, the assessee became entitled to refund amounting to Rs. 4,57,055. The said refund was made available to the assessee on the same date i.e., 29th Aug., 1977.
3. The AAC, however, held that the assessee was not entitled to interest under s. 244(1) on the said refund amount for the period 1st Feb., 1976, to 29th Aug., 1977. An application purported to be under s. 154 of the IT Act was filed pressing its claim for interest stating : (a) that interest due under s. 214 had not been allowed on the excess amount of advance tax; and (b) that interest as due under s. 244 had not been allowed on the entire amount of refund. The said claim was rejected. However, on appeal, the CIT(A) accepted the assessee’s contention that he was entitled to interest on the entire refund amount of Rs. 4,57,055 for the period 1st Feb., 1976, to 29th Aug., 1977. Feeling aggrieved, the Revenue preferred an appeal. The Tribunal, by reason of the order dt. 17th May, 1982, held : “Though bifurcation of the refund amount of Rs. 4,57,055 has not been made available to us, it is common case of the parties that a component or part of the said refund amount could have been straightway paid by the Department to the assessee in terms of the quantum relief given by the AAC, inasmuch as giving of relief to that extent called for no further investigation or verification and tax figure could be calculated at that rate applicable to companies. It was only regarding the balance amount concerned involving relief under ss. 80G and 80J and development rebate that further verifications or investigation by the ITO was necessary before effect could have been given to the appellate order of the AAC.
So far as the said balance amount is concerned, we agree with the ITO’s finding that delay was attributable to assessee itself. In this regard there is sufficient material available from the ITO’s order dt. 29th Aug., 1977 itself. Further, a certain portion from that order has also been extracted by the ITO while disposing of assessee’s petition headed s. 154 IT Act. In the result, we modify the learned CIT’s order and hold that assessee is entitled to interest for the period from 1st Feb., 1976, to 28th Aug., 1977, on that portion of the refund amount, which required no further investigation or verification at the ITO level. As regards the balance claim of the assessee there was no mistake apparent from the record.” Hence this reference.
Mr. Aggarwal, learned counsel appearing on behalf of the assessee would submit that the learned Tribunal committed an error in passing the impugned order insofar as it failed to take into consideration that in terms of s. 244 of the IT Act, the interest becomes payable as soon as the refund becomes due and if the same is not paid within a period of three months, interest becomes automatically payable. Strong reliance in this connection has been placed on Trustees of HEH the Nizam’s Miscellaneous Trust vs. CWT & Anr. (1985) 44 CTR (AP) 223 : (1984) 150 ITR 423 (AP) : TC 67R.1023 and CIT vs. Graphite India Ltd. (1994) 122 CTR (Cal) 7 : (1994) 209
ITR 318 (Cal) : TC 43R.445.
The learned counsel would contend that any delay attributable on the part of the assessee cannot be taken into consideration for rejecting the claim of interest inasmuch such a provision has been made only in s. 243 of the IT Act.
Mr. Pandey, the learned counsel appearing on behalf of the Revenue, on the other hand, would contend that no interest was payable under sub-s. (1) of s. 244 as the reassessment could not be completed owing to delay attributable on the part of the assessee. Strong reliance in this connection has been placed on National Horticulture Board vs. Union of India & Ors. (2002) 173 CTR (P&H) 107 : (2002) 253 ITR 12 (P&H). Secs. 243 and 244 of the IT Act read thus : “243. Interest on delayed refunds.—(1) If the AO does not grant the refund, (a) in any case where the total income of the assessee does not consist solely of income from interest on securities or dividends, within three months from the end of the month in which the total income is determined under this Act, and (b) in any other case, within three months from the end of the month in which the claim for refund is made under this Chapter, the Central Government shall pay the assessee simple interest at fifteen per cent per annum on the amount directed to be refunded from the date immediately following the expiry of the period of three months aforesaid to the date of the order granting the refund. Explanation.—If the delay in granting the refund within the period of three months aforesaid is attributable to the assessee, whether wholly or in part, the period of the delay attributable to him shall be excluded from the period for which interest is payable. 244. Interest on refund where no claim is needed.—(1) Where a refund is due to the assessee in pursuance of an order referred to in s. 240 and the AO does not grant the refund within a period of three months from the end of the month in which such order is passed, the Central Government shall pay to the assessee simple interest at fifteen per cent per annum on the amount of refund due from the date immediately following the expiry of the period of three months aforesaid to the date on which the refund is granted. (1A) Where the whole or any part of the refund referred to in sub-s. (1) is due to the assessee as a result of any amount having been paid by him after the 31st day of March, 1975, in pursuance of any order of assessment or penalty and such amount or any part thereof having been found in appeal or other proceeding under this Act to be in excess of the amount which such assessee is liable to pay as tax or penalty, as the case may be, under this Act, the Central Government shall pay to such assessee simple interest at the rate specified in sub-s. (1) on the amount so found to be in excess from the date on which such amount was paid to the date on which the refund is granted: Provided that where the amount so found to be in excess was paid in instalments, such interest shall be payable on the amount of each such instalment or any part of such instalment, which was in excess, from the date on which such instalment was paid to the date on which the refund is granted: Provided further that no interest under this sub-section shall be payable for a period of one month from the date of the passing of the order in appeal or other proceeding : Provided also that where any interest is payable to an assessee under this sub-section, no interest under sub-s. (1) shall be payable to him in respect of the amount so found to be in excess. (2) Where a refund is withheld under the provisions of s. 241, the Central Government shall pay interest at the aforesaid rate on the amount of refund ultimately determined to be due as a result of the appeal or further proceeding for the period commencing after the expiry of three months from the end of the month in which the order referred to in s. 241 is passed to the date the refund is granted. (3) The provisions of this section shall not apply in respect of any assessment for the assessment year commencing on the 1st day of April, 1989, or any subsequent assessment years.”
It is true that on a plain reading of s. 244 of the IT Act, it would appear that interest becomes payable on expiry of three months. However, in this case, the refund was not to be made by reason of the order of the AAC. For all intent and purport, the directions issued by the AAC were to be carried out by the AO on the basis of the evidences which were to be furnished by the assessee. It is not in dispute that he failed and/or neglected to do so and as and when such evidences were furnished, an order of refund was passed. To the said extent, there was no delay in making the refund of the amount to which the assessee was entitled to. ‘Lex non cogit ad impossibilia’ is a well-known maxim. It means the law does not compel a man to do which he cannot possibly perform. If the AO could not perform his duties to complete the order of assessment in the absence of any evidence furnished by the assessee, the Department cannot be blamed therefor. A law cannot be interpreted in vacuum. It has to be interpreted having regard to the facts and circumstances involved in each case.
In a situation of this nature, the refund must be held to have become payable on 29th Aug., 1977. Furthermore, it is true that interest is payable by way of recompense but a person cannot claim any compensation if he is the contributing factor for non-payment. A person cannot claim damages even under common law either by way of interest or otherwise, if the statutory order could not be passed owing to his own conduct. A person, as is well- known, cannot take advantage of his own wrong. If such claim is permitted, the same would not advance the cause of justice.
In Nizam’s Miscellaneous Trust (supra), a Division Bench of the Andhra Pradesh High Court was dealing with a matter of refund under WT Act. In the fact of that case, it was held that the assessee was entitled to refund in terms of s. 34A of the WT Act, 1957, in terms whereof such refund is liable to be paid as a result of order passed in appeals including a rectification proceeding and secondly, the amount has to be refunded to the assessee “without his having to make any claim in that behalf.”
In the instant case, the claim for refund did not arise directly as a result of any order passed in appeal but only pursuant to the directions issued therein in terms whereof the AO was required to pass a separate order on the basis of the evidence which was to be furnished by the assessee himself.
In Graphite India (supra), following observations were made : “The respondent-assessee is also entitled to get interest under s. 244(1) of the said Act in accordance with law since the amount refundable to the respondent- assessee was not refunded within a period of three months from the end of the month in which the appellate order was passed by the CIT(A). The requirement for the entitlement to interest on refund under sub-s. (1) of s. 244 is quite clearly expressed. This interest falls payable under two condition : (i) the refund arises in pursuance of an order passed in appeal; (ii) the refund has not been granted within a period of three months from the end of the month in which such order is passed.”
17. The question which has been raised in the instant case did not arise in the aforementioned cases.
18. A Division Bench of Punjab & Haryana High Court in National Horticulture Board (supra) on the other hand, upon interpreting the provisions of s. 244A of the IT Act, observed : “A conjoint reading of the provisions quoted above shows that the assessee is entitled to receive interest on the amount of refund at the rates prescribed in cls. (a) and (b) of sub-s. (1) of s. 244A. The rationale underlying this provision is to compensate the assessee in lieu of the deprivation of his property right by virtue of unlawful collection of tax. If the proceedings resulting in the refund are delayed due to reasons attributable to the assessee, then the period of delay has to be excluded from the period for which the interest is payable. In other words, if the assessee is responsible for the delay in the finalisation of the proceedings on the basis of which he becomes entitled to refund, then the period of delay is to be excluded from the total period for which interest becomes payable. However, there is nothing in the plain language of sub-ss. (1) and (2) of s. 244A from which it can be inferred that the assessee can be deprived of the interest in respect of the period during which his application for refund remains pending before the competent authority.”
19. In view of our findings aforementioned, we are of the opinion that the assessee has rightly been held to be not entitled to the refund (sic-interest) by the Tribunal.
20. The answer to the question must be rendered in the negative i.e., in favour of the Revenue and against the assessee.
21. The reference is disposed of accordingly.
[Citation : 257 ITR 468]
