Tax Appeal Partially Allowed: Interest Under Section 234D (of Income Tax Act, 1961) Upheld, Section 244A(1)(b) (of Income Tax Act, 1961) Dismissed

Case Name**: COMMISSIONER OF INCOME TAX VS INDIAN OIL CORPORATION LTD. **Key Takeaways**: 1. The court upheld the charging of interest under Section 234D (of Income Tax Act, 1961), following a previous judgment. 2. The court dismissed the appeal regarding interest under Section 244A(1)(b) (of Income Tax Act, 1961), relying on precedents from Delhi and Madras High Courts. 3. The judgment emphasizes the importance of following established legal precedents in tax matters. **Issue**: 1. Whether interest under Section 234D (of Income Tax Act, 1961) is liable to be charged? 2. Whether interest under Section 244A(1)(b) (of Income Tax Act, 1961) is to be granted to the Assessee? **Facts**: - The case pertains to the Assessment Year 2002-2003. - The appeal arose from an order dated 30.09.2011 passed by the Income Tax Appellate Tribunal in Income Tax Appeal No.1949/Mum/2010. - Two substantial questions of law were raised in the appeal. - The relevant statutory provisions, particularly Section 244A (of Income Tax Act, 1961), were identically worded at the time of assessment as they are today. **Arguments**: The specific arguments of each party are not detailed in the judgment. However, it's clear that: - The Revenue argued for the charging of interest under Section 234D (of Income Tax Act, 1961) and against granting interest under Section 244A(1)(b) (of Income Tax Act, 1961). - The Assessee likely argued against the charging of interest under Section 234D (of Income Tax Act, 1961) and for the granting of interest under Section 244A(1)(b) (of Income Tax Act, 1961). **Key Legal Precedents**: 1. Commissioner of Income Tax v/s M/s Indian Oil Corporation Limited, reported in (2012) 78 ITR 361: (2012) 254 CTR 113 2. Commissioner of Income Tax v/s Sutlaj Industries Limited, reported in 325 ITR 331 (Del.) 3. Cholamandalam Investment and Finance Limited, reported in (2007) 294 ITR 438 (Madras High Court) **Judgement**: 1. On the first question (Section 234D (of Income Tax Act, 1961)), the court allowed the appeal in favor of the Revenue, following the precedent set in the Indian Oil Corporation Limited case. 2. On the second question (Section 244A(1)(b) (of Income Tax Act, 1961)), the court dismissed the appeal, relying on the precedents set by the Delhi High Court in the Sutlaj Industries Limited case and the Madras High Court in the Cholamandalam Investment and Finance Limited case. 3. The appeal was partially allowed, with no costs awarded. **FAQs**: 1. Q: What is Section 234D (of Income Tax Act, 1961)? A: Section 234D (of Income Tax Act, 1961) deals with the charging of interest on excess refund granted to the assessee. 2. Q: What does Section 244A(1)(b) (of Income Tax Act, 1961) cover? A: Section 244A(1)(b) (of Income Tax Act, 1961) pertains to the interest payable by the government on refunds due to the assessee. 3. Q: Why did the court rule differently on the two questions? A: The court followed different legal precedents for each question. For Section 234D (of Income Tax Act, 1961), it relied on a previous judgment of the same court, while for Section 244A(1)(b) (of Income Tax Act, 1961), it followed precedents from other High Courts that had been indirectly approved by the Supreme Court. 4. Q: What is the significance of the court mentioning that the statutory provision was identically worded at the relevant time? A: This ensures that the precedents applied are relevant and applicable, as the law hadn't changed between the assessment year and the time of judgment. 5. Q: How might this judgment affect future tax cases? A: This judgment reinforces the importance of legal precedents in tax matters and provides clarity on the application of Sections 234D and 244A(1)(b) of the Income Tax Act.

1. When this matter was called out for admission, Mr.Tejveer Singh, learned counsel appearing for the Revenue, stated that the Appeal is arising out of the order dated 30.09.2011 passed by the Income Tax Appellate Tribunal in Income Tax Appeal No.1949/Mum/2010. The Assessment Year in question is 2002­2003. The Appeal raises the substantial questions of law and according to him, they are formulated at page 4 of the paper book. They read as under:­

(a) Whether on the facts and in the circumstances of the case and in law, the Tribunal is justified in holding that interest under Section 234D (of Income Tax Act, 1961) is not liable to be charged?

(b) Whether on the facts and in the circumstances of the case and in law, the Tribunal is justified in holding that interest under Section 244A(1)(b) (of Income Tax Act, 1961) is to be granted to the Assessee?

2. After the Appeal was argued for sometime, Mr.Tejveer Singh and Mr.Murlidhar, conceded that insofar as the question (a) is concerned that is a substantial question of law and fully covered against the Assessee and in favour of the Revenue by the order of this Court dated 12.09.2012 in Income Tax Appeal No.2012/2011 and since reported in (2012) 78 ITR 361 : (2012) 254 CTR 113 (The Commissioner of Income Tax v/s M/s Indian Oil Corporation Limited).

3. Having perused this judgment with the assistance of the learned counsel appearing for the parties we are of the opinion that the Appeal has to be partly allowed. It is, accordingly, allowed partly and answer to question (a) shall be in favour of the Revenue and against the Assessee in terms of the Division Bench judgment.

4. Insofar as the question (b) and reproduced above is concerned, our attention is invited to Section 244A (of Income Tax Act, 1961) and particularly it's sub­section (1), so also, clauses thereof. It is conceded by Mr.Tejveer Singh that the facts in this case do not give rise to an issue of applicability of sub­section (2) or (3) of the relevant statutory provision, namely, Section 244A (of Income Tax Act, 1961). It is further conceded that the relevant statutory provision and for the Assessment Year in question was identically worded as that of Section 244A (of Income Tax Act, 1961) standing today. Our attention is then invited to the Tribunal's order and impugned in this Appeal. Mr.Murlidhar submits that in paragraph 7 of the impugned order the Tribunal has extensively referred to the judgment of the Delhi High Court in the case of Commissioner of Income Tax v/s Sutlaj Industries Limited reported in 325 ITR 331 (Del.).

5. The Delhi High Court relied on the view taken by the Madras High Court in the case of Cholamandalam Investment and Finance Limited reported in (2007) 294 ITR 438. It has recorded in the order that the Special Leave Petition against this order of the Madras High Court was dismissed by the Honourable Supreme Court of India.

6. The Tribunal in relying upon the view taken by the Delhi High Court, as also, it's own view on that basis, has dismissed the Appeal of the Revenue.

7. Nothing contrary to this legal position has been brought to our notice by Mr.Tejveer Singh. In fact he fairly concedes that the issue is covered against the Revenue. It is also conceded that the statutory provision was identically worded at the relevant time. In such circumstances the Appeal is dismissed insofar as the question (b) is concerned.

8. The Appeal is, accordingly, disposed of. No costs.

(A.K. MENON, J.) (S.C. DHARMADHIKARI, J.)