GUJARAT FLOUROCHEMICALS LTD Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) By filing the instant petition under Articles 226 and 227 of the Constitution, the petitioner has prayed to set aside: (1) the order dated October 6, 1992 passed by the Commissioner of Income Tax, Baroda, by which the claim of interest on refund advanced by the petitioner was rejected as inadmissible under Sections 243(1)(b), 244(1A) and Section 214(2) of the Income Tax Act, 1961 (the Act for short); (2) the order dated January 18, 1993 passed by the Chief Commissioner of Gujarat, Ahmedabad, by which interest claimed by the petitioner on the excess amount of tax deducted at source was rejected on the ground that excess amount of tax deducted at source was not as a result of order passed by an authority under the Act and that the provisions of Section 244A(1) of the Act were not applicable since those provisions were brought into force only from the assessment year 1989-90; and, (3) the order dated April 19, 1993 passed by the Government of India by which the claim for interest advanced by the petitioner was refused on the ground that the refund was not issued in pursuance of order of assessment or penalty and, therefore, provisions of Section 244(1A) of the Act were not applicable to the facts of the case. The petitioner has further prayed to issue a writ of mandamus directing the respondents to award compensation by way of interest on the amount of refund for the period from July 1, 1987 to November 13, 1990.

(2.) The petitioner is a company incorporated under the provisions of the Companies Act, 1956 and is manufacturing Anhydrous Hydrogen Fluoride and Chlorofluorocarbon Refrigerant Gases. For this purpose, the promoters of the petitioner company had entered into a technical collaboration agreements with a company based at U.S.A. Necessary approval was granted by the Reserve Bank of India to above mentioned collaboration agreement. On June 19, 1987, the petitioner had paid a sum of Rs. 23,96,032/- to its collaborator. The petitioner thereafter intimated the Income Tax Officer, Company Circle-III, New Delhi, regarding payment made by it by making applications dated June 20, 1987 and requested him to issue no objection certificate. The case of the petitioner is that the said Income Tax Officer directed the petitioner to deduct and pay taxes at the rate of 30% on the amount remitted by the petitioner to M/s. Stearans Catalyic Corporation, U.S.A. Accordingly, the petitioner deducted and paid Rs. 34,22,900=00 towards the tax. Subsequently, the assessee company claimed that in view of the amended provisions of Section 6(10) of the Act, no grossing was required to be made as the payment was to be remitted under the agreement approved by the Government of India and claimed refund. The Income Tax Officer, Ward-2(1), Baroda, by order dated November 30, 1990 held that the petitioner was entitled to refund of Rs. 10,26,868/-. A copy of the said order is produced by the petitioner at Annexure-K to the petition. The petitioner thereafter requested the respondent No. 4, i.e. Income Tax Officer, Ward-2(1), Baroda, to grant interest on the excess amount of tax refunded by letter dated January 17, 1991. As there was no response from the respondent No. 4 to the said letter, the petitioner applied on July 15, 1992 to the Commissioner of Income Tax, Baroda, with a prayer to grant interest on the amount refunded. However, the Commissioner of Income Tax by his letter dated October 6, 1992 declined to entertain the claim of interest on the ground that the same was not admissible either under Section 243(1)(b) or 244(1A) or under Section 214(2) of the Act. A copy of the said order is produced by the petitioner at Annexure-N to the petition. Feeling aggrieved, the petitioner approached the Chief Commissioner of Income Tax, Gujarat, Ahmedabad, by making an application dated October 31, 1992. However, the Chief Commissioner of Income Tax also by letter dated January 18, 1993 refused to entertain the claim of the petitioner for interest on the excess amount of tax paid on the ground that excess amount of tax deducted at source was not as a result of any order passed by an authority under the Act nor the provisions of Section 244A(1) of the Act were applicable to the facts of the case.

(3.) Dissatisfied by the said order, the petitioner approached CBDT by making application on February 26, 1993. The petitioner reiterated its submissions made before the Chief Commissioner of Income Tax. However, the CBDT also by order dated April 19, 1993 refused to accept the claim made by the petitioner for awarding interest on the amount of excess tax paid by it. A copy of the said letter is produced by the petitioner at Annexure-R to the petition.