ORDER
B.L. Khatri, Accountant Member
1. This is an appeal filed by the department against the CIT(A’s) order dated 16.10.2002 for the assessment year 1973-74. The assessee has also filed the Cross Objection.
2. The brief facts of the case are that as per the order of the CIT(A) dated 27.05.1978, the assessee has become entitled for refund of excess advance tax paid by it. The department has already allowed the interest upto the date of regular assessment. The AO has not allowed the further interest on interest claimed by the assessee under Section 214. The assessee has moved an application under Section 154 for the grant of interest under Section 214 for the delay. The AO has rejected the application under Section 154 against which the assessee went to the first appellate authority. The CIT(A), by the impugned order, has directed the AO to allow interest on interest for the delay from 27.05.1978 to 30.09.1992 on the refund of Rs. 1,82,248/-. Not being satisfied, the department is before us.
3. With this background, the ld. D/R submitted that interest on interest is not allowable as there is no statutory provision available in the Income-tax Act. Further, the ld. D/R relied on the ratio laid down by Bombay High Court in the case of Sandvik Asia Ltd. v. CIT (2004), 267 ITR 78 (Bom) where it was specifically mentioned that interest on interest is not allowable.
4. On the other hand, the ld. A/R Supported the order of the CIT(A). He submitted that the CIT(A) has rightly relied upon the ratio laid down by the Hon’ble Supreme Court in the case of CIT v. Narendra Doshi (2002), 254 ITR. 606. He also relied on the decision of Hon’ble Gujarat High Court in the case of D.J. Works v. Dy. CIT (1992), 195 ITR 227. Further, the ld. A/R relied on the decision of ITAT Jaipur Bench (by the same Bench) in the case of Hemraj Udyog v. ITO in ITA Nos. 2002 & 2003/JP/1996 dated 28th January, 2004 for the assessment year 1989-90 where the Tribunal observed that:
” we find that various Hon’ble High Courts and Apex Court in the case of Narendra Doshi (supra) have held that assessee is entitled to interest on interest. The law pronounced by Hon’ble Apex Court is law of land which is binding upon the lower authorities. The decision of this Bench in the case of SBBJ v. DCIT is distinguishable. We direct the Assessing Officer to allow claim of the assessee.”
The ld. A/R further submitted that there is unreasonable delay on the part of the department for the refund. On equitable ground also the assessee is entitled for the interest on interest. On specific query from the Bench, he accepted that there is no statutory provision for granting the interest on interest. He also admitted that the cases of Narendra Doshi and D.J. Works, supra, were filed under the Writ Petition and not in regular appeals. So lastly he made a request to uphold the order of the CIT(A).
5. After hearing both the parties and on perusal of record, it is evident that there is no provision of granting the interest on interest. The Hon’ble Bombay High Court in the case of Sandvik Asia Ltd. v. CIT, 267 ITR 79 had the occasion to discuss the ratio laid down by the Hon’ble Supreme Court in the case of CIT v. Narendra Doshi (2004) 254 ITR 606. The Hon’ble Bombay High Court in the case of Sandvik Asia Ltd. v. CIT, 267 ITR 78 (supra) at page 80 observed :
“In CIT v. Narendra Doshi (2002) 254 ITR 606 (SC) the matter before the Supreme Court was relating to the correctness of the answer of the High Court of Madhya Pradesh in the facts and circumstances of that case and not to the correctness of the decisions of the Gujarat High Court on the point of liability of the Revenue for payment of interest on interest either in case of unjustifiable delay in payment of interest to the assessee or otherwise. In fact, the Supreme Court has not expressed any opinion on the said point The decision of the Supreme Court was restricted to the point of correctness of the answer of the High Court of Madhya Pradesh to the question on the correctness of the decision of the Tribunal in the facts and circumstances of the case and not to the correctness of the decision of the Gujarat High Court in D.J. Works case (1992) 195 ITR 227.
The decision of the High Court of Madhya Pradesh stood merged in the order of the Supreme Court passed in Narendra Doshi’s case (2002) 254 ITR 606 (SC). The said order of the Madhya Pradesh High Court, however was not on the point of liability to pay interest on interest. The High Court of Madhya Pradesh was neither called upon to decide the issue regarding the liability of the Department to pay interest on interest, nor the correctness of the view about such liability nor was that the subject matter of dispute before the High Court of Madhya Pradesh in Narendra Doshi’s case. The only issue before it was whether the Appellate Tribunal was justified in upholding the decision of the Commissioner (Appeals) in the given set of facts. Even the decision of the Gujarat High Court was not on the point of liability to pay interest on interest under the provisions of the said Act but was on account of the peculiar facts of the case and in spite of the absence of the provisions in that regard in the said Act Under no circumstances, could the decisions of the Gujarat High Court in D.J. Work’s case (1992) 195 ITR 227 or in Chimanlal’s case (1994) 210- ITR 419 be said to have merged with the order of the Supreme Court in Narendra Doshi’s case (2002) 254 ITR 606.”
6. Finally, the Bombay High Court (267 ITR 78) dismissed the appeal filed by the assessee by observing at page 108 that:
“Neither does any statutory provision entitle the petitioners to claim any such amount or part thereof, nor have the petitioners been able to establish existence of state of circumstances which may attract exercise of equitable jurisdiction and to invoke rule of equity in order to justify the claim.”
7. Moreover, it may be mentioned that the ITAT has no power to grant relief on equitable jurisdiction as the Hon’ble High Court and the Supreme Court have been vested with such powers under writ jurisdiction. The ITAT is vested with only statutory powers.
8. In the light of the above discussion, we are of the view that the assessee is not entitled to get interest on interest. Therefore, we set aside the order of the CIT(A) and restore order of the AO in this regard.
9. In the Cross Objection, the assessee is aggrieved against the order of the CIT(A) confirming the action of the AO in grating interest under Section 214 upto the date of original assessment completed under Section 143(3) on 11.3.1974 and not upto the date of assessment completed on 27.05.1978.
10. We have set aside the order of the CIT(A). In the instant case, the department has already allowed the interest upto the date of regular assessment. When it is so, then there is no merit in the Cross Objection filed by the assessee.
11. In the result, the appeal filed by the Revenue is allowed and the Cross Objection filed by the assessee is dismissed as stated above and announced in the open court.