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2014 (4) TMI 284 - AT - Income TaxEntitlement for interest u/s 244A of the Act – Refund of taxes (TDS) deposited in excess – order passed u/s 195 of the Act – Held that:- The language used in section 244A, clearly provides that interest has to be granted on the refund of any amount which becomes due to the assessee - It cannot be construed to mean that such an interest will not be allowed on the refund of TDS, which has been deducted by the payer - The section per–se does not make any distinction on the tax determined in pursuance of orders passed u/s 143(3) or the refund of tax on account of TDS - The section 244A clearly provides right to the assessee to claim interest on the amount of refund which has become due to him under the provisions of the Act. The decision in Union of India v/s Tata Chemicals Ltd. [2014 (3) TMI 610 - SUPREME COURT] followed - Interest on refund is a kind of compensation of use and retention of the money collected unauthorizedly by the Department - When the collection is illegal, there is corresponding obligation on the revenue to refund such amount with interest in as much as they have retained and enjoyed the money deposited - Even the Department has understood the object behind insertion of Section 244A, as that, an assessee is entitled to payment of interest for money remaining with the Government which would be refunded - There is no reason to restrict the same to an assessee only without extending the similar benefit to a resident/deductor who has deducted tax at source and deposited the same before remitting the amount payable to a non-resident/foreign company - the assessee is eligible for interest u/s 244A on the amount of refund due to the assessee worked out on TDS deducted by it – thus, the order of the CIT(A) set aside and the AO is directed to grant interest u/s 244A – Decided in favour of Assessee.
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