TMI Blog2008 (10) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... on under s. 154 and again within two years on 17th Jan., 2005 vide application under s. 155(14)." 2. The assessee in the present case is a foreign company governed by Double Taxation Avoidance Agreement (DTAA) betweenIndiaandMauritius. It is registered under the law ofMauritiusand during the year under consideration it has earned an income in the form of capital gain and dividend. The capital gain earned is claimed exempt under s. 90(2) in terms of art. 13(4) of DTAA betweenIndiaandMauritiusand dividend income is also claimed exempt under s. 10(33) of the IT Act, 1961 ('Act'). The impugned assessment is framed under s. 143(3) by issue of notice under s. 148 in response to which nil return was filed. The original return claiming exempted income was filed on26th Dec., 2002in which TDS refund of Rs. 4,14,887 was claimed. Copy of such return is filed at p. 1 of the paper book. The computation in this regard showing income from capital gain as a sum of Rs. 29,85,499 and dividend income of Rs. 300 was shown to be exempt under the respective sections as mentioned in the earlier part of this order and prepaid tax was claimed at a sum of Rs. 4,40,887 which was sought to be refUl1ded. Copy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessed as nil, but Department did not give refund to the assessee in respect of the additional claim of Rs. 2,02,577 for which the necessary TDS was submitted by the assessee to the Department. Non-grant of such refund was challenged in an appeal filed before the CIT(A) which has been decided by the impugned order dt.5th Dec., 2006. The assessee stated all the facts before the CIT(A), who has upheld the action of the AO regarding non-grant of refund to the assessee vide his observations contained in para 6 of his order. It is observed by CIT(A) that he has carefully considered the facts of the case and has perused the relevant assessment order and other material and it was observed that claim of TDS for a sum of Rs. 2,02,577 was not made in the original return filed on 26th Dec., 2006 and such claim was made only in the return filed in response to notice issued under s. 148 of the Act. According to the CIT(A), the proceedings under s. 148 of the Act are to be initiated with a view to tax income which had escaped the assessment and not for granting additional refund. Reliance has been placed on the decision of the Hon'ble Supreme Court in the case of CIT vs. Sun Engineering Works (P ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d it is improper and impermissible for the Revenue to swallow the TDS after having received and enjoyed the same. If the tax is due to the Government is not barred by limitation for recovery, refund of TDS due to the assessee should not equally be hit by the bar of limitation. He has produced before us a copy of said decision and relying on the same it was pleaded that refund may be granted to the assessee and the order of the CIT(A) should be reversed. 6. On the other hand, learned Departmental Representative has submitted before us the written submissions relying on which she pleaded the case of the Revenue. It was submitted by her that application filed by the assessee dt.31st March, 2004under s. 154 should not be filed as s. 154 is not applicable. She referred to art. 13 of Indo-Mauritius DTAA and pleaded that it has not been shown that under which article such income is exempt. Further, she pleaded that the claim of TDS was lodged by the assessee in the return filed in response to s. 148 of the Act. Relying on that decision of Hon'ble Supreme Court in the case of Sun Engineering Works (P) Ltd. pleaded that jurisdiction under that section is confined to only such income which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is barred by limitation laid down under s. 239 of the Act r/w r. 41 of IT Rules. It is not the case of the Revenue that the TDS claimed by the assessee does not belong to income which has been admitted even by the Department as not taxable in the hands of the assessee. Thus, the TDS refund claimed by the assessee pertains to the income which is claimed to be exempt by the assessee and is also held to be exempted by the assessment order itself. Thus, the question before us is to examine firstly, that whether relying on the decision of Hon'ble Supreme Court in the case of Sun Engineering Works (P) Ltd. such claim of refund could be denied to the assessee and secondly, whether assessee's claim is barred by limitation as envisaged in s. 239 r/w r. 41 of the IT Rules. 8. First, we will examine the applicability or otherwise of the decision of the Hon'ble Supreme Court in the case of Sun Engineering Works (P) Ltd. vis-a-vis facts of this case. In the said case, the returns of income for asst. yrs. 1960-61 and 1961-62 were filed by the assessee at a loss of Rs. 36,418 and Rs. 24,314 respectively. The loss so returned by the assessee was not accepted for the reason that the loss returns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which were before this Court. A decision of this Court takes its colour from the questions involved in the case in which it is rendered and, while applying the decision to a later case, the Courts must carefully try to ascertain the true principle laid down by the decision of the Court and not to pick out words or sentences from the judgment, divorced from the context of the questions under consideration by this Court, to support their reasoning. In Madhav Rao Jivaji Rao Scindia Bahadur vs. Union of India (1971) 3 SCR (SC) : AIR 1971 SC 530, this Court cautioned: 'It is not proper to regard a word, clause or a sentence occurring in a judgment of the Supreme Court, divorced from its context, as containing a full exposition of the law on a question when the question did not even fall to be answered in that judgment'." 9. As per the abovementioned decision, reassessment proceedings are to be initiated only for bringing to tax items which had escaped assessment and it is not open to an assessee to put forward claims for deduction of any expenditure in respect of that income or the non-taxability of the items at all. As these proceedings are for the benefit of the Revenue and not as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d hereunder for the sake of convenience: "Sec. 239 (1) Every claim for refund under this chapter shall be made in the prescribed form and verified in the prescribed manner. (2) No such claim shall be allowed, unless it is made within the period specified hereunder, namely: (a) where the claim is in respect of income which is assessable for any assessment year commencing on or, before the 1st day of April, 1967, four years from the last day of such assessment year; (b) where the claim is in respect of income which is assessable for the assessment year commencing on the first day of April, 1968, three years from the last day of the assessment year; (c) where the claim is in respect of income which is assessable for any other assessment year, one year from the last day of such assessment year; (d) where the claim is in respect of fringe benefits which are assessable for any assessment year commencing on or afterthe first April, 2006, one year from the last day of such assessment year." Rule 41 (1) A claim for refund under Chapter XIX shall be made in Form No. 30. (2) The claim under sub-r. (1) shall be accompanied by a return in the form prescribed under s. 139 unless ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f recovery. 15. It may also be mentioned here the claim of refund of TDS is allowable de hors the reassessment proceedings as assessee's application for refund of TDS was filed not only within time as prescribed under s. 239, but its second application filed under s. 155(14) was also in time, therefore, also assessee is entitled to get refund irrespective of the fact that the claim was made in the return filed in response to s. 148. 16. It may also be mentioned here that the authorities under the Act are under an obligation to act in accordance with law. Tax can be collected only as provided under the Act. If an assessee, under a mistake, misconception or on not being properly instructed, is overassessed, the authorities under the Act are required to assist him and ensure that only legitimate taxes due are collected. This position of law has been well explained by Hon'ble Gujarat High Court in the case of S.R. Koshti vs. CIT (2005) 193 CTR (Guj) 518 : (2005) 276 ITR 165 (Guj) with the following observations: "20. A word of caution. The authorities under the Act are under an obligation to act in accordance with law. Tax can he collected only as provided under the Act. If an as ..... X X X X Extracts X X X X X X X X Extracts X X X X
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