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2021 (8) TMI 1078 - HC - Income TaxAmount payable under the DTVSV Act - Interest u/s 244A on the refund due to the Petitioner - whether Petitioner has a permanent establishment in India under certain provisions of the India-Netherlands double taxation avoidance agreement to the Assessing Officer? -whether the Appeal pending before the ITAT is a departmental Appeal or an assessee Appeal? - HELD THAT:- As following our decision in Writ Petition[2021 (7) TMI 336 - BOMBAY HIGH COURT] we have no doubt in arriving at the conclusion that pending Appeal is a Revenue Appeal and the first proviso to Section 3 of the DTVSV Act would become applicable and, accordingly, the amount payable by Petitioner would be 50% of the disputed tax. Whether an interest granted under Section 244A of the IT Act to Petitioner earlier can be recovered by the Respondents by adding the same to the amount of disputed tax otherwise payable by Petitioner under the DTVSV Act? - Once a declarant has filed a declaration to the Designated Authority in respect of the tax arrears, which declaration is in accordance with Section 4, then notwithstanding anything contained in the IT Act or any other law, the amount payable shall be as set out in the Table in Section 3. In the case of Petitioner, Section 3(a) read with the first proviso would be applicable which would be 50% of the amount of disputed tax. Disputed tax in accordance with the definition set forth above would mean the income tax including surcharge and cess, referred therein as the amount of tax payable by the Appellant, computed as contained in Clause (A) therein. It is also undisputed fact that interest under Section 244A has been received by Petitioner as that is the amount of interest which was levied on the refund granted to Petitioner, pursuant to order giving effect to the order of CIT(A) pending the proceedings before the ITAT. It is also not in dispute that ordinarily if the Appeal before the ITAT is decided against Petitioner, the said amount already paid to Petitioner, would be recovered in the order giving effect to the order of the ITAT, as interest or as an amount is due from Petitioner to the Department. Upon a query from the Court, as to how the Department would recover the interest paid under Section 244A, in the absence of the DTVSV Act, if the Tribunal order was decided against the assessee, it is being clarified on behalf of Revenue that such interest granted earlier under Section 244A of the IT Act would be recovered from the assessee by charging interest under Section 234D of the IT Act at the rate stated therein on the whole of the excess amount refunded and not separately, as the rate at which Section 234D interest would be levied is higher than the rate which is given to assessee under Section 244A From a conjoint reading of Section 2(1)(j)(A), Section 2(1)(o)(i), Section 3, Section 5 and Section 6 of the DTVSV Act, it is clear that there is no provision in the DTVSV Act, which authorises recovery of interest paid earlier by the Department under Section 244A as disputed tax, there being no statutory mandate for the Designated Authority to recover interest as disputed tax in the manner sought to be done in this case. Thus there is no provision in the DTVSV Act which authorises recovery of interest paid earlier by the Department under Section 244A of the IT Act by adding the same to the amount of disputed tax in the manner sought to be done, thereby making the addition to disputed tax in Form-3 bad in law.
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