TMI Blog2013 (5) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... only issue in this appeal is with reference to non granting of interest under section 244A consequent to the refund received giving effect to the order of the CIT(A), pursuant to the order under section 251/195 of the I.T. Act. 2. Assessee filed an application on 12.03.2008 under section 195(2) for lower or nil deduction of income tax on payments to be made to M/s Nimbus Sports International Pte. Ltd who is having the rights over the telecast of cricket matches. It was the contention of assessee that the payments to be made on account of live matches are not in the nature of 'royalty' and therefore, the same is not taxable in India. It was contended that broadcast of live matches consequently does not entitle any broadcasting right to assessee and therefore no income is being accrued or arisen in India to the payee as the agreement has been signed outside India and matches will be played outside India. AO did not agree with the contention and directed assessee to deduct the tax at 11.72% (inclusive of surcharges) on the payment being made to M/s Nimbus Sports International Pte Ltd. The matter was carried in appeal before the CIT (A), who decided in favour of assessee vide the ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uct tax at 11.72% vide order under section 195(2) dated, 28.03.2008 and accordingly assessee deducted the said tax. Assessee did not claim any refund in pursuance to the Circular directly but has contested the matter on the directions so given by AO. The CIT (A) analyzing the factual situation and legal position held that payment for the live telecast of cricket matches does not come in the nature of 'royalty' and accordingly the amount was not required to be deducted and directed the tax paid to be refunded. Therefore, the observations of the CIT (A)/reliance by him on the Board Circular No.007 of 2007 dated 23.10.2007 is not correct in the sense that it is not a direct refund claim placing reliance on the Board Circular and the circumstances stated therein. Had assessee deducted the tax on its own voluntarily and claimed the benefit of the Circular for issuance of the refund, then the Circular may be applicable. In the Circular it was clarified that the amount deducted cannot be considered as 'tax' and no interest under section 244A is admissible on refunds to be granted in accordance with this Circular (007 of 2007) or on the refunds already granted in accordance with the Circul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44A. (1) [where refund of any amount becomes due to the assessee under this Act], he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated in the following manner, namely:- (a) where the refund is out of any tax [paid u/s 115WJ or [collected at souse u/s 206C or] paid by way of advance tax or treated as paid u/s 199, during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of [one-half per cent] for every month or part of a month comprised in the period from the 1st day of April of the assessment year to the-date on which the refund is granted: Provided that no interest shall be payable if the amount of refund is less than ten per cent of the tax as determined [under [sub-section (1) of section 115WE or] sub-section (1) of section 143 or] on regular assessment. (b) in any other case, such interest shall be calculated at the rate of 79 [one-half per cent] for every month or part of a month comprised in the period or periods from the date, or as the case may be, dates of payment of the tax or penalty to the date on whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. In the present case, the Dy. Director of Income Tax passed two orders u/s 201 read with section 201(1A) and the payment was made to the assessee on the direction of the Dy. Director in accordance with law. This issue was considered by the Mumbai Bench of the Tribunal in the case of Tata Chemicals Ltd. v. Dy CIT [2007] 16 SOT 481 (Mum.). In this case it has been held by the Tribunal as under:.- "Under the 'provisions of section 195(2), the assessee is empowered to make an application to the AO for non-deduction tax on such sums remitted to a non-resident which according to the assessee are not subject to tax .at source. In view of the provisions of DTAA between the two countries under the said sub-section (2) of section 195, the AO is empowered to determine such sums which are deductible out of remittance to be sent to the recipient and only 'after deduction and payment of such sums, the balance amount is to be remitted to the non-resident. In the instant case, in compliance of the order of the AO, the assessee had deducted the tax at source before remitting the amounts to Germany and Denmark. The order u/s 195(2) is appealable under the provisions of section 248 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on to clause (b) of section 244A(1) further provides that 'date of payment of tax or penalty' means the date on which the amount or tax or penalty specified in the notice of demand issued u/s 156 is paid. The Explanation attached to the main section does not in any way obliterate the meaning of the section. Section 156 talks of service of a notice of demand in the prescribed form where any tax, interest, penalty, fine or any other' sum is payable in consequence of any order passed under this Act. The order u/s 195(2) had been passed under the provisions of the Act and any notice of demand, for the said amount due pursuant to order passed u/s 195(2) was bound to be issued u/s 156. The provisions of clause(b) of section 244A(1) very categorically provide interest, on any refund, arising because of payment of tax 'in any other case' which shall include the payment made by assessee pursuant to order u/s 195(2), by which the AO requisitioned the assessee to deduct the tax and deposit the same in treasury before remitting the amounts due to the recipients outside India. Accordingly, the assessee was entitled to receive interest u/s 244A(1)(b) on amount deposited pursuant to order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Income Tax (International Taxation (2)(1) has held assessee to be an assessee in default and the said order was challenged by assessee before the CIT (A) under the Act. The CIT (A) on appeal found the order made by the Dy. Director of Income Tax to be contrary to law and assessee was held not to be treated an assessee in default. It was as a result of the order of the CIT (A), assessee was entitled to refund. The payment made by assessee was on demand under the provisions of the Act and refund also because due to assessee under the provisions of the Act. Therefore, it cannot be said that the refund was not granted to assessee under the Act. The decisions of the CIT (A) to this effect in our view, does not warrant any interference. The appeals of the Revenue are accordingly dismissed". 8. As can be seen from the above, the decision in the case of Tata Chemicals Ltd. and the decision of the Godrej Industries Ltd. were also considered. Similar view was also taken by the Coordinate Bench in the case of Taj TV Ltd. (supra) wherein on similar facts it was held as under: "3.19. In view of the decision of the Hon'ble Supreme Court in the case of ITO vs. Delhi Development Autho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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