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Commissioner of Income Tax-VIII Versus Indian Farmer Fertilizer Co-Operative

2015 (3) TMI 280 - DELHI HIGH COURT

Entitlement to any amount for the delayed payment of interest under Section 244A on the principal refund amount claimed by it - Held that:- Plain text of Section 244A does not provide for a construction which entitles the assessee aggrieved by delayed payment of principal to any amount over and above the interest directed by Section 244A(1) itself. See Commissioner of Income Tax V. Gujarat Fluoro Chemicals [2013 (10) TMI 117 - SUPREME COURT]

In Sandvik Asia Ltd. (2006 (1) TMI 55 - SU .....

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is interest and that “no other interest on such statutory interest” is payable. This ruling, in the opinion of this Court, rendered by a larger Bench, would have to be followed as opposed to the ratio in HEG Ltd. (2009 (12) TMI 35 - SUPREME COURT ) where the Supreme Court had expressed a contrary opinion by indicating that the interest component towards the delayed payment of the tax refund would partake of the character of the „amount of due‟ under Section 244 A. In other words, HEG Ltd. .....

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ed: Whether in the facts and circumstances of the case, the assessee was entitled to any amount for the delayed payment of interest under Section 244A on the principal refund amount claimed by it. 3. The assessee s returns for the year 1997-98 and 1998-99 were processed under Section 143(1). It is the admitted case of the parties that the requisite advance tax payments were completed within the time specified i.e. 1.4.1997 and 1.7.1998. The assessments were thereafter framed under Section 143(1) .....

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. The assessee s appeal to the ITAT succeeded. The Tribunal in ITA No.3398 and 3399/Del/2011 by its impugned order dated 20.1.2012 held that the amounts were payable towards delayed payment of interest. The ITAT discussed the facts in the following terms : 5. In this case refund of ₹ 10,38,32,977/- has been determined by the Assessing Officer. No interest has been granted u/s. 244A, though the tax and interest payable on the returned income was computed at ₹ 26,87,16,819/- as against .....

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by limitation. It was held that no order u/s. 154 could be passed after the expiry of 4 years from the end of the year in which the order sought to be amended was passed. 6. Upon assessee s appeal in this regard Ld. Commissioner of Income Tax (Appeals) held that he agreed with the assessee that interest u/s 244A should have been granted by the Assessing Officer, for which there was no requirement in law for the assessee to claim the interest. Ld. Commissioner of Income Tax (Appeals) further obse .....

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the date of adjustment of the refund, and declined to order granting of interest on interest. 4. The ITAT relied upon the decision of the Supreme Court in Sandvik Asia Ltd. V. CIT & Ors. (2006) 280 ITR 643 and held that in its opinion the assessee was entitled to interest on delayed payment of interest and upheld the assessee s contentions as follows : 10. We find that Hon'ble Apex Court in the case of Sandvik Asia Ltd. vs. C.I.T. & Ors. 280 ITR 643 had held that "assessee was e .....

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s entitled to interest on the delayed payment of interest and accordingly the assessee's appeal is allowed. 5. The revenue contends that the reliance placed upon Sandvik Asia Ltd. (supra) is erroneous. It is submitted on its behalf that Sandvik Asia Ltd. (supra) was delivered in respect of facts prior to the insertion of Section 244A and that Courts are duty bound to correctly interpret that provision. It was emphasized that the plain text of Section 244A does not provide for a construction .....

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o is made to wait for refund of interest for decades be compensated for the great prejudice caused to it due to the delay in its payment after the lapse of statutory period. In the facts of that case, this Court had come to the conclusion that there was an inordinate delay on the part of the Revenue in refunding certain amount which included the statutory interest and therefore, directed the Revenue to pay compensation for the same not an interest on interest. 8. Further it is brought to our not .....

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t was only in respect of the interest payable and not any amount over and above it. It was next contended that the decision of the Supreme Court in Commissioner of Income Tax V. HEG Ltd. (2010) 324 ITR 331 supports the view adopted by the ITAT. Learned counsel also stated that a Division Bench of this Court had followed HEG Ltd. (supra), in India Trade Promotion Organisation V. CIT (2014) 361 ITR 646. In India Trade Promotion Organisation (supra) it was held - after consideration of HEG Ltd. (su .....

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the Revenue would be liable to pay interest on the shortfall. This does not amount to payment of interest on interest. An example will clarify the situation and help us to understand what is due and payable under Section 244A of the Act. Suppose Revenue is liable to refund ₹ 1 lac to an assessee with effect from 1st April, 2010, the said amount is refunded along with interest due and payable under Section 244A on 31st March, 2013, then no further interest is payable. However, if only ͅ .....

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e same manner. For example, if ₹ 60,000/- was paid on 31st March, 2013, Revenue would be liable to pay interest on ₹ 1 lac from 1st April, 2010 till 31st March, 2013 and thereafter on ₹ 40,000/-. Further, interest payable on ₹ 60,000/-, which stands paid, will be quantified on 31st March, 2013 and on this amount, i.e., interest amount quantified, Revenue would be liable to pay interest under Section 244A till payment is made. 7. Section 244A(1) of the Income Tax Act reads .....

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diately 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, s .....

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