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2015 (3) TMI 280 - DELHI HIGH COURT

2015 (3) TMI 280 - DELHI HIGH COURT - [2015] 374 ITR 56 (Del) - 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 - SUPRE .....

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ved by delayed payment can legitimately claim under the statute 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 „amo .....

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n Court) 1. Admit. 2. The following question of law has been urged: 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 1.7.1 .....

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ed and the refunds claimed were partly adjusted for future years. 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 r .....

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lication u/s. 154 has been rejected, on account of being barred 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 .....

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of justice would be met by granting the interest u/s. 244A upto 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. .....

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in this regard. Hence, in our considered opinion, the assessee is 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 .....

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pra) this Court was considering the issue whether an assessee who 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 .....

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not to be disturbed. It is firstly argued that the refund sought 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 Organi .....

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es not include interest due and payable on the amount refunded, 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, 2 .....

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rt payment is made, Section 244A would be still applicable in the 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 .....

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reated as paid under section 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) o .....

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