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2016 (8) TMI 206 - ITAT MUMBAI

2016 (8) TMI 206 - ITAT MUMBAI - TMI - Interest on delayed grant of refund in terms of section 244A(1) - delay in grant of refund - Held that:- Relevant TDS certificates were furnished alongwith the return of income and it is also irrefutable that the tax was deducted and deposited in the account of the Central Government within the stipulated period. Therefore, in our view, income-tax authorities have erred in construing that the proceedings resulting in the refund are delayed for reasons attri .....

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n any income-tax authority to proceed to decide any issue before it, in case an application is pending before the AAR. Be that as it may, in our view, if the proceedings resulting in refund are delayed on account of pendency of an application before the AAR, the same cannot be construed as ‘reasons attributable to the assessee’ within the meaning of Sec. 244A(2) of the Act. Therefore, the aforesaid stand of CIT(A), in our view, is untenable in law. - In this view of the matter, in our consid .....

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Tekriwal ORDER PER G.S. PANNU, AM : The captioned appeal by the assessee is directed against the order of CIT(A)-33, Mumbai dated 14.02.2008, pertaining to the Assessment Year 2003-04, which in turn has arisen from the order passed by the Assessing Officer dated 10.01.2006 under section 154 of the Income Tax Act, 1961 (in short the Act ). 2. In this appeal, although the assessee has raised multiple Grounds of appeal but the sum and substance of the dispute is assessee s claim for interest on del .....

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he year. The said Denmark based concern had deducted tax at source and deposited the same in the Government account, but the plea of the assessee was that such income is not taxable in India as the sale had taken place outside India. Be that as it may, the said issue is not the subject matter of controversy before us. It would suffice for us to notice that on 28.11.2003 the assessee-company filed a return of income claiming a refund of ₹ 5,06,40,450/-. The claim of refund was based on orig .....

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assed an order u/s 143(3) of the Act whereby credit for the TDS was granted for ₹ 98,44,905/- and a refund of ₹ 9,450/- was determined. At the time of hearing, learned representative for the assessee explained that the credit for the TDS of ₹ 5,06,31,000/- was not granted on the ground that the relevant TDS certificate did not bear the stamp of the company issuing such certificate. On 11.11.2005, assessee filed an Indemnity Bond in response to requirement of the Assessing Offic .....

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kground, the grievance of the assessee is that the Assessing Officer has allowed interest for delay in grant of refund only for the period 1.11.2005 to 10.1.2006 whereas the interest on delayed grant of refund in terms of Sec. 244A(1) of the Act accrues to the assessee from 1.4.2003 up to the date of grant of refund, i.e., 20.7.2006. 5. Per contra, the stand of the Revenue is that the proceedings resulting in the refund were delayed for reasons attributable to the assessee up to the date of fili .....

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ted out that it clearly reflects that the deductor had duly deducted and thereafter deposited the amount of tax into the Central Government account on 5.12.2002. It was, therefore, sought to be canvassed that the monies were indeed credited to the account of the Government within the stipulated period. It was also pointed out that ultimately the Assessing Officer has granted credit for the TDS based on the very same TDS certificate and, therefore, the interest for delay in grant of refund is all .....

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ayed refund from the first day of the assessment year up to the date of refund. The learned representative pointed out that the Hon ble High Court noted that where tax was deducted and deposited with the exchequer in time, Sec. 244A(2) of the Act cannot be invoked to deny interest to the assessee. The judgment of the Hon'ble Kerala High court in the case of State Bank of Travancore, 42 taxmann.com 572 (Kerala) was also relied upon to justify grant of interest on delayed refund up to July, 20 .....

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the appeal of the assessee. 8. We have carefully considered the rival submissions. Notably, sub-section (1) of Sec. 244A of the Act prescribes that where refund of any amount becomes due to the assessee, interest shall be payable to the assessee from the first day of April of the assessment year to the date on which the refund is granted. In the present case, the claim set-up by the assessee is that it has been found that assessee was entitled to the refund of the TDS and, therefore, it is entit .....

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rest is to be allowed. 9. For such situations, sub-section (2) of Sec. 244A of the Act prescribes that where the proceedings resulting in refund are delayed for reasons attributable to the assessee, the period of delay so attributable to assessee shall be excluded from the period for which the interest is payable. In this case, the first point made by the Revenue is that the TDS certificate for ₹ 5,06,31,000/- issued by the tax deductor did not bear the stamp of the company issuing such ce .....

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the requisite tax into Government exchequer and also issued requisite Form No. 16A. Non-affixing of stamp on the TDS certificate by the issuing concern, in our considered opinion, does not distract from the fact that the tax was deducted and deposited in the account of the Government exchequer within the period prescribed. Moreover, once the Assessing Officer allows credit for the TDS based on the same certificate, the credit is understood to have been granted with respect to the tax that was de .....

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r the reasons attributable to the assessee on account of non-filing of TDS certificates with the return of income. The Hon ble High Court noticed that once the benefit of TDS has been allowed to the assessee, interest u/s 244A could not be denied keeping in mind that the tax was deducted and deposited with the exchequer in time, and that Sec. 244A(2) of the Act was not attracted. 10. In our considered opinion, the fact-situation in the present case stands on a much better footing than what was b .....

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the meaning of Sec. 244A(2) of the Act. 11. Apart therefrom, CIT(A) has made a reference to the fact that assessee had earned certain income from transaction with EAC Nutrition, Denmark for which assessee was claiming non-taxability in India and its application in this regard was pending with the Authority for Advance Ruling (AAR). The CIT(A) further noticed that the AAR, vide its ruling dated 18.10.2004, held that such income was not chargeable to tax. According to the CIT(A), since assessee ha .....

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to the assessee. In this manner, the CIT(A) has sought to justify invoking Sec. 244A(2) of the Act to that extent. In our considered opinion, the aforesaid stand of the CIT(A) is untenable as our following discussion would show. Firstly, the parity of reasoning enunciated by the Hon ble Bombay High Court in the case of Larsen & Toubro Ltd. (supra) clearly militates against the stand of the CIT(A) in the present case because there is no dispute that the tax was deducted and deposited in the G .....

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riction is placed only for an assessee-applicant who is a resident of India as per the Act, whereas the appellant-assessee before us is a non-resident. Apart therefrom, we do not find any provision which places restrictions on any income-tax authority to proceed to decide any issue before it, in case an application is pending before the AAR. Be that as it may, in our view, if the proceedings resulting in refund are delayed on account of pendency of an application before the AAR, the same cannot .....

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