TMI Blog2016 (9) TMI 1073X X X X Extracts X X X X X X X X Extracts X X X X ..... led for interest and revenue is liable to pay it to the assessee. Thus, we direct the AO to grant the interest u/s 244A for the period falling between the date of passing of order u/s 143(1) and actual date of granting of refund, at the rate of interest as would have been applicable if the refund amount would have been for an amount more than 10% of the gross tax. - Decided in favour of assessee - ITA NO.5450/Mum/2014 - - - Dated:- 27-7-2016 - Shri Joginder Singh, Judicial Member, and Shri Ashwani Taneja, Accountant Member For The Assessee : Shri Ashok D. Shah (AR) For The Revenue : Shri O.P. Meena (DR) ORDER Per Ashwani Taneja (Accountant Member): This appeal has been filed by the Assessee against order of Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Judgment delivered on, 26.02.2014 clearly spelt out that interest needs to be paid on refund. Interest on refund is a substantive right of the assessee and statutory obligations of state. The Apex court in the case of Union of India vs. Tata Chemicals Ltd (363 ITR 658) held that an assessee is entitled to payment of interest for money remaining with the Govt. which would be refunded. Rajashekhar 3 Swaminathan The various courts the CBDT Circular clearly says that soon after order is passed the refund should be granted within a reasonable period, and in the case of delay the assessee should be compensated with interest u/s 244 on the refundable amount. In other words various High Courts have interpreted that if an assessee is depri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest also. This is true in the case of assessee under the Act when the collection is illegal, there is a corresponding obligation on the Revenue to refund such amount with interest inasmuch as it had retained and enjoyed the money deposited. Rajashekhar 4 Swaminathan Even the department understood the object behind insertion of section 244A,as that am assessee is entitled to payment of interest for money remaining with the Government which would be refunded. 3.2. Ld. CIT(A) considered the submissions of the assessee but did not accept the same on the ground that in the present case the amount of refund determined was as ₹ 10,39,710/- u/s 143(1), which was less than 10% of gross tax that ₹ 1,49,11,408/-, and therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viz: i. Tax deducted/collected at source ii. Advance Tax and Self Assessment Tax etc. 3.4. The provisions with regard to deduction of tax at source by the payers are quite stringent. The payers are bound to deduct the tax at source from the payments made to the payees irrespective of the facts whether any amount of tax would be payable by the payee on its income or not. Further, it is very difficult to estimate the exact amount of taxable income in view of uncertainties in life and business coupled with complex provisions of law and various deductions and exemptions as may be available to an assessee, and therefore, assessee is at times required to pay advance tax purely on estimate basis. Under these circumstances, the assessee un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ult. Subsequent to the above decision, the CBDT came out with instruction No.7/2013 on the subject of payment of interest u/s 244A Act when assessee is not at fault. 3.6. In the case of Sandvik Asia Ltd. vs CIT 280 ITR 643, Hon ble Supreme Court held as follows: In view of the express provisions of the Income Tax Act, 1961, an assessee is entitled to compensation by way of interest for the delay in the payment of amounts lawfully due to the assessee which are withheld wrongly and contrary to law. 3.7. Hon ble Gauhati High Court in the case of Jwala Prasad Sikaria ( 175 ITR 535 ) has gone to the extent of observing that the assessee is entitled to payment of interest on refund due Rajashekhar 7 Swaminathan to assessee for delay on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ligation to refund carries with it the right to interest also. It was finally held that when the col lection is illegal , there is a corresponding obligation on the Revenue to refund such amount with interest in as much as it had retained and enjoyed the money deposited. 3.9. In view of facts of this case and clear guidance and instruction given by the courts time to time, we find that there was no proper justification on the part of the revenue to Rajashekhar 8 Swaminathan withhold the amount of refund beyond the date of issuance of intimation/order u/s 143(1). We can appreciate that upto the date of passing order/intimation u/s 143(1), no interest shall be payable by the department to the assessee because of clear provisions of law on ..... X X X X Extracts X X X X X X X X Extracts X X X X
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