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2016 (9) TMI 1073 - ITAT MUMBAI

2016 (9) TMI 1073 - ITAT MUMBAI - TMI - Grant the interest u/s 244A - Withhold amount of refund beyond the date of issuance of intimation/order u/s 143(1) - Held that:- 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 assesse .....

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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. order of Ld. Commissioner of Income Tax (Appeals)-18 Mumbai, {(in short CIT(A) }, dated 10.10 .....

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nue. 3. The brief background of the case as noted from the orders of lower authorities are that the AO passed an order u/s 154 of the I.T. Act rejecting the claim of the assessee relating to interest u/s 244A of the IT. Act, wherein the AO held that on verification of records the contention of the assessee was found to be incorrect, since the refund of ₹ 10,39,710/- determined u/s 143(1) was less than 10% of gross tax of ₹ 1,49,11,408/-. As per the provisions of Income Tax Act, no in .....

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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 .....

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t. Interest on refund is a substantive right of the assessee & statutory obligation of the AO Clause (b) of sub section (1) of sec. 244A opens with the words "in any other case" that means in any other case than the amount paid under clause (a) of sec. 244A. Circular No. 549, dt. 31st Oct. 1989, clarified the purpose and object of introducing section 244A of the Act to replace sections 214, 243 and 244 of the Act as providing for payment of interest by the Department for delay in g .....

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ngfully exacted or are believed to be, for any reason, inequitable. The statutory obligation to refund carries with it the right to interest 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 i .....

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considered the submissions made by the Ld. Counsel and the Ld. DR before us. The Ld. Counsel has fairly accepted that in case amount of refund is less than 10% of the gross tax as determined in sub-section 143(1), then, no interest is payable to the assessee. But, the assessee submits that undisputedly, no refund should be payable up to the date of determination of tax u/s 143(1). But, if the amount payable to the assessee is withheld by the department beyond that date and that too without any r .....

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tion (C) Rajashekhar 5 Swaminathan 2659/2012 dated 14.03.2013. No contrary judgment was brought to our notice by the Ld. DR. 3.4. We have carefully considered the submissions made by both sides and facts of this case brought before us. It is noted that the provisions of the Act has been drafted in such a manner that assessee is obliged to pay tax through various channels viz: i. Tax deducted/collected at source ii. Advance Tax and Self Assessment Tax etc. 3.4. The provisions with regard to deduc .....

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sessee is at times required to pay advance tax purely on estimate basis. Under these circumstances, the assessee under stringent provisions of the law ends up in paying more amounts of tax then he is liable to pay in a particular assessment year. On the top of that, there is no provision under the income tax law which permits an assessee to set off the extra amount of tax paid by an assessee in a particular year against the amount payable in the subsequent year at the time of filing of return fo .....

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nd again issued strict instructions and guidance to the revenue authorities to refund the amount of excess tax collected from the assessee on its earlier convenience. It is further noted that the Central Board of Directs Taxes had also come out with various instruction to avoid undue hardship to the tax payers. 3.5. Hon ble Delhi High Court in case of Court on its Own Motion Vs. UOI and Others in W.P,(C) 2659/2012 dated 14.03.2013 issued writ of Mandamus for necessary action by the Income Tax De .....

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st 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 the part of revenue even if there is no statutory provision in this regard. 3.8. In the matter of UOI vs Tata Chemicals (363 ITR 658) the Hon .....

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by the Revenue. The state having received the money without right, and having retained and used it, is bound to make the party good, just as an individual would be under like circumstances. The obligation to refund money received and retained without right implies and carries with it the right to interest. Whenever money has been received by a party which ex ae quo et bono ought to be refunded, the right to interest follows, as a matter of course interest is a kind of compensation for use and r .....

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