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STATE BANK OF TRAVANCORE Versus CHIEF COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM AND OTHERS

2016 (10) TMI 398 - KERALA HIGH COURT

Interest on refunds - whether the Chief commissioner was justified in rejecting interest for the period of delay? - Unexplained inordinate delay in payment of interest within the statutory period by the department - Held that:- A certificate to the effect that tax has been deducted and specifying the amount so deducted, rate of tax and such other particulars, as may be prescribed. Therefore, there cannot be any dispute about the fact that the obligation to provide a certificate for deducting tax .....

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ch according to the Department, is attributable to the assessee. When such a view is possible and the claim for interest is denied on that specific period, do not think that this Court will be justified in taking a different view. No doubt, as rightly contended by the learned counsel for the petitioner, once the defect is cured, the parties have to go back to their original position, but the question is whether there is an obligation on the part of the Department to pay interest on the amount to .....

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in which the question that had arisen was whether the assessee was entitled to interest on the amounts of interest paid under Section 214 or 244 of the IT Act. Question considered was whether an assessee was entitled to be compensated by the Department for the delay in paying to the assessee all amounts admittedly due to it, the delay ranging from 12 to 17 years. Thus do not think that the factual issues arising in the present case and the judgment in Sandvik Asia Ltd. (supra) has any resemblan .....

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led this writ petition challenging Ext.P1, P2, P3, P4 and P5 and for a direction to the respondents to pay the petitioner interest on the refund. 2. Ext.P1 is an order dated 31/01/2006 passed by the Chief Commissioner of Income Tax considering an application filed by the petitioner under Section 244A of the Act. By the said order, the Chief Commissioner came to a finding that interest is not payable to the petitioner for the period of delay which occurred in curing defects in the TDS certificate .....

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s. Assessee therefore filed an application dated 15/04/2004 before the Chief Commissioner to grant interest under Section 244A on the TDS amount refunded to them as per proceedings dated 27/05/2004. This came to be rejected by the Chief Commissioner on the ground that the delay was attributable to the assessee. Exts.P2, P3 and P4 are similar orders passed with reference to assessment years 1993-94, 1992- 93 and 2001-02. The petitioner appears to have taken up the matter before the Government of .....

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ure the defects and resubmitting the same, the delay can only be attributed to the assessee. Paragraph 6 of the counter affidavit is relevant which reads as under: 6. For the assessment year 1992-93 interest under Section 244A was not granted for 27 months from January 1993 to March 1995 for the TDS certificates resubmitted after curing defects. For the Asst.year 1993-94, interest u/s 244A was not granted from August 1994 to December 1994 for the TDS certificates resubmitted after curing defects .....

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proceedings granting refund was attributable to the assessee in filing proper TDS certificates after curing defects. While passing the order for these assessment years, the Chief Commissioner of Income Tax has not merely relied on the order for Assessment year 2001-02 but after considering all the facts and affording an opportunity of being heard to the applicant. The contentions of the assessee's representative were dealt with in great detail in these orders. The reference to the order for .....

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ssioner of Income Tax and Others [(2006) 280 ITR 643] (SC). Specific reference is made to paragraph 79 which reads as under: The facts and the law referred to in paragraph (supra) would clearly go to show that the appellant was indisputably entitled to interest under Sections 214 and 244 of the Act as held by the various High Courts and also of this Court. In the instant case, the appellant's money had been unjustifiably withheld by the Department for 17 years without any rhyme or reason. Th .....

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te that while charging interest from the assessees, the Department first adjusts the amount paid towards interest so that the principle amount of tax payable remain outstanding and they are entitled to charge interest till the entire outstanding is paid. But when it comes to granting of interest on refund of taxes, the refunds are first adjusted towards the taxes and then the balance towards interest. Hence as per the stand that the Department takes they are liable to pay interest only upto the .....

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hat as has happened in the instant case. It is a case of the appellant as set out above in the instant case for the assessment year 1978-79, it has been deprived of an amount of ₹ 40 lakhs for no fault of its own and exclusively because of the admittedly unlawful actions of the Income Tax Department for periods ranging up to 17 years without any compensation whatsoever from the Department. Such actions and consequences, in our opinion, seriously affected the administration of justice and t .....

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ssessee, the assesee cannot claim any interest on the amount of refund. There is no dispute regarding the obligation on the part of the Income Tax Department (for short 'Department') in giving simple interest on the amount of refund as provided under Section 244A(1) of the Act. However, Section 244A(2) indicates that if the proceedings resulting in the refund are delayed for reasons attributable to the assessee, the period of delay so attributable shall be excluded from the period for wh .....

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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) of section .....

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Section 156 is paid in excess of such demand. (2) If the proceedings resulting in the refund are delayed for reasons attributable to the assessee, whether wholly or in part, the period of the delay so attributable to him shall be excluded from the period for which interest is payable, and where any question arises as to the period to be excluded, it shall be decided by the Chief Commissioner or Commissioner whose decision thereon shall be final. 7. As provided under the Statute, if any question .....

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2) can only mean the proceedings which culminated in Ext.P1 order and not the entire proceedings by which the return had been processed. Secondly, as far as the claim for refund is concerned, it becomes due at the moment the TDS certificates, after curing the defects, has been accepted. Once it is accepted, it is a confirmation that the amount had come to the account of the Income Tax Department. The delay for curing the defects in the TDS certificates does not amount to a delay in the proceedin .....

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Of course, if the delay is on the part of the Department in finalizing the returns, interest is payable from the date on which it becomes due, i.e. from the 1st day of April of the assessment year to the date on which the refund is granted. However, sub Section (2) draws a slight deviation from 244A(1) by which the assessee is deprived of the interest, if the delay in the proceedings resulting in refund is attributable to the assessee whether wholly or in part. Therefore the first contention is .....

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time spent for obtaining the corrected TDS certificates and presenting the same before the Income Tax Department shall not be a reason for denying interest. 11. The finding of the Department in Ext.P5 is that there was enough time between the date of obtaining of the certificates and filing of the return for the assessee with its network of officers and infrastructure to get the defects cured. 12. In the counter affidavit filed by the 1st respondent it is submitted that for the assessment year .....

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mind. 13. Under Section 199, any deduction made in accordance with the provisions of Chapter XVII and paid to the Central Government shall be treated as payment of tax on behalf of the person from whom income tax deduction was made. Section 200 deals with the duty of the person deducting tax. Any person deducting any sum in accordance with the provisions of the Chapter shall pay within the prescribed time the sum so deducted to the credit of the Central Government or as the Board directs. They h .....

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t so deducted, rate of tax and such other particulars, as may be prescribed. Therefore, there cannot be any dispute about the fact that the obligation to provide a certificate for deducting tax is on the deductor. The question is, if there is any defect in such certificate, and the petitioner fails to get it cured before filing of the return, petitioner can be termed as a person who had caused the delay. No doubt, as rightly held by the respondent, if the defect is noticeable on receipt of the c .....

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