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Preeti N Aggarwala, Naresh Kumar Aggarwal, Brisk Capital Market Services Ltd. Versus Chief Commissioner Of Income Tax & Anr.

2017 (5) TMI 308 - DELHI HIGH COURT

Interest on refund - Expression ‘in any other case’ occurring in Section 244A (1) (b) - whether would include the amount of refund which constitutes the interest that has been waived by the Income Tax Department (‘Department’) under Section 220 (2A) of the Act? - Held that:- The decision in Union of India v. Tata Chemicals Limited (2014 (3) TMI 610 - SUPREME COURT ) is clear in its enunciation that even if there is no express statutory provision for payment of interest, the government cannot avo .....

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tion 220(2A) of the Act. The circular of the CBDT dated 26th April 2016 accepts the above proposition laid down in Union of India v. Tata Chemicals Limited (supra) in its entirety. - The sum found refundable to the Petitioners as a result of the waiver of interest order passed by the CCIT is a definite sum that was wrongly deducted from the Petitioners as interest. Payment of interest on that sum by the Revenue cannot be characterised as payment of 'interest on interest'. - Thus this Cou .....

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- 1-5-2017 - S. MURALIDHAR & CHANDER SHEKHAR JJ. Petitioner Through: Mr. Sandeep Sapra with Mr. Manu K. Giri, Advocates. Respondents Through: Mr. Ashok Manchanda, Senior standing counsel and Mr. Raghvendra Singh, Advocate. O R D E R Dr. S. Muralidhar, J. 1. The central question involved in these three writ petitions under Article 226 of the Constitution of India is whether the expression in any other case occurring in Section 244A (1) (b) of the Income Tax Act, 1961 ( Act ) would include the .....

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ioners entailed their paying the substantial amounts towards tax and interest. By a communication dated 29th August 2006 the Assistant Commissioner of Income Tax ( ACIT ), Central, Circle-19, New Delhi requested the Custodian (Special Court) for recovery of the income tax demand. 4. By an order dated 19th March 2008 the Department recovered in the case of Preeti Aggarwala (the Petitioner in W.P. (C) No. 1011 of 2016) a sum of ₹ 3,74,323 towards interest under Section 220(2) of the Act for .....

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16) the dues in respect of taxes and interest were recovered by the Respondent from the Custodian under the orders of the Special Court by debiting the attached account of the said Petitioner and also by adjusting refunds due for AYs 1993-94 up to 1996-97. 5. On 22nd August 2008 the three Petitioners filed applications for waiver of interest under Section 220 (2A) of the IT Act for the various AYs. After several letters and reminders by the Petitioners for disposal of their waiver applications, .....

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wal 2004-05 ₹ 4,62,945 Naresh Agarwal 2006-07 ₹ 1,66,097 Naresh Agarwal 2006-07 ₹ 6,787 TOTAL ₹ 79,78,839 Preeti Aggarwala 1998-99 ₹ 3,74,323. 6. After the Petitioners petitions for waiver of interest were decided, the Petitioners filed an application dated 18th June 2015 before the Assessing Officer ( AO ) for grant of interest on the above amounts under Section 244 A of the Act. These applications were rejected by the AO by an order dated 3rd August 2015 stating i .....

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powers and waived the interest under Section 220(2A) of the Act. Your right of refund of the waived amount arose only the date of order passed under Section 220(2A) of the Act i.e. on 30th March 2015 and the resultant refund was issued to you on 30th April 2015. The obligation to refund money received and retained without right implies and carries with it the right of interest also whereas charging of interest under Section 220(2) for non payment of tax within the stipulated period is mandatory .....

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not squarely covered with facts of the case laws relied upon by you. 4. In view of the facts and the provisions of the Act, you are not entitled to the interest under Section 244A and your application under reference is rejected. 7. Thereafter, the present three writ petitions were filed seeking the quashing of the above orders dated 3rd August 2015 and for a direction to the Department to pay the Petitioners simple interest @ 6% from the date of recovery of the interest till the date of refund .....

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it of Section 244A (1) (b) of the Act would in fact be complied with. In other words, this should not be viewed as interest on interest as is sought to be contended by the Department. Mr. Sapra submitted that with the language of statute being clear and unambiguous there should be no difficulty in the Court directing that the Petitioners should be paid the interest on the said sum under Section 244 A (1) (b) of the Act. 9. Reliance was placed by Mr. Sapra on the decision in Union of India v. Tat .....

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on the decision dated 2nd February 2016 of the High Court at Calcutta in ITA No. 526 of 2004 [Commissioner of Income Tax, Kolkata-I v. Birla Corporation Limited]. 10. On the other hand Mr. Ashok Manchanda, learned Senior standing counsel for the Department, submitted that in the first place there was an unexplained delay in Petitioners filing the present petitions ten months after the order of waiver of interest dated 30th March 2015 and 9 months after 30th April 2015 when the refunds were in fa .....

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refund order dated 30th March 2015. Further, since CCIT had waived the interest payable by the Petitioners, the question of their incurring a financial loss did not arise. There was no general mandatory rule that every amount of refund made by the Department to an Assessee must carry interest thereon. Reliance was placed on the decision of this Court in Commissioner of Income Tax v. Engineers India Limited (2015) 373 ITR 377 (Del). 12. Mr Manchanda submitted that the decision of the Supreme Cour .....

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arat Fluoro Chemicals (2014) 43 Taxman.com 350 (SC) where it was held that only that interest provided for under the statute may be claimed by an Assessee and no other interest. 13. First, the Court would like to recapitulate the facts of the present case. The assessments of the Petitioners for several years were held up on account of the proceedings before the Special Court. In the case of Brisk Capital Market Services Limited, the relevant AYs were 1993-94 to 1996-97; in the case of Preeti Agg .....

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of the Act. Their applications seeking waiver of interest filed on 22nd August 2008 were finally disposed of by the CCIT only on 30th March 2015, i.e., after almost seven years. Certainly, the Petitioners cannot be held responsible for such delay. Obviously there was a loss suffered by the Assessees as the amounts waived, and therefore refundable, were substantial. In the case of Brisk Capital Market Services. Ltd. the interest amount waived was ₹ 62,24,677 In the case of Naresh Aggarwal i .....

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eon calculated in the following manner, namely: (a) Where the refund is out of any tax collected at source under Section 206C or paid by way of advance tax or treated 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,- (i) from the 1st day of April of the assessment year to the date on which the refund is granted, if the retur .....

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f tax, whichever is later, to the date on which the refund is granted: Provided that no interest under clause (a) or clause (aa) 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 143 or on regular assessment. (b) In any other case, 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 or periods from the date or, as the case may be, dates of payment o .....

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e other than refund of taxes or penalties. Clause (b) stipulates that in any other case the interest payable shall be calculated at the rate of one-half per cent for every month or part of a month comprised in the period or periods from the date or, as the case may be dates of payment of the tax or penalty to the date on which the refund is granted. 17. This has to be read with the expression refund of any amount that becomes due occurring in Section 244 A (1) of the Act. When the entire sub-sec .....

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ich the refund is granted. This does not mean that the amount other than tax or penalty cannot be included in the expression in any other case . it is only reflective of the periods for which such interest would become payable. In fact the disjunctive or between the words period and periods indicates that 'in any other case' interest would be calculated for every month or part of a month comprised in the period or periods from the date o which the refund is granted. The Court is not prep .....

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interest under Section 244A of the Act on the refund arising due to excess payment on self-assessment of tax. It was held that Section 244A does not mandate that interest cannot be allowed on self-assessment tax paid under Section 140A of the IT Act. Relying on the decisions in Commissioner of Income Tax v. Cholamandalam Investment and Finance Company Limited (2007) 294 ITR 438 (Mad), ACIT v. Kerala Transport Company (2014) 222 Taxman 149 (Ker), Commissioner of Income Tax v. Mangalam Arts (2013) .....

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claim interest under Section 244A on refund of excess self-assessment tax. 20. As correctly noted in Commissioner of Income Tax v. Birla Corporation Limited (supra), there was a divergence of views of the Division Benches of this Court in CIT v. Sutlej Industries (2010) 325 ITR 331 (Del) and CIT v. Engineers India Limited Ltd. (2015) 373 ITR 377 (Del). In the latter decision, the Court purportedly followed the decision of the Supreme Court in Commissioner of Income Tax, Gujarat v. Gujarat Fluor .....

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ndia v. Tata Chemicals Limited (supra) the question that arose was whether the Revenue was liable to pay interest on the refund of tax made to the Resident/Deductor under Section 240 of the Act. Answering the said question in the affirmative, the Supreme Court held as under: 22. It is cardinal principle of interpretation of Statutes that the words of a Statute must be understood in their natural, ordinary or popular sense and construed according to their grammatical meaning unless such construct .....

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Courts have adhered to the principle that efforts should be made to give meaning to each and every word used by the legislature and it is not a sound principle of construction to brush aside words in a Statute as being inapposite surpluses, if they can have proper application in circumstances conceivable within the contemplation of the Statute (See Gurudevdatta VKSSS Maryadit v. State of Maharashtra [2001] 4 SCC 534). 23. It is also well settled principle that the courts must interpret the prov .....

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tion, substitution or alteration of words and violence would be done to the spirit of legislation, (ii) where the words of a Provision are capable of being given only one meaning and (iii) where there is no ambiguity in a provision, however, the Court may apply the rule of beneficent construction in order to advance the object of the Act. 25. Before the insertion of Section 244A as a composite Section by the Direct Tax Laws (Amendment) Act, 1987, the liability to pay interest on refund of pre-pa .....

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ulated in accordance with clause (a) & (b) of sub-Section (1) of Section 244A. In calculating the interest payable, the section provides for different dates from which the interest is to be calculated. ..... 38. Providing for payment of interest in case of refund of amounts paid as tax or deemed tax or advance tax is a method now statutorily adopted by fiscal legislation to ensure that the aforesaid amount of tax which has been duly paid in prescribed time and provisions in that behalf form .....

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ained 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." 22. The aforesaid decision in Union of India v. Tata Chemicals Limited (supra) is clear in its enunciation that even if there is no express statutory provision for payment of interest, the government cannot avoid its obligation to reimburse the lawful monies "together with .....

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