TMI Blog2016 (9) TMI 1326X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee’s claim of interest on interest can be decided on the basis of those facts. In that view of the matter, the learned Commissioner (Appeals) was not justified in rejecting additional ground raised by the assessee. We, therefore, restore this issue back to the file of the Assessing Officer for deciding assessee’s claim of interest on interest in the light of the facts and material on record and in consonance with the relevant statutory provisions as well as the decisions which may be relied upon by the assessee. - ITA no.4193/Mum./2014 - - - Dated:- 16-9-2016 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER, AND SHRI N.K. PRADHAN, ACCOUNTANT MEMBER For The Assessee : Shri K.B. Desai For The Revenue : Shri Satya Pal Kumar ORDER PER SAKTIJIT DEY, J.M. Instant appeal by the assessee is directed against the order dated 21st March 2014, passed by the learned Commissioner (Appeals) 14, Mumbai, for the assessment year 2005 06. The solitary issue in dispute in the present appeal relates to disallowance of assessee s claim of interest on refund. 2. Brief facts are, the assessee a joint venture is engaged in the busines ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of TDS amount of ₹ 29,27,400, mistakenly deducted and remitted to the Government account. Thereafter, the assessee went on filing several letters before the Departmental Authorities requesting for grant of refund. Since none of these letters were responded to by the Departmental Authorities, the assessee on 1st June 2012, filed a petition before the Ombudsman claiming refund of TDS amount along with interest. On the basis of petition filed by the assessee, the Ombudsman vide letter dated 5th June 2012, called for a report from the Assessing Officer on assessee s claim. The Assessing Officer vide letter dated 8th August 2012, intimated the assessee that against refund claim for ₹ 29,27,400 certain demands relating to assessment year 2007 08, were to be adjusted. Ultimately, after adjusting the said demand, the Assessing Officer on 17th August 2012, granted refund of ₹ 16,29,669 to the assessee. While granting such refund, as the Assessing Officer did not compute any interest under section 244A, the assessee on 5th October 2012 and 8th November 2012 filed applications purportedly under section 154 before the Assessing Officer claiming interest on the refund of exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed Representative submitted, thus, it is an accepted fact that the TDS amount was not payable to the Government account. Learned Authorised Representative submitted, there is no dispute to the fact that the assessee has paid the TDS amount to the Government account in the financial year 2004 05 and after filing its revised return and completion of assessment on 28th March 2008, , the assessee for the first time claimed the refund in letter dated 29th November 2008 and thereafter has repeated the claim on various occasions. He submitted, since assessee s money was retained by the Department for such a long period, the assessee is entitled to receive interest on the refund of excess TDS in terms of the provision contained under section 244A. Learned Authorised Representative submitted, the object behind introduction of section 244A is for the purpose of removing the ambiguity and inequity in payment of interest on delayed payment of refund. Learned Authorised Representative relying upon the decision of the Hon'ble Supreme Court in Tata Chemicals Ltd. (supra) submitted, even for erroneous deduction of tax at source, the assessee is entitled for grant of interest. He submitted, wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Ombudsman called for a report from the Assessing Officer, he granted refund of excess TDS after adjusting certain demand relating to A.Y. 2007 08. Thus, as could be seen, though the excess TDS was remitted to the Govt. account by the assessee, may be voluntary in the financial year 2004 05 but the Department granted refund only in August 2012. Thus, it is apparent there was inordinate delay by the Department in granting refund to the assessee. The issue before us is whether the assessee is entitled for interest on delayed payment of refund. The Assessing Officer / learned Commissioner (Appeals) have rejected the assessee s claim of interest on delayed payment of refund on the reasoning that excess TDS was voluntarily paid to the Govt. account, hence, in terms of section 244A, r/w CBDT circulars referred to by the Departmental Authorities, the assessee is not entitled for interest payment. On a perusal of the provisions contained in section 244A, we have noted that there is no specific bar or prohibition under the said provision for granting interest on delayed payment of refund. As far as the circular on delayed payment of interest is concerned, we are of the view that the Dep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich has been duly paid in prescribed time and provisions in that behalf form part of the recovery machinery provided in a taxing Statute. Refund due and payable to the assessee is debt-owed and payable by the Revenue. The Government, there being no express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, cannot shrug off its apparent obligation to reimburse the deductors lawful monies with the accrued interest for the period of undue retention of such monies. 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. In the present case, it is not in doubt that the payment of tax made by resident/depositor is in excess and the department chooses to refund the excess payment of tax to the depositor. As already held the interest requires to be pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t effort on the part of the Department to refund the excess TDS paid by the assessee knowing fully well that such money retained by it is without authority of law. That being the case, applying the ratio laid down by the Hon'ble Supreme Court, the Revenue has to compensate the assessee for unauthrisedly holding on or retaining the excess amount paid by the assessee. Therefore, even if the excess TDS was paid by the assessee to the Govt. account voluntarily under misconception, however, as held by the Hon'ble Supreme Court even in the absence of an express statutory provision for payment of interest, the assessee has to be paid interest on refund from the date of payment of such tax. It has further been brought to our notice that the CBDT abiding by the view expressed by the Hon'ble Supreme Court in Tata Chemicals Ltd. (supra) had issued Circular no.11 of 2016 dated 26th April 2016, wherein, it is stated that if a resident deductor is entitled for refund of tax deposited, then it has to be refunded with interest under section 244A from the date of payment of such tax. In the said Circular, Departmental Authorities have also been advised not to contest the claim of intere ..... X X X X Extracts X X X X X X X X Extracts X X X X
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