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TMI Blog2019 (2) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... Court decision in the case of Tata Chemicals Ltd., (363 ITR 658) without considering the fact that the facts of this case is not identical to that of the assessee's" 2. Brief facts are as under: (i) Respondent-Assessee is Association of Persons (for short "AoP") and is engaged in the business of Civil Construction. The Assessee follows the project completion method of accounting to offer its income to tax. For the Assessment Years 2003-04, 2004-05 and 2005-06, the Assessee had received certain payments as a Contractor, on which the payer had deducted at tax source. In the return of income filed by the assessee for Assessment Year 200506, it had declared loss of Rs. 81.3 Crores (rounded of). In said return, the Assessee had claimed the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act and paid to the Central Government, shall be treated as the tax paid on behalf of the person in respect of whose income such payment of tax has been made. 4 Section 244A of the Act pertains to income on refunds. Relevant portion of the said Section reads as under: 244A(1): Where refund of any amount becomes due to the assessee under this Act, he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under section 156 is paid in excess of such demand." 5. Sub-section 1 of Section 244A of the Act provides for interest on refund in three separate clauses, covering different situations. Clause (a) pertains to cases where the refund is out of any tax collected at source under Section 206C of the Act or paid by way of advance tax or treated as paid under Section 199 of the Act. Clause (aa) refers to the refund arising out of any tax paid under Section 140A of the Act. Clause (b) essentially provides that in case the refund becomes due in any other case i.e. cases not covered under clause (a) or (aa), such interest shall be calculated at the rate of ½ % for every month or part of the month comprised in the period from the date of paym ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the reference "from the 1st day of April of the Assessment Year" which is the starting point for computing the interest payable, must be to the Assessment Year, in which, the tax was deducted at source. Since this expression has to be read along with the main body of clause (a) which refers to the refund arising out of, inter alia, of the tax treated to have been paid as per Section 199 of the Act. Any other view, would be holding untenable since, the Revenue which has received the tax deducted at source from the payments to be made to the Assessee and appropriate the same, would refund the same but the interest would be accounted much later when the return giving rise to the refund, is filed. 7. In slightly different background, the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ionary in nature to the assessee. In tune with the aforesaid general principle, section 244A is drafted and enacted. The language employed in section 244A of the Act is clear and plain. It grants substantive right of interest and is not procedural. The principles for grant of interest are the same as under the provisions of section 244 applicable to assessments before April 1, 1989, albeit with clarity of application as contained in section 244A. The Department has also issued Circular clarifying the purpose and object of introducing section 244A of the Act to replace sections 214, 243 and 244 of the Act. It is clarified therein, that, since there was some lacunae in the earlier provisions with regard to non-payment of interest by the Reve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey received and retained without right implies and carried with it the right to interest. Whenever money has been received by a party which ex aequo 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. We have held the interest requires to be paid on such refunds. The catechize is from what date interest is payable, since the present case does not fall either under clause (a) or clause (b) of section 244A of the Act. In the absence of an express provision as contained in clause (a), it cannot be said that the interest is payab ..... X X X X Extracts X X X X X X X X Extracts X X X X
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