TMI Blog2021 (10) TMI 1254X X X X Extracts X X X X X X X X Extracts X X X X ..... amount due in section 244A of the Act , thereby making the assessee eligible to receive interest u/s 244A of the Act thereon. In view of the aforesaid observations and placing reliance on various judicial precedents relied upon hereinabove including the CBDT Instruction and CBDT Circular we direct the ld AO to grant interest on refund from 14.7.2009 onwards till the date of granting refund for all the Asst Years under consideration. Accordingly, the grounds raised by the assessee are allowed. - ITA No.728/Mum/2018 TO 731/Mum/2018 (Assessment Year :1994-95 to 1997-98) - - - Dated:- 27-10-2021 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI M.BALAGANESH, ACCOUNTANT MEMBER Assessee by: Shri Farrokh Irani Revenue by: Shri Amit Singh ORDER PER M. BALAGANESH (A.M): These appeals in ITA Nos.728/Mum/2018 to 731/Mum/2018 for A.Yrs.1994-95 to 1997-98 respectively arise out of the order by the ld. Commissioner of Income Tax (Appeals)-6, Mumbai in appeal No.CIT(A)-6/IT-228/3/2016-17, CIT(A)-6/IT-227/4/2016-17, CIT(A)-6/IT-226/5/2016-17 CIT(A)-6/IT-225/6/2016-17 respectively dated 29/12/2017 (ld. CIT(A) in short) against the order of assessment passed u/s.154 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der determining the tax and interest refundable to the assessee for the various Asst Years under consideration as under:- Asst Year Refund 1994-95 ₹ 7,92,48,950 1995-96 ₹ 34,51,94,642 1996-97 ₹ 4,49,31,336 1997-98 ₹ 23,16,11,027 3.3. The aforesaid refunds were however retained by the department without granting the same to the assessee. The ld AR before us submitted that after repeated reminders and persistent follow up , inter alia in the form of more than 54 letters addressed to the ld AO, the above refunds were granted to the assessee after a lapse of almost 98 months by cheques dated 04/05/2016, without any interest thereon for the delayed period. The assessee s request for interest u/s 244A of the Act on the above refunds were denied by the ld AO on the ground that : a) In para 9 of its order , the ITSC had not given interest beyond March 2008 ; b) The matter had not yet attained finality in view of pending appeals ; 3.3.1. This action of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e relevant to get into the statutory provisions governing refunds and interest thereon. Section 240 Refund on appeal, etc. Where, as a result of any order passed in appeal or other proceeding under this Act, refund of any amount becomes due to the assessee, the Assessing Officer shall, except as otherwise provided in this Act, refund the amount to the assessee without his having to make any claim in that behalf: Provided that where, by the order aforesaid, - (a) an assessment is set aside or cancelled and an order of fresh assessment is directed to be made, the refund, if any, shall become due only on the making of such fresh assessment; (b) the assessment is annulled, the refund shall become due only of the amount, if any, of the tax paid in excess of the tax chargeable on the total income returned by the assessee. Section 244A - Interest on refunds 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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... B) Where refund of any amount becomes due to the deductor in respect of any amount paid to the credit of the Central Government under Chapter XVII-B, such deductor shall be entitled to receive, in addition to the said amount, simple interest thereon calculated at the rate of one-half per cent for every month or part of a month comprised in the period, from the date on which- (a) claim for refund is made in the prescribed form; or (b) tax is paid, where refund arises on account of giving effect to an order under section 250 or section 254 or section 260 or section 262, to the date on which the refund is granted. (2) If the proceedings resulting in the refund are delayed for reasons attributable to the assessee or the deductor, as the case may be, 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 under sub-section (1) or (1A) or (1B), and where any question arises as to the period to be excluded, it shall be decided by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner whose decision thereon shall be final. (3) Where, as a resul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which is against the provisions of the Act. We find that this aspect has been specifically addressed by the Hon ble Supreme Court by 3 Judges Bench in the case of CIT vs H.E.G. Ltd reported in 324 ITR 331 (SC) wherein it was held as under:- 7. The next question which we are required to answer is - What is the meaning of the words refund of any amount becomes due to the assessee in section 244A? In the present case, as stated above, there are two components of the tax paid by the assessee for which the assessee was granted Refund, namely TDS of ₹ 45,73,528 and Tax paid after Original assessment of ₹ 1,71,00,320. The Department contends that the words any amount will not include the Interest which accrued to the respondent for not refunding ₹ 45,73,528 for 57 months. We see no merit in this argument. The interest component will partake of the character of the amount due under section 244A. It becomes an integral part of ₹ 45,73,528 which is not paid for 57 months after the said amount became due and payable. As can be seen from the facts narrated above, this is the case of short payment by the Department and it is in this way that the assessee claims ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uctor who has deducted tax at source and deposited the same before remitting the amount payable to a non-resident/foreign company. 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 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions for payment of interest by the Department for delay in the grant of refunds. The rate of interest has been increased from the earlier 15 per cent annum to 1.5% per month or part of a month, comprised in the period of delay in the grant of refund. The Amending Act, 1987, has also amended sections 214, 243 and 244 to provide that the provisions of these sections shall not apply to the assessment year 1989-90 or any subsequent assessment years. (Emphasis supplied by us) We find that the Hon ble Apex Court in para 14 and 15 of this judgement had reproduced the operative portions of its earlier decisions in CIT vs H.E.G. Ltd reported in 324 ITR 331 (SC) and Union of India vs Tata Chemicals Ltd reported in 363 ITR 658 (SC) and ultimately held as under:- 16. The above extract would clearly show that a corresponding right exists, to refund to individuals any sum paid by them as taxes which are found to have been wrongfully exasted or believed to be, for any reason, inequitable. The statutory obligation to refund, being non discretionary, carries with it the right to interest, also making it clear that the right to interest is parasitical. The right to claim refund is automa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... should be directed to carry out periodic test checks of cases within their jurisdiction to ensure that provisions of section 244A are scrupulously implemented. 4. These instructions should also be brought to the notice of the officers responsible for conducting internal audit and adherence to these should be checked by the auditing parties. 4.6.1. We hold that the refunds finally determined by the ITSC in the instant case had been wrongfully retained by the department for a considerable period of time and hence department is bound to compensate assessee with interest u/s 244A of the Act. 4.7. We find that the ld AR also placed reliance on the CBDT Circular No. 11/2016 dated 26/04/2016 which reads as under:- CIRCULAR NO.11/2016 [F.NO.279/MISC./M-140/2015-ITJ] SECTION 244A, READ WITH SECTION 195, OF THE INCOME-TAX ACT, 1961 - REFUNDS - INTEREST ON - PAYMENT OF INTEREST ON REFUND OF EXCESS TDS DEPOSITED UNDER SECTION 195 CIRCULAR NO.11/2016 [F.NO.279/MISC./M-140/2015-ITJ], DATED 26-4-2016 The procedure for refund of tax deducted at source under section 195 of the Income tax Act, 1961, to the person deducting the tax is delineated in CBDT Circular No. 7/2007 d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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