TMI Blog2022 (8) TMI 532X X X X Extracts X X X X X X X X Extracts X X X X ..... 1) TMI 1353 - DELHI HIGH COURT ] and observed that the issue involved in the said reference pertains to refund of excess self assessment tax whereas, the issue determined in the judgment in Preeti N. Aggarwala (supra) was payment of interest on the amount of refund payable to the assessee u/s 220A. The issue arising in the present appeal is authoritatively answered by the predecessor Division Bench in Preeti N. Aggarwala [ 2017 (5) TMI 308 - DELHI HIGH COURT ] and we do not find any substance in the contention of the learned counsel for the Revenue that present appeal must await the decision of the larger Bench. The said judgment was also followed by the Supreme Court in the case of Universal Cable [ 2019 (12) TMI 1081 - SC ORDER ] to hold that there is reason to deny payment of interest to the deductor who has deducted the tax at source and deposited the same with the treasury. The Supreme Court rejected the submission of the Revenue that interest can only be granted to an assessee under Section 244A of the Act and not to a deductor of the tax at source. The judgment of the Supreme Court in the case of Gujarat Fluoro Chemicals [ 2013 (10) TMI 117 - SUPREME COURT ] arose on i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed an appeal before the Commissioner of Income Tax (Appeals) ['CIT(A)'] against the said order on the ground that the Assessing Officer ('AO') has erred in not granting interest under Section 244A of the Act on the refund granted. The CIT(A) dismissed the appeal of the respondent, relying upon the judgment of the Supreme Court in the case of Commissioner of Income Tax, Gujarat vs. Gujarat Fluoro Chemicals reported in (2014) 1 SCC 126. The CIT(A) concluded that the claim of interest by the respondent for the refund amounts to 'interest on interest' and held that it is beyond the scope of Section 244A of the Act. 4. The respondent aggrieved by the aforesaid order of the CIT(A) filed an appeal before the ITAT, which allowed the appeal placing reliance on the judgment of the Division Bench of this Court in the case of Preeti N Aggarwala v. Chief Commissioner of Income Tax Anr. reported in [2017] 394 ITR 557(Del) and a judgment of a Coordinate Bench of the ITAT, Ahmedabad in the case of ACIT v. Alembic Glass Industries Ltd. reported in 111 ITD 320 (Ahd). The ITAT held that the respondent is entitled to interest under Section 244A(1)(b) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India Ltd. v. N.C. Tewari, Commissioner of Income-tax, Mumbai City-III [2015] 53 taxmann.com 106 (Bombay), wherein the Court has held that the Revenue is liable under Section 244A(1) (b) of the Act to pay interest upon refund of tax deposited by the assessee on self assessment. The Bombay High Court relied upon the judgment of this Court in CIT v. Sutlej Industries Ltd. reported in [2010] 325 ITR 331 (Delhi), wherein it was held that interest is payable from the date of payment of tax on self assessment to the date of repayment of the amount under Section 244A of the Act. 9. We have heard the learned counsel for the parties. The contention of the learned counsel for the Revenue that the issue arising in the present appeal must await the judgment in the reference made to the larger Bench in Sutlej Industries Limited vs. CIT in ITA No. 493/2003 (2016) (supra) has no merit. The subject matter of the said reference is with respect to entitlement of the assessee to interest on the refund of the amount of self assessment tax. The Division Bench made the said reference in view of the conflicting decisions of this Court in CIT v. Sutlej Industries Ltd. [2010] 325 ITR 331 (Delhi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of this debt that the assessee is demanding that Revenue should be liable to pay interest for the period that Revenue retained the said money. The assessee is therefore seeking interest on the debt owed to it by the Revenue and not interest on interest as sought to be contended by the Revenue. 14. In this regard, it would also be relevant to refer to definition of refund , as it appears in the Oxford English Dictionary, Fifth Edition, Volume 2, N-Z : which reads as under : refund [Old French refonder or Latin refundere, formed as RE- + fundere pour; later based on FUND verb.] 1 verb trans. a Pour back, pour in or out again. Now rare or obsolete. LME. b Give back, restore. Now rare. LME. c PHILOSOPY. Put back into something antecedent. rare. L17. 2 a verb trans. Return or repay (a sum of money); hand back. M16. b verb in trans. Make repayment. M17. c verb trans. Reimburse or repay (a person). M18. 2a Smart Set Warranted to cure in thirty days or money refunded. c J.M. LUDLOW A proposal to refund him out of the Treasury. [Emphasis Supplied] 15. The said definition explains that the payment of refund made by the Revenue is return of money ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 244A(1) (b) of the Act to hold that Revenue is liable to pay interest on the sum found refundable to an assessee, upon waiver of interest. In the facts of the present case too, a sum has admittedly been found refundable to the assessee as a consequence of reduction in the taxable income. The relevant text of Section 244A(1)(b) of the Act reads as under : 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) xxx xxx xxx (aa) xxx xxx xxx (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 of the tax or penalty to the date on which the refund is granted. [Emphasis Supplied] 18. The learned counsel for the Revenue has not disputed that the payment of interest by the respondent under Section 234D and Section 220(2) of the Act was in pursuance of the deman ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee had paid taxes pursuant to a special order passed by the assessing officer/Income Tax Officer. In the appeal filed against the said order the assessee has succeeded and a direction is issued by the appellate authority to refund the tax paid. The amount paid by the resident/deductor was retained by the Government till a direction was issued by the appellate authority to refund the same. When the said amount is refunded it should carry interest in the matter of course. As held by the Courts while awarding interest, it is a kind of compensation of use and retention of the money collected unauthorisedly by the Department. When the collection is illegal, there is corresponding obligation on the Revenue to refund such amount with interest inasmuch as they have retained and enjoyed the money deposited. Even the Department has understood the object behind insertion of Section 244-A, as that, an assessee is entitled to payment of interest for money remaining with the Government which would be refunded. There is no reason to restrict the same to an assessee only without extending the similar benefit to a resident/deductor who has deducted tax at source and deposited the same before rem ..... X X X X Extracts X X X X X X X X Extracts X X X X
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