TMI Blog2023 (12) TMI 1165X X X X Extracts X X X X X X X X Extracts X X X X ..... ether wholly or in part, the period of the delay so attributable only can be excluded from the period for which interest is payable under subsections (1) or (1A)or (1B) to section 244A of the Act, 1961. In the facts of the case, the words or the deductor, as the case may be, which is inserted with effect from 01.04.2017 would not be applicable as the petitioners have been permitted to file the refund claim for the AY 2013-2014 after condonation of delay and such delay in claiming the refund cannot be said to be attributable to the petitioners as the petitioners were not made aware about the deduction of tax at source by the deductor in absence of issuance of Form No. 16-A which was mandatorily required as per Rule 31(3) of the Rules. In view of the foregoing reasons, the petitions succeed and are accordingly allowed. The respondent is directed to grant interest on the refund claim from the date of deposit of the TDS till the date of refund as per the provisions of section 244A of the Act, 1961. Such exercise shall be completed within a period of 12 weeks from the date of receipt of a copy of this order. Rule is made absolute to the aforesaid extent. - HONOURABLE MR. JUS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erest portion of the amount deposited and withdrawn. However, the Executive Engineer of the Irrigation Department did not inform the petitioners about the deduction of TDS and did not issue Form-16A as required under the provisions of the the Act, 1961 ) and Income Tax Rules, 1962 (for short the Rules ). The petitioner therefore could not file the return of income to claim refund before the due date under the Act, 1961. 4.6) This Court by common Judgment and Order dated 10.08.2015 remanded all the appeals to the Reference Court for deciding the same afresh and it was observed that 25% of the amount which was already paid to the petitioners-claimants would not be recovered. 4.7) Reference Court after remand passed the Judgment and Award dated 08.07.2016 which was challenged by the State Government by preferring First Appeal Nos. 2615/2016 to 2632/2016 before this Court. These appeals were admitted vide order dated 2.12.2016 and in the stay application it was observed that 50% of the amount with interest up to 31.10.2016 is already withdrawn and the remaining amount as per the Judgment and Award was stayed without directing the State Government to deposit any amount. The Firs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oners as the petitioners had also given an application to the Executive Engineer, Irrigation Department, Rajkot dated 30.04.2018 stating that no written notice about deduction of TDS was given to the petitioners nor the petitioners were informed in writing after deduction of TDS. It was submitted that the Executive Engineer who deducted the TDS did not issue Form-16A disclosing the amount of deduction of tax and the TDS deposited under the Act, 1961. 5.1) It was submitted that the petitioner also found that there was an error in mentioning the correct provision for the deduction of TDS in the TDS return filed by the Executive Engineer. The petitioners, therefore, prayed to the Executive Engineer to correct section 194A instead of section 194C in the TDS return and also prayed to correct F (final) instead of P (provisional) in the status of booking and requested to issue correct Form no. 16-A. 5.2) The petitioners by letter dated 14.12.2018 also informed the Executive Engineer that there are mistakes in Form no. 26AS related to the deduction of TDS and no corrections were made nor any reply was given to the earlier written application and Form no. 16A was also not issued. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, the same would not be applicable in the facts of the present case as TDS was deducted from the amount of interest awarded under section 28 of the Land Acquisition Act was deposited in the Financial Year 2012-2013 relevant to . . 2013-2014. 5.8) It was therefore, submitted that the petitioners are entitled to interest on the refund claim as no TDS was liable to be deducted under section 194LA of the Act, 1961 as the interest on the compensation amount is paid for acquisition of the agricultural land of the petitioners. 5.9) Learned advocate Mr. Sheth also referred to and relied upon Instruction No. 7/2013 dated 15.07.2013 issued by the Income Tax department wherein in view of the decision of Delhi High Court in case of Court On its Own Motion v. Commissioner of Income Tax (Judgment dated 14.3.2013 passed in Writ Petition (CIVIL) No. 2659/2012), it was directed that in no case should interest under section 244A of the Act, 1961 be denied to the assessee where assessee is not at fault as per the directions issued by the Delhi High Court in paragraph no. 32 of the said judgment. 5.10) It was therefore, submitted that the respondent may be directed to grant interest on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... come in time and hence the question of granting interest under section 244-A of the Act, 1961 would not arise. It was submitted that the petitioners could get refund only as applications to condone delay in filing return of income to claim the refund was allowed under section 119(2)(b) of the Act, 1961, and therefore, till such applications to condone the delay were allowed, the petitioners were not entitled to refund and therefore, there was no question of awarding interest on the refund claim made by the petitioners. It was, therefore, submitted that the contention raised by the petitioners that the delay is not attributable to the petitioner-assessee is not correct, and hence the petitioners are not entitled to interest on the refund claim. 6.4) It was submitted that the provisions of section 203 of the Act, 1961 read with Rule 31(3) of the Rules are mandatory provisions, and therefore, it was obligatory on the part of the deductor to furnish a Certificate as per Rule 31 of the Rules, 1962 in Form 16-A which was never issued by the Executive Engineer and accordingly the petitioners did not file return of income to claim the refund and therefore, no interest can be paid on the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest under section 28 of the Land Acquisition Act forms part of the compensation and shall be treated as tax free and the Irrigation Depart of the State of Gujarat is duty-bound to return the said amount with interest even without making any application or filing the income tax return by the petitioners and the State of Gujarat by circular dated 29.12.2018 has clarified that no TDS is liable to be deducted from the amount of interest under section 28 of the Land Acquisition Act. It was therefore, submitted that it is for the Executive Engineer, Irrigation Department to pay the interest on the amount which was deducted and deposited with the Income Tax department as ultimately the said amount was ordered to be refunded on the premise that the same is not taxable. It was submitted that it is clear that said amount was not liable to be deducted by the Irrigation department and therefore, necessary directions may be issued for payment of interest on the amount of TDS which was deducted by the Irrigation department and not by the Income Tax department. 7. Having heard the learned advocates for the respective parties and having considered the facts of the case, it would be german ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncipal Commissioner or] Commissioner whose decision thereon shall be final. (Emphasis supplied) Inserted by the Finance Act, 2017 w.e.f 1.04.2017. INSTRUCTIONS Instruction No. 7/2013 dated 15.07.2013 Hon ble Delhi High Court vide its judgment in case of Court on its Own motion v. UOI in W.P.(C) 2659/2012 dated 14-3-2013 (2013) 31 taxmann.com 31 (Delhi) has issued seven Mandamus for necessary action by the Income-tax Department. One Mandamus is on payment of interest under section 244A of Income-tax Act 1961 when the assessee is not at fault. 2. On this issue, the Hon'ble Court has observed as under: 31. In the affidavit filed on 29th January, 2013, the respondents have stated as under:- Where an assessee makes a mistake in the claim of TDS in the e-return and the return is processed and a demand is raised and subsequently, the assessee rectifies the mistake in the claim and files an online rectification application, the same is processed and on any excess TDS is refunded, the interest under section 244A is granted as per the I.T. Act after excluding the period of delay attributable to the assessee in terms of sub-section (2) of sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laims if the amount of such claims exceeds Rs. 10 lakhs but is not more than Rs. 50 lakhs for any one assessment year. The applications/claims for amount exceeding Rs. 50 lakhs shall be considered by the Board. 3. No condonation application for claim of refund/loss shall be entertained beyond six years from the end of the assessment year for which such application/claim is made. This limit of six years shall be applicable to all authorities having powers to condone the delay as per the above prescribed monetary limits, including the Board. A condonation application should be disposed of within six months from the end of the month in which the application is received by the competent authority, as far as possible. 4. In a case where refund claim has arisen consequent to a Court order, the period for which any such proceedings were pending before any Court of Law shall be ignored while calculating the said period of six years, provided such condonation application is filed within six months from the end of the month in which the Court order was issued or the end of financial year whichever is later. 5. The powers of acceptance/rejection of the application within the mo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der in Risal Singh v. Union of India [Risal Singh v. Union of India, 2010 SCC OnLine P H 276 : (2010) 321 ITR 251] directing the Income Tax Department to refund the amount to the Collector with a direction to the Collector to determine whether the compensation is paid for property other than agricultural land or otherwise and whether deduction of tax at source was permissible under any provision of law. The manner in which the Land Acquisition Collector has to proceed further after determining the aforesaid issue is contained in Para 8 of Writ Petition No. 9912 of 2009 decided on 11-1-2001, which is reproduced below: 8. Accordingly, we allow this petition and direct the Income Tax Department to refund the amount to the Collector within one month from the date of receipt of a copy of this order. Thereafter, the Collector will determine whether compensation paid is for property other than agricultural land or otherwise and whether deduction of tax at source was permissible under any provision of law. Whether deduction is permissible or not will be decided by the Collector within two months from the date of receipt of a copy of this order. If deduction is found not permissible ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e refund as the deductor i.e. Executive Engineer, Irrigation department neither informed the petitioners about the deduction of tax nor Form-16A which is mandatory was issued. On the contrary, when the petitioners made representations by informing the Executive Engineer, Irrigation department about the wrong mentioning of the provision for deduction of tax in Form No. 26AS issued as per return of TDS to be filed by the deductor, no reply was given. Therefore, it is clear that the petitioners were not at fault for the delay caused in filing the return of income claiming the refund of the tax deducted at source as no tax was payable by the petitioners on the amount of interest under section 194LA of the Act, 1961. 12. The Hon ble Apex Court in case of Tata Chemicals Limited (supra) while considering the issue of payment of interest in case of refund has held as under: 37. A tax refund is a refund of taxes when the tax liability is less than the tax paid. As per the old section an assessee was entitled for payment of interest on the amount of taxes refunded pursuant to an order passed under the Act, including the order passed in an appeal. In the present fact scenario, the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to interest follows, as a matter of course. 13. It is true that in the said case, the refund was claimed in the return of income which was filed in time. However, the ratio of the said judgment is with regard to the entitlement of the assessee to receive interest on the amount of refund when the collection was illegal and the revenue was obliged to refund such amount with interest as money so deposited is retained and enjoyed by the revenue whereas in the facts of the present case delay in filing the return of income is not attributable to the petitioners and such fact is also not in dispute as the respondent has condoned delay and granted refund to the petitioners. 14. Reliance placed by the respondent authority on Circular No. 9/2015 is also misplaced because paragraph no. 6(ii)of the said circular is to the effect that no interest will be admissible on belated claim of refund when such application is for supplementary claim of refund i.e. claim of additional amount of refund after completion of assessment for the same year. Therefore, reliance placed by the respondent upon the said circular for denying the interest on the refund claim of the petitioners is misplaced. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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