TMI Blog2024 (2) TMI 889X X X X Extracts X X X X X X X X Extracts X X X X ..... TDS along with the applicable rate of interest as per extant law as expeditiously as possible not exceeding beyond six months. - HON'BLE MR. JUSTICE YASHWANT VARMA AND HON'BLE MR. JUSTICE PURUSHAINDRA KUMAR KAURAV For the Petitioner Through: Ms. Ananya Kapoor, Adv. For Mr. Salil Kapoor and Mr. Sumit Lalchandani, Advs. For the Respondents Through: Mr. Prashant Meharchandani, Sr. Standing Counsel along with Mr. Akshat Singh, Jr. Standing Counsel and Ms. Ritika Vohra, Adv. ORDER 1. The petitioner has filed the instant writ petition under Article 226 and 227 of the Constitution of India, assailing the orders dated 19.01.2017 and 29.03.2018, whereby, the claim of the petitioner seeking refund of excess Tax Deducted at Source [ TDS ] amounting to Rs. 67,41,620/- deducted under Section 195 of the Income Tax Act, 1961 [ Act ], for the Assessment Year [ AY ] 2012-13 has been rejected. 2. The facts of the present case exhibit that the petitioner is a company incorporated under the Indian Companies Act, 1956, primarily engaged in manufacturing and trading of molded plastic items, which includes import on lease basis from overseas group companies. It is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ondents. 6. While referring to the CBDT circular dated 23.10.2017, she contends that the case of the petitioner is covered by the said circular, which stipulates that in such cases where income does not either accrue to the non-resident or it accrues but the excess amount in respect of which refund is claimed, is borne by the deductor, then the TDS on the aforesaid income belongs to the deductor. She also submits that since the negotiations between the petitioner and Dart USA never culminated into a transaction or any agreement, the petitioner is rightfully entitled for claiming the benefit envisaged in the said circular. 7. Learned counsel for the petitioner further submits that even otherwise also, if any amount which is credited to the Government does not fall into the category of tax, the said amount cannot be unjustifiably retained by the Government. She contends that it is a trite principle of law that nobody can be unjustly enriched at the expense of another person and therefore, the refund of excess TDS claimed by the petitioner is permissible within the contours of law. She submits that as per the CBDT circular dated 26.04.2016, the refund of excess TDS must be initi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 45,80,337/- and the TDS was deducted and paid on the aforesaid amount equivalent to Rs. 4,58,035/-. Therefore, it is clearly established that no income had accrued to Dart USA qua the excess TDS paid by the petitioner and consequently, no right of retention of the said amount vests in the respondents. 14. The rationale imported in the impugned orders passed by the respondents i.e., orders dated 29.03.2018 and 19.01.2017, manifests that the petitioner is denied the refund of the excess TDS deposited by it as its case does not fall within the gamut of cases mentioned in the CBDT circular dated 23.10.2017. 15. We find no substance in the above-mentioned reasoning provided in the impugned orders as a bare glance at the said circular would indicate that the primary objective behind the said circular is to lay down a procedure for refund of tax deducted under Section 195 of the Act in certain situations. For the sake of clarity, relevant clauses of the said circular are reproduced as under:- 2. The cases which are being referred to the Board mainly relate to circumstances where, after the deposit into Government account of the tax deducted at source under section 195, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessing Officer should also ensure that in the case of a deductor making the claim of refund, the corresponding disallowance of expense amount representing TDS refunded is made. 16. Even otherwise also, reliance can be placed to the latin maxim jure naturae aequum est, neminem cum alterius detrimento, et injuria fieri locupletioremit which translates to and settles the position that by natural law, it is just that no one should be enriched by another s loss or injury. Put otherwise, no one can be unjustly enriched at the expense of others. It is pertinent to refer to the decision of the Coordinate Bench of this court in the case of Indglonal Investment and Finance Ltd. v. ITO [2011 SCC OnLine Del 2609], wherein, it was held that:- 6. Article 265 and a claim for refund for violation of the principles underlying the said article or under the general principles of equity, justice and good conscience as well as the statutory provisions in tax enactments was settled by the Constitutional Bench decision of nine judges in Mafatlal Industries Ltd. v. Union of India 111 STC 467 (SC) ; (1997) 5 SCC 536. The said decision interprets article 265 of the Constitution and lay ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 party which ex ae quo et bono ought to be refunded, the right to interest follows, as a matter of course. [Emphasis supplied] ..... X X X X Extracts X X X X X X X X Extracts X X X X
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