IT: Where refund is pending before authorities, failure to apply for refund cannot be treated as delay attributable to assessee for denial of interest on refund
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[2013] 38 taxmann.com 192 (Allahabad)
HIGH COURT OF ALLAHABAD
Commissioner of Income-tax (Central), Kanpur
v.
Sahara India Savings & Investment Corpn. Ltd.*
RAJIV SHARMA AND DR. SATISH CHANDRA, JJ.
IT APPEAL NO. 52 OF 2004†
SEPTEMBER 16, 2013
Section 244A of the Income-tax Act, 1961 - Refunds - Interest on [Denial of interest] - Assessment year 1992-93 - Whether no application is necessary for interest on refund under section 244A as interest on refund goes along with refund - Held, yes - Whether where refund is pending before authorities, failure to apply for refund cannot be treated as delay attributable to assessee and interest on refund cannot be denied - Held, yes [Para 10] [In favour of assessee]
CASE REVIEW
National Horticulture Board v. Union of India [2002] 253 ITR 12/125 Taxman 922 (Punj. & Har.); CIT v. H.E.G. Ltd. [2010] 324 ITR 331/189 Taxman 335 (SC) and CIT v. Larsen & Toubro Ltd. [2011] 330 ITR 340/196 Taxman 308 (Bom.) (para 13) followed.
CASES REFERRED TO
Dy. CIT v. Central Concrete & Allied Products Ltd. [1996] 236 ITR 595/[1998] 100 Taxman 195 (Cal.) (para 9), National Horticulture Board v.Union of India [2002] 253 ITR 12/125 Taxman 922 (Punj. & Har.) (para 10), CIT v. H.E.G. Ltd. [2010] 324 ITR 331/189 Taxman 335 (SC) (para 11) and CIT v. Larsen & Toubro Ltd. [2011] 330 ITR 340/196 Taxman 308 (Bom.) (para 12).
P. Agrawal, D.D. Chopra and Sanjiv Sankhyadhar for the Appellant. Pradeep Kumar and Amit Shukla for the Respondent.
ORDER
Dr. Satish Chandra, J. - Present appeal has been filed by the department under Section 260A of the Income Tax Act, 1961, against the judgment and order dated 15.04.2004 passed by the Income Tax Appellate Tribunal, Lucknow in I.T.A.No.1293/Alld/95, for the assessment year 1992-93.
2. On 28.09.2004, a Coordinate Bench of this Court has admitted the appeal on the following substantial questions of law:—
"Whether the Income Tax Appellate Tribunal was legally justified in law and on facts of the case in adjudicating the issue relating to determination of period of delay attributable for claiming interest under section 244A ignoring the provisions of section 244A(2) according to which the Chief Commissioner or the Commissioner of Income Tax are only empowered to decide the period so attributable and whose decision shall be final and binding."
3. The brief facts of the case are that the return was filed by the assessee showing the income of Rs.30,49,770/- in the status of the Company. It is alleged that the assessee has not filed tax deducted at source (in short TDS) certificates along with the return of the income. Therefore, credit was not allowed in respect of the TDS certificates as the same was not filed along with the return of income. Subsequently, TDS certificates were filed along with the application under Section 154 of the Act. On 25.10.1994, the A.O. passed an order under Section 154, where the interest was not allowed under Section 244A in view of the delay on the part of the assessee. The A.O. observed that the delay is on the part of the assessee, so no interest shall be allowed. In first appeal, CIT(A) has confirmed the order passed by the A.O. by observing that the TDS certificates were not filed along with the return of the income. Therefore, credit was not given. It is only at the very late stage that TDS certificates were filed and refunds were issued. The delay is apparently attributable to the assessee-Company. Interest has been rightly denied. However, the Tribunal vide its impugned order has directed the A.O. to allow interest under Section 244A of the Act on the amount of refund for the period 01.04.1992 to 31.12.1992. Being aggrieved, the Department has filed the instant appeal.
4. With this back dropped, Sri D.D.Chopra, learned counsel for the Department has justified the order passed by the A.O. At the strength of the written submissions, he submits that the assessee did not file all TDS certificates along with return of income. Subsequently, two bunches of TDS certificates were filed.
5. Learned Counsel read out Section 244A (2) of the Act, which reads as under:—
"If the proceedings resulting in the refund are delayed for reasons attributable to the assessee, whether wholly or in part, the period of delay so attributable to him shall be excluded from the period for which interest is payable, and where any question arises as to the period to be excluded, it shall be decided by the Chief Commissioner or Commissioner whose decision thereon shall be final."
6. Learned counsel further submits that neither the CIT(A) nor ITAT should have adjudicated the issue relating to the allowability of interest on refund under Section 244A which is to be decided exclusively by the Chief Commissioner of Income Tax, whose decision shall be final and no appeal would lie. Finally, he submits that the Tribunal has passed the order without having the jurisdiction. Lastly, he made a request that the impugned order may kindly be set aside.
7. On the other hand, Sri Waseequddin Ahmad, learned counsel for the assessee has justified the impugned order passed by the Tribunal. He submits that the assessee has filed TDS certificates along with the application under Section 154. Thus, once the TDS certificates have been filed on that date and the A.O. has passed the order, then no delay is attributed.
8. After hearing both the parties and on perusal of the record, it appears that refund of the interest under Section 244A is a substantial question of law against which the appeal lies in the High Court. Hence, the order passed by the A.O. is appealable to the High Court. So, in this regard, the submission of the learned counsel for the Department is not sustainable.
9. It may be mentioned that Section 244A is constitutionally valid in providing for payment of interest on excess tax deducted at source. Right to interest on refund is a matter of substantive right. Section 244A not being procedural as observed in the case of Dy. CIT v. Central Concrete & Allied Products Ltd. [1999] 236 ITR 595/[1998] 100 Taxman 195 (Cal).
10. Further, it may be mentioned that no application is necessary for interest on refund under Section 244A. Interest on refund goes along with refund. No application is required for this purpose in view of the mandatory provision under section 244A(1)(b) of the Act as observed in the case of National Horticulture Board v. Union of India [2002] 253 ITR 12/125 Taxman 922 (Punj. & Har.). The argument that the assessee should have made an application for refund was found to be without any merit. Denial of interest on delay attributable to the assessee as provided under section 244A(2) would have no application, merely because of delay in application for refund. At any rate, where the refund is pending before the authorities, failure to apply for the refund cannot be treated as delay attributable to the assessee.
11. It may also be mentioned that the Hon'ble Apex Court in the case of CIT v. H.E.G. Ltd. [2010] 324 ITR 331/189 Taxman 335 observed that:—
'Interest which accrued to the assessee for non-refund of TDS partook of the character of the "amount due" under Section 244A and became an integral part of the principal amount which was not refunded after it became due and payable and therefore assessee was entitled to interest on delayed refund of TDS.'
12. It is pertinent to mention that the Bombay High Court in the case of CIT v. Larsen & Toubro Ltd. [2011] 330 ITR 340/196 Taxman 308, observed that :—
"Section 244A(2) provides that in the event the proceeding resulting in refund has been delayed for reasons attributable to the assessee, the period of delay so attributable shall be excluded from the period for which the interest is payable. In the present case, Section 244A(2) is clearly not attracted. The proceeding resulting in the refund was not delayed for reasons attributable to the assessee. Though the TDS certificates were not submitted with the return and were filed during the course of the assessment proceedings, the Tribunal has noted that the tax was in fact deducted at source at the right time. In the circumstances, the Tribunal is correct in holding that since the benefit of TDS has been allowed to the assessee, interest under Section 244A could not be denied only on the ground that the TDS certificates were not furnished with the return of income. Tax was deducted and deposited in the exchequer in time. Section 244A(2) is not attracted. The appeal, therefore, does not raise any substantial question of law and is dismissed."
13. In the light of the above discussions and by considering the totality of the facts and circumstances of the case, we find no reason to interfere with the impugned order passed by the Tribunal and the same is hereby sustained along with the reasons mentioned therein.
14. The answer to the substantial question of law is in favour of the assessee and against the Department.
15. In the result, appeal filed by the department is dismissed.
Regards
Prarthana Jalan
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