2014 (11) TMI 1140 - HC - FEMA

Interest on refund - grievance of the petitioner is that although the amount has been refunded to the petitioner, he has not received interest on the demand drafts for a sum of ₹ 1.70 crores, which were seized by respondent No.1 on 19.05.2001 - Held that - In the event income tax has been deducted at source in respect of interest on a sum of ₹ 1.70 crores, it is obvious that the interest would have been credited to the account of the petitioner. In the circumstances, the petitioner would, indisputably, be entitled to interest on the amount refunded. The amount that was seized from the petitioner has since been returned and, undisputedly, the respondents cannot profit from seizure of the amount in question. Mr Sanjay Jain, learned Additional Solicitor General who appears for respondent No.1 states that in the event any interest was earned and/or had accrued on the amount of ₹ 1.70 crores which was seized, the same would be paid to the petitioner.

Summary

Issues:
1. Petitioner seeking release of seized funds and interest
2. Petitioner requesting TDS certificate for deducted interest
3. Petitioner seeking costs for present proceedings

Analysis:

Issue 1: Petitioner seeking release of seized funds and interest
The petitioner filed a petition requesting the release of all monies, including interest earned on an amount seized by respondent No.1. The petitioner claimed that although the amount was refunded, interest on the demand drafts for a sum of Rs. 1.70 crores was not received. It was contended that no interest was paid on the said amount as it was kept in a non-interest bearing account. However, it was later discovered that tax was deducted at source for the interest accrued on the amount. The petitioner argued that if tax was deducted, the interest should have been credited to their account. The court acknowledged the petitioner's entitlement to interest on the refunded amount and emphasized that the respondents cannot benefit from the seizure.

Issue 2: Petitioner requesting TDS certificate for deducted interest
Apart from seeking the release of seized funds and interest, the petitioner also requested the issuance of a TDS certificate for the deducted interest on the seized amounts. This request was made to ensure proper documentation and compliance with tax regulations regarding the interest earned on the seized funds. The court considered this request as part of the petitioner's right to transparency and accountability in financial matters related to the seized amount.

Issue 3: Petitioner seeking costs for present proceedings
In addition to the main requests, the petitioner also sought costs for the present proceedings. This was a common practice to recover legal expenses incurred during the litigation process. The court did not specifically address this issue in the judgment, indicating that it might have been resolved through the overall disposition of the case. However, the petitioner's right to claim costs for legal proceedings is a standard practice in legal matters to ensure fair compensation for legal representation and related expenses.

Overall, the court disposed of the writ petition after considering the submissions of both parties. The learned Additional Solicitor General representing respondent No.1 assured that if any interest was earned or accrued on the seized amount, it would be paid to the petitioner. Consequently, no further orders were deemed necessary, and the petition was disposed of accordingly.