2013 (9) TMI 686 - HC - Income Tax

Interest u/s 244A for delay in refund Held that - Reliance has been placed upon the judgment in the case of Commissioner of Income-tax vs. Larsen & Toubro Ltd., 2010 (6) TMI 414 - Bombay High Court , wherein it has been held 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 - 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 - 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 In the light of the above judgment in the case, the issue is decided in favor of Assessee Decided against the Revenue.

Summary

Issues:
1. Appeal 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. Adjudication of the issue relating to determination of period of delay attributable for claiming interest under section 244A.
3. Allowability of interest on refund under Section 244A.
4. Jurisdiction of Chief Commissioner or Commissioner of Income Tax to decide the period of delay attributable to the assessee under Section 244A(2).
5. Appeal filed by the Department against the order of the Tribunal directing the A.O. to allow interest under Section 244A on the amount of refund for a specific period.

Analysis:
1. The appeal was admitted based on the substantial question of law regarding the determination of the period of delay attributable for claiming interest under section 244A. The case involved the delay in filing TDS certificates by the assessee along with the return of income, leading to the denial of interest under Section 244A by the Assessing Officer (A.O.).
2. The Department contended that the delay was attributable to the assessee, justifying the denial of interest. The Counsel for the Department argued that the decision on the allowability of interest under Section 244A should be made exclusively by the Chief Commissioner of Income Tax, whose decision is final and binding, and the Tribunal lacked jurisdiction in this matter.
3. On the other hand, the Counsel for the assessee justified the order passed by the Tribunal, emphasizing that the TDS certificates were filed along with the application under Section 154, and hence no delay could be attributed to the assessee.
4. The High Court held that the right to interest on refund under Section 244A is a substantive right, and the denial of interest on delay attributable to the assessee does not apply solely due to a delay in applying for the refund. The Court cited relevant case laws supporting the assessee's entitlement to interest on delayed refund of TDS.
5. Considering the facts and circumstances of the case, the High Court found no reason to interfere with the Tribunal's order and upheld the decision, ruling in favor of the assessee and dismissing the appeal filed by the Department.

Conclusion:
The High Court sustained the Tribunal's order, emphasizing the assessee's entitlement to interest on delayed refund of TDS under Section 244A. The judgment clarified the substantive right to interest on refund and highlighted the inapplicability of denial of interest solely based on delay in applying for the refund.