2014 (1) TMI 25 - HC - Income Tax

Interest on the refund for the period of delay u/s 244A - Held that - Following Commissioner of Income Tax v. Larsen and Toubro Ltd. 2010 (6) TMI 414 - Bombay High Court - The interest cannot be denied for the time taken by the appellant assessee to cure the defects in the TDS certificates as no amount is due from the assessee so far as TDS certificates and the amount was lying with the revenue - The interest is payable on account of the amount in excess of what is payable was remaining with the revenue and not for the delay caused by the revenue in determining the refund of the amount - Decided against Revenue.

Summary

Issues:
1. Entitlement to interest on refund of TDS amounts.
2. Delay in filing TDS certificates and its impact on interest calculation.
3. Interpretation of Section 244A of the Income Tax Act.
4. Applicability of precedents from Bombay and Punjab & Haryana High Courts.

Analysis:
1. The primary issue in this case was whether the assessee was entitled to interest on the refund of the amount, specifically concerning TDS amounts. The Department argued that the time taken by the assessee to rectify defects in TDS certificates should not qualify for interest under Section 244A(2) of the Income Tax Act.

2. The case involved assessment proceedings for the years 1989-90 and 1990-91. The Revenue contended that delays in rectifying defects in TDS certificates led to a dispute regarding the interest payable to the assessee. The assessing officer did not allow interest under Section 244A for the period taken by the assessee to correct the certificates, leading to an appeal before the Commissioner of Income Tax (Appeals).

3. The Tribunal, citing decisions from the Bombay and Punjab & Haryana High Courts, held that interest could not be denied for the time taken by the assessee to rectify TDS certificate defects. The interest was deemed payable on the excess amount held by the revenue, not for delays in refund determination caused by the revenue. This interpretation aligned with the precedents, leading to the dismissal of the revenue's appeal.

4. The decisions from the Bombay and Punjab & Haryana High Courts emphasized that once TDS credit is given, interest on tax credit should be determined. The interest was to be paid on the amount to be refunded to the appellant assessee, considering the excess amount held by the revenue. The High Court declined to interfere with the Tribunal's decision based on the consistent legal interpretation provided by the Division Benches of the aforementioned High Courts.

Therefore, the appeal was dismissed, affirming the entitlement of the assessee to interest on the refund of TDS amounts, despite delays in rectifying TDS certificate defects.