2014 (11) TMI 650 - HC - Income Tax

Interest on the delayed refund u/s 244A(2) - Held that - The Act provides for refund of any amount received by the department, in excess of what was due from an assessee, in a particular AY - Section 244-A also provides for payment of interest, in case the refund is delayed - from the payments, that were due, its customers have deducted TDS, being ₹ 3,52,721/- in the financial years 1991-92 and 1992-93 assessee was entitled for refund or adjustment of the same, only on production of the TDS certificate - The Rules framed under the Act mandate that the adjustment of TDS from the tax payable by an assessee can be made only on production of the certificate, issued by the person or agency, which effected the TDS - In the absence of the same, the department cannot be expected to refund or adjust the amount - The record does not disclose the nature of steps taken by the petitioner for obtaining the TDS certificates, either from the concerned agencies, or even from the department - the occasion to pay interest would have arisen, if only the delay was on the part of the department - Section 244A of the Act itself mandates that, if the delay in refund is attributable to the assessee, wholly or in part, it shall be excluded from the period for which, the interest is payable it is not the case of the assessee that even after it has submitted the TDS certificates, or the indemnity bond, there was any delay on the part of the department in making the refund the order of the Tribunal is upheld Decided against assessee.

Summary

Issues:
1. Delay in refunding TDS amount to the petitioner.
2. Applicability of interest under Section 244-A of the Income Tax Act.
3. Obligation of department to pay interest on delayed refund.

Detailed Analysis:
1. The petitioner, an industrial undertaking, claimed a refund of TDS amounting to Rs. 3,52,721 deducted by agencies for work undertaken during 1991-92 and 1992-93. The refund was delayed, and the petitioner requested interest under Section 244-A of the Income Tax Act, alleging the department's obligation to pay interest on delayed refunds. The respondent argued that the delay was due to the petitioner's failure to provide TDS certificates promptly, which were only submitted in 2001. The Court noted that the petitioner's entitlement for refund or adjustment of TDS required the production of certificates, as per rules under the Act.

2. Section 244-A of the Income Tax Act provides for interest payment in case of delayed refunds. The Court highlighted that interest could be payable on interest if there was proven negligence by the department. However, the applicability of interest depends on the circumstances of each case. The Act mandates interest payment if the delay is due to the department, excluding delays attributable to the assessee.

3. The Court emphasized that the obligation to pay interest arises only if the delay is on the department's part. In this case, the petitioner's delay in providing TDS certificates until 2001 was a contributing factor. As per Section 244-A(2) of the Act, delays attributable to the assessee exclude the period for which interest is payable. Since the delay was partly due to the petitioner, interest was not applicable. The Court dismissed the petition, finding no grounds for relief to the petitioner.

In conclusion, the judgment underscores the importance of timely compliance with documentation requirements for refunds and clarifies the conditions for interest payment under Section 244-A of the Income Tax Act, emphasizing the exclusion of delays attributable to the assessee.