2015 (9) TMI 750 - HC - Income Tax

TDS on interest u/s 194A - whether cannot be pressed in service against the State Bank of India - refund seeked with interest - Held that - Once I.T.A.T. has opined that Section 194A(i) of the Income Tax Act is not applicable against the Bank on SRF deposit, then the same legal position would be applicable in the subsequent assessment years as well, unless of course, Section 194A(i) is amended or is substituted by any new law. Therefore, submission of Mr. Bishwajit Bhattacharya, learned Senior Counsel appearing for the petitioner Bank that amount of ₹ 97,85,38,937/- has been deleted against the assessee/Bank seems to be correct. Since, it is not within the knowledge of Revenue, as to whether order dated 03.03.2015 has been passed by the Commissioner of Income Tax (Appeals), therefore, in the peculiar facts and circumstances of the case, direct that on the applications of the petitioner seeking refund, an appropriate decision shall be taken within two weeks positively and if it is found that vide order dated 03.03.2015 amount of ₹ 97,85,37,937/- has been deleted against the assessee, amount of ₹ 44,36,57,686/- shall be refunded to the petitioner Bank along with interest as provided under Section 240 read with Section 244 of the Income Tax Act. It is, however, clarified that unless and until order passed by the Income Tax Appellate Tribunal has been stayed or set aside by the higher Forum, refund shall not be denied to the petitioner.

Summary

Issues:
1. Interpretation of Section 149A(i) of the Income Tax Act, 1961 regarding its applicability to the State Bank of India.
2. Refund of amount by the Income Tax Authorities to the Bank based on judgments passed by different tribunals and authorities.
3. Direction for refund and interest under Section 240 and Section 244 of the Income Tax Act.
4. Requirement for a decision on refund applications within a specified time frame.
5. Conditions for denying refund to the petitioner Bank.

Analysis:
1. The High Court analyzed the judgment passed by the Income Tax Appellate Tribunal (I.T.A.T.), Delhi, which allowed the appeal by the State Bank of India and dismissed the appeal by the Revenue. It was observed that Section 149A(i) of the Income Tax Act cannot be applied against the Bank. The Court upheld this position for subsequent assessment years unless there are amendments to the law. The legal counsel for the Bank argued that a substantial amount was adjusted against a demand, but subsequent orders directed the deletion of this amount. The Court agreed with the Bank's contention, highlighting the correctness of the deletion of the amount against the Bank.

2. The Court addressed the issue of refund sought by the Bank from the Income Tax Authorities based on the judgments and orders passed by different authorities. The counsel for the Revenue expressed unawareness of a specific judgment directing the deletion of a significant amount against the Bank. The Court directed a decision on the refund applications within two weeks, emphasizing that if the amount was indeed deleted against the Bank, the refund with interest under Section 240 and Section 244 of the Income Tax Act should be provided.

3. In response to the uncertainty regarding the specific judgment, the Court instructed that if the mentioned amount was indeed deleted against the Bank, a refund of the requested amount should be issued along with applicable interest. The Court clarified that unless the order by the I.T.A.T. is stayed or set aside by a higher forum, the refund cannot be denied to the Bank.

4. The Court disposed of the petition and related application accordingly, ensuring that the decision on refund applications is made promptly within the specified timeframe to provide clarity and resolution to the matter at hand.

5. The judgment concluded by clarifying the conditions under which the refund should be processed, emphasizing the importance of following the legal procedures and honoring the decisions made by the relevant authorities unless overturned by a higher forum.