2015 (9) TMI 1046 - HC - Income Tax

Refund of Tax deducted at source denied - delay of 6 years in claiming the refund - non entertaining the application for condonation of delay for claiming refund - Held that - It is not disputed by the respondent revenue that on merits the petitioner is entitled to the benefit of refund of TDS as the payment received under the scheme is exempted under Section 10(10C) of the Act. The decision of the Apex Court in the matter of Chandra Ranganathan and ors. Vs. CIT (2009 (10) TMI 498 - SUPREME COURT OF INDIA) concludes the issue. This is also the view of the revenue as clarified in CBDT Circular dated 8 May 2003. The application under Section 119(2)(b) of the Act is being denied by adopting a very hyper technical view that the application for condonation of delay was made beyond 6 years from the date of the end of the assessment year 200405. In this case the revised return of income filed on 30 September 2009 should itself be considered as application for condonation of delay under Section 119(2)(b) of the Act and refund granted. It will be noted that on 8 May 2009 the CBDT issued a circular clarifying and reviewing its earlier decision to declare that the employees of RBI who opted for early retirement scheme under the Scheme will be entitled to the benefit of Section 10(10C) of the Act. Immediately after the issue of circular dated 8 May 2009 by the CBDT the petitioner filed on 30 September 2009 a revised return of income seeking refund of TDS paid on her behalf by RBI. We allow the petition and direct the revenue to grant refund due to the petitioner.

Summary

Issues:
1) Challenge to revenue's action of not entertaining application for refund of TDS by RBI.
2) Condonation of delay for claiming refund under Section 119(2)(b) of the Income Tax Act, 1961.
3) Entitlement to benefit of exemption under Section 10(10C) of the Act.
4) Refusal to entertain application for refund beyond the specified period.
5) Dispute over technical view of limitation for refund claim.
6) Consideration of revised return of income as application for condonation of delay.
7) Dispute resolution regarding refund claim on hyper technical grounds.

Analysis:
1) The petition, filed by a Senior Citizen, challenges the respondent revenue's refusal to entertain the application for refund of Tax deducted at source (TDS) by Reserve Bank of India (RBI) in relation to the payment made under the Optional Early Retirement Scheme in 2004. The revenue cited a delay beyond six years from the relevant assessment year as the reason for non-entertainment under Section 119(2)(b) of the Income Tax Act, 1961.

2) The petitioner, despite not claiming any refund in the initial return for assessment year 2004-05, later filed a revised return in 2009 after a Circular by the Central Board of Direct Taxes (CBDT) clarified the entitlement to exemption under Section 10(10C) of the Act for RBI employees opting for early retirement. The respondent's refusal to consider the refund claim was based on an instruction stating that applications filed beyond six years from the end of the assessment year cannot be entertained.

3) Both parties acknowledged the petitioner's entitlement to the refund based on the exemption under Section 10(10C) of the Act. The revenue's stance, influenced by a technical view of the limitation period, was countered by the petitioner's argument that the revised return filed in 2009 should be deemed as an application for condonation of delay under Section 119(2)(b) of the Act.

4) The Court emphasized that the revenue did not contest the merit of the refund claim but solely relied on a hyper-technical interpretation of the limitation period. The issuance of a CBDT circular in 2009 prompted the petitioner to file the revised return seeking the refund, which should have been considered as a valid application for condonation of delay.

5) Ultimately, the Court allowed the petition, directing the revenue to grant the refund due to the petitioner, highlighting the importance of substantive entitlement over technical limitations in such cases. The judgment was made without any order as to costs, resolving the dispute in favor of the petitioner based on the merits of the case.