2016 (9) TMI 1073 - AT - Income Tax

Grant the interest u/s 244A - Withhold amount of refund beyond the date of issuance of intimation/order u/s 143(1) - Held that - We find that there was no proper justification on the part of the revenue to Rajashekhar 8 Swaminathan withhold the amount of refund beyond the date of issuance of intimation/order u/s 143(1). We can appreciate that upto the date of passing order/intimation u/s 143(1), no interest shall be payable by the department to the assessee because of clear provisions of law on the statute in this regard, but for the period of delay in issuing the refund after the date of passing of the order u/s 143(1), the assessee is entitled for interest and revenue is liable to pay it to the assessee. Thus, we direct the AO to grant the interest u/s 244A for the period falling between the date of passing of order u/s 143(1) and actual date of granting of refund, at the rate of interest as would have been applicable if the refund amount would have been for an amount more than 10% of the gross tax. - Decided in favour of assessee

Summary

Issues:
Granting interest u/s 244A of the Act from the date of issuance of order u/s 143(1) up to the actual date of granting of funds.

Analysis:
The appeal was filed by the Assessee against the order of the Commissioner of Income Tax (Appeals) rejecting the claim of the assessee for interest u/s 244A of the IT Act. The Assessing Officer (AO) had held that no interest was payable as the refund amount was less than 10% of the gross tax as determined in the assessment order. The Assessee contended that interest on refund is a substantive right and statutory obligation of the state, citing various court judgments and CBDT Circulars. The Assessee argued that interest should be paid if the refund is delayed beyond the date of the order u/s 143(1). The CIT(A) did not accept the claim based on the clear provisions of section 244A(1)(a) of the Act.

The Assessee further argued that if the refund is withheld beyond the date of the order u/s 143(1) without any fault on their part, interest should be granted. The Assessee relied on judgments of various High Courts to support this argument. The Tribunal noted that the provisions of the Act require the assessee to pay tax through various channels, including TDS, advance tax, and self-assessment tax. It highlighted the difficulties faced by the assessee in estimating taxable income and the obligation of the revenue to refund excess tax collected promptly.

The Tribunal referred to court decisions emphasizing the entitlement of the assessee to interest on delayed refunds, even in the absence of a specific statutory provision. It cited the Supreme Court's stance on compensation for delayed payments due to the assessee. The Tribunal concluded that the revenue was unjustified in withholding the refund beyond the date of the order u/s 143(1) and directed the AO to grant interest u/s 244A for the delay period. The appeal of the Assessee was allowed based on these findings.

In conclusion, the Tribunal's judgment focused on the entitlement of the assessee to interest on delayed refunds, emphasizing the statutory obligation of the revenue to promptly refund excess tax collected. The decision highlighted the legal principles and court precedents supporting the Assessee's claim for interest u/s 244A, ultimately ruling in favor of the Assessee and directing the AO to grant the interest for the delay period.