2018 (12) TMI 1340 - HC - Income Tax

Interest u/s 244A - delay in the proceedings for granting the refund - TDS certificates were not furnished with the return of income - Held that - As decided in assessee s own case UNION BANK OF INDIA AND OTHERS VERSUS DEPUTY COMMISSIONER OF INCOME TAX, LTU AND OTHERS 2015 (10) TMI 19 - ITAT MUMBAI TDS certificates were submitted with the return of income - TDS certificate has been issued by Reserve Bank of India and various other Government agencies therefore any defect in the TDS certificate cannot be attributed to the assessee - the tax deducted at source by the deductors have been deposited to the credit of the Government, therefore assessee cannot be denied interest u/s. 244A of the Act when the tax was deducted and deposited in the exchequer in time, section 244A(2) is not attracted. Case of Larsen & Toubro (2010 (6) TMI 54 - BOMBAY HIGH COURT) to be followed. Direct the AO to allow the interest - Decided in favour of assessee.

Summary

Issues:
Interpretation of Section 244A of the Income Tax Act, 1961 regarding the allowance of interest on a delayed refund.

Analysis:
The High Court of Bombay considered the appeal filed by the Revenue against the judgment of the Income Tax Appellate Tribunal. The main issue was whether interest under section 244A of the Income Tax Act should be allowed on a specific amount for a particular period, despite delays attributed to the assessee in the refund proceedings. The respondent-assessee, Union Bank of India, had deducted tax at source and deposited it in the Government Revenue for the assessment year 2006-07. However, minor defects in the TDS certificates caused delays in the refund process. The Tribunal held that interest under section 244A cannot be withheld in such circumstances, as the delay was not attributable to the assessee.

The Revenue argued that only specific authorities mentioned in subsection (2) of Section 244A have the power to decide whether delays in refund proceedings were due to the assessee, justifying the withholding of interest. The Tribunal's decision to not attribute the delay to the assessee was contested by the Revenue. On the contrary, the assessee relied on a previous judgment of the High Court in the case of Larsen & Toubro Limited, where it was held that if the tax was deducted and deposited in time, section 244A(2) would not apply to deny interest to the assessee.

The High Court noted that the Tribunal correctly decided the matter by considering that the tax was deducted and deposited in a timely manner, leading to the conclusion that subsection (2) of Section 244A did not apply. Referring to the Larsen & Toubro case, the Court reiterated that if the tax was deducted and deposited on time, the assessee should not be denied interest under section 244A based solely on the delay in submitting TDS certificates. Consequently, the Court dismissed the tax appeals, emphasizing that no substantial question of law arose in this case.