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2021 (10) TMI 1254 - AT - Income TaxEntitlement to interest u/s 244A - nature of amount of refund - refunds admittedly due to it by an order of the Hon ble Income Tax Settlement Commission, but granted to it after a delay of 98 months - HELD THAT - Hon ble Apex Court in case of K.Lakshmanya Co. 2017 (11) TMI 589 - SUPREME COURT had held that assessee was entitled to interest u/s 244A of the Act on a refund due to it on account of waiver by the ITSC of interest u/s 234A, 234B and 234C. We hold that the refunds finally determined by the ITSC in the instant case had been wrongfully retained by the department for a considerable period of time and hence department is bound to compensate assessee with interest u/s 244A of the Act. We find from perusal of provisions of section 244A of the Act that the said section does not draw any distinction between tax and interest . It only uses the expression any amount due . Hence the final refund determined by the ITSC would fall within the ambit of the expression any amount due in section 244A of the Act , thereby making the assessee eligible to receive interest u/s 244A of the Act thereon. In view of the aforesaid observations and placing reliance on various judicial precedents relied upon hereinabove including the CBDT Instruction and CBDT Circular we direct the ld AO to grant interest on refund from 14.7.2009 onwards till the date of granting refund for all the Asst Years under consideration. Accordingly, the grounds raised by the assessee are allowed.
Issues Involved:
1. Entitlement to interest under Section 244A of the Income Tax Act on delayed refunds. Issue-wise Detailed Analysis: 1. Entitlement to Interest under Section 244A of the Income Tax Act on Delayed Refunds: The primary issue in these appeals is whether the assessee is entitled to interest under Section 244A of the Income Tax Act on refunds granted after a delay of 98 months. The refunds were due following an order by the Income Tax Settlement Commission (ITSC). Facts and Background: The assessee, an Indian Listed Public Limited Company engaged in banking and leasing transactions, filed an application under Section 245C of the Act for various assessment years before the ITSC. The ITSC passed an order on 04.03.2008, granting immunity from penalty and prosecution. However, the department filed a writ before the Karnataka High Court challenging the ITSC's order, which is pending before the Supreme Court. Meanwhile, the ITSC passed an order on 14.07.2009 determining the tax and interest refundable to the assessee for the relevant assessment years. Despite this, the refunds were retained by the department and were only granted to the assessee after a delay of 98 months, without any interest for the delayed period. Arguments and Contentions: The assessee argued that the refunds were wrongfully retained by the department, and interest under Section 244A should be granted for the delayed period. The department contended that the ITSC's order did not provide for interest beyond March 2008 and that the refunds were not final due to pending appeals. Tribunal's Observations: The tribunal noted that the ITSC's order did not disqualify the assessee from receiving interest under Section 244A beyond March 2008. The ITSC's jurisdiction ended in March 2008, and it did not deal with interest liability beyond that date. The tribunal found that the department misinterpreted the ITSC's observations and deprived the assessee of legitimate interest due under Section 244A. Legal Provisions and Precedents: Section 244A of the Act entitles an assessee to interest on refunds due under the Act. The tribunal referred to several judicial precedents, including the Supreme Court's decisions in CIT vs H.E.G. Ltd and Union of India vs Tata Chemicals Ltd, which held that interest on refunds is a statutory right and compensates for the unauthorized retention of money by the department. Conclusion: The tribunal concluded that the refunds determined by the ITSC became "any amount due" to the assessee under Section 244A, and the department's delay in granting refunds entitled the assessee to interest. The tribunal directed the Assessing Officer to grant interest on the refund from 14.07.2009 onwards until the date of granting the refund for all the assessment years under consideration. Final Judgment: All appeals by the assessee were allowed, and the department was directed to grant interest on the delayed refunds as per Section 244A of the Income Tax Act. Order Pronounced: The order was pronounced on 27/10/2021.
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