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2022 (1) TMI 241 - AT - Income TaxInterest payable u/s.244A - Refund claim - Date of determination of interest payable - HELD THAT - As in the present case period involved is only 6 years and 4 months. Further, it is not a case of the assessee that money due to the assessee was determined and retained by the department without any reason. In fact, interest payable to the assessee was itself determined on 15.03.2018. If we consider date of determination of interest payable to the assessee as per provisions of section 244A of the Act, i.e., 15.03.2018, then the arguments of the assessee that there is inordinate delay in payment to the assessee which requires payment of compensation cannot be accepted. As per provisions of section 244A of the Act, the assessee is entitled only interest on income tax refund due to the assessee upto the date of payment of such refund - there is no provision in the Act to pay compensation to the assessee for certain delay in payment of interest, more particularly, such delay is on account of technical reasons. Therefore, we are of the considered view that there is no merit in arguments taken by the assessee in light of decision of the Hon'ble Supreme Court in the case of M/s.Sandvik Asia Ltd. Vs CIT 2006 (1) TMI 55 - SUPREME COURT and also the decision in the case of CIT VS. Narendra Dosh 2001 (7) TMI 10 - SUPREME COURT Hon ble Karnataka High Court in the case of CIT Vs. M/s. Syndicate Bank 2020 (10) TMI 522 - KARNATAKA HIGH COURT has considered identical issue and after considering decision of the Hon'ble Supreme Court in the case of Sandvik Asia Ltd. vs CIT (supra) observed that although, the Hon'ble Supreme Court very clearly held that revenue is liable to pay interest on the amount of interest while deciding issue, but fact remains that in the said case there was inordinate delay of 17 years and under those facts, it was held that the revenue is liable to pay compensation for unlawful retention of money due to the assessee. But, fact remains that as per provisions of section 244A of the Act, interest has to be paid to the assessee and such interest has to be paid in terms of section 244A of the Act only, which prescribes interest upto the date of granting refund to the assessee.Appeal filed by the assessee is dismissed.
Issues:
1. Failure to grant interest compensation for the period of money retention. 2. Interpretation of provisions of section 244A of the Income Tax Act. 3. Application of judicial precedents on interest payment. Issue 1: Failure to grant interest compensation for the period of money retention The assessee filed an appeal against the order of the Commissioner of Income Tax (Appeals) concerning the assessment year 2008-09. The primary contention was the non-payment of interest amounting to ?26,60,383, which the department withheld for 6 years and 4 months. The assessee argued for compensation citing judicial precedents, including the case of Sandvik Asia Ltd. vs CIT. The Commissioner rejected the appeal, stating that although there was a delay in granting interest, the assessee failed to prove the unlawful retention of money. The Appellate Tribunal noted that the delay in payment was not equivalent to the situation in Sandvik Asia Ltd. case, where the revenue retained money for over 17 years without justification. The Tribunal upheld the Commissioner's decision, stating that the assessee did not establish unlawful retention, and interest was paid as per the law. Issue 2: Interpretation of provisions of section 244A of the Income Tax Act The Assessing Officer did not calculate interest payable under section 244A when determining the refund due to the assessee. However, interest was later determined and paid up to the date of determining the refund. The Tribunal examined the provisions of section 244A and concluded that the assessee was entitled to interest on the income tax refund until the date of payment. The Tribunal emphasized that there was no provision in the Act to compensate for delays in interest payment due to technical reasons. It was held that the assessee's argument for compensation was not valid under section 244A. Issue 3: Application of judicial precedents on interest payment The assessee argued that the decision in Sandvik Asia Ltd. case mandated compensation for money retention, citing subsequent clarifications by the Supreme Court. However, the Tribunal disagreed, stating that the case did not align with the facts of the present situation. Referring to the decision in CIT vs. Narendra Doshi, the Tribunal emphasized that interest payment was as per the provisions of section 244A. The Tribunal also cited a Karnataka High Court case, reiterating that interest had to be paid in accordance with the law and not for compensatory reasons. Ultimately, the Tribunal dismissed the appeal, upholding the Commissioner's decision and rejecting the grounds raised by the assessee. This detailed analysis of the judgment covers the issues of interest compensation, interpretation of tax provisions, and the application of judicial precedents in the context of the case.
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