2004 (10) TMI 264 - AT - Income Tax

Summary

Issues Involved:
1. Period for which interest under section 244A should be calculated on the refund arising from TDS.
2. Interpretation of "proceedings resulting in the refund" under section 244A(2).
3. Attribution of delay in filing TDS certificates and its impact on interest calculation.

Detailed Analysis:

1. Period for which interest under section 244A should be calculated on the refund arising from TDS:
The primary issue in this case is the period for which interest under section 244A should be granted on the refund arising from TDS. The assessee argued that interest should be calculated from the first day of April of the assessment year to the date on which the refund is granted, as per section 244A(1). However, the Assessing Officer and CIT(A) determined that interest should be calculated from 1-4-1997, the date when the TDS certificates were furnished, to 1-10-1997, the date when the refund was granted. The Tribunal upheld this view, confirming that the delay in filing TDS certificates was attributable to the assessee, and thus, the period of delay should be excluded from the interest calculation as per section 244A(2).

2. Interpretation of "proceedings resulting in the refund" under section 244A(2):
The assessee contended that the term "proceedings resulting in the refund" refers to assessment or other proceedings determining tax liability and refund, not the act of filing TDS certificates. The Tribunal, however, clarified that the proceedings under section 154, necessitated by the late filing of TDS certificates, were indeed the proceedings resulting in the refund. The Tribunal agreed with the CIT(A)'s interpretation that the delay in filing TDS certificates by the assessee caused the delay in determining the refund, and thus, the period of delay must be excluded from the interest calculation.

3. Attribution of delay in filing TDS certificates and its impact on interest calculation:
The assessee argued that the delay in filing TDS certificates was beyond its control and should not impact the interest calculation. The Tribunal acknowledged that while the delay might have been beyond the assessee's control, the law does not permit condoning such delays for interest calculation purposes. The Tribunal emphasized that interest is calculated based on the eligible period, and any delay attributable to the assessee must be excluded as per section 244A(2). Consequently, the Tribunal upheld the Assessing Officer's decision to exclude the period of delay caused by the late filing of TDS certificates from the interest calculation.

Conclusion:
The Tribunal dismissed the appeal filed by the assessee, confirming that the interest on the refund arising from TDS should be calculated from the date the TDS certificates were furnished to the date the refund was granted. The Tribunal upheld the CIT(A)'s interpretation of section 244A, emphasizing that the delay in filing TDS certificates by the assessee was attributable to the assessee and must be excluded from the interest calculation period.