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2013 (5) TMI 71 - AT - Income TaxNon granting of interest u/s 244A consequent to the refund - Held that where assessee voluntarily deducted tax and claimed refund directly, grant of interest under section 244A may not arise and the Board Circulars on this issue are applicable, whereas in a case where AO demand the tax / interest consequent to an order under section 195/201 or 201A, and the refund arose consequent to the orders of the CIT (A)/ITAT, then interest under section 244A has to be granted. Relying in the decisions of Tata Chemicals Ltd. v. Dy. CIT 2007 6 TMI 300 Mumbai and the decision of the Godrej Industries Ltd. v. Dy. CIT 2006 1 TMI 469 Mumbai assessee is entitled to interest u/s 244A. - Decided in favor of assessee.
Issues Involved:
1. Non-granting of interest under section 244A on the refund received by the assessee. Issue-Wise Detailed Analysis: 1. Non-granting of interest under section 244A on the refund received by the assessee: The core issue in this appeal is the non-granting of interest under section 244A of the Income Tax Act, 1961, on the refund received by the assessee. The refund was issued consequent to the order of the CIT(A), which followed an order under section 251/195 of the I.T. Act. The assessee had filed an application under section 195(2) for lower or nil deduction of income tax on payments to be made to M/s Nimbus Sports International Pte. Ltd. The assessee contended that the payments for live telecast of cricket matches were not in the nature of 'royalty' and thus not taxable in India. However, the AO directed the assessee to deduct tax at 11.72%. This decision was appealed, and the CIT(A) ruled in favor of the assessee, stating that no taxes were deductible and directed a refund of Rs. 2,65,11,410 without any interest under section 244A. The assessee filed an application under section 154 requesting the AO to rectify and grant interest under section 244A on the amount of TDS deposited. The AO rejected this request, stating that there is no provision in the Income Tax Act for allowing interest on the TDS deducted. The CIT(A) upheld this decision, relying on Board Circular No.007 of 2007, which stated that the amount of TDS cannot be considered as 'tax' and thus no interest under section 244A is admissible. The assessee's counsel argued that interest under section 244A was due as the refund was granted consequent to the order of the CIT(A). He referenced similar cases where interest was granted, including Dy. DIT (International Taxation) v. Star Cruises (India) Travel Services Pvt. Ltd. and Tata Chemicals Ltd. v. Dy. CIT. The Tribunal considered the rival contentions, Board Circular, and relevant case laws. It noted that the refund arose consequent to an order of CIT(A) in an appeal and not as a direct refund claim relying on the Board Circular. The Tribunal distinguished the present case from the Godrej Industries Ltd. case, where the tax was voluntarily deducted without an order under section 195(2). The Tribunal referred to section 240 and section 244A of the Income Tax Act, which provide for the refund of any amount due to the assessee and the payment of interest on such refunds. It cited the decision in Star Cruises (India) Travel Services (P.) Ltd., which elaborated that interest under section 244A is payable on refunds arising from appellate orders. The Tribunal concluded that the assessee is entitled to interest under section 244A as the refund was due to an appellate order, not a voluntary deduction. It directed the AO to calculate the interest from 31.03.2008 to 30.07.2009 and grant the same to the assessee. Conclusion: The appeal filed by the assessee was allowed, and the AO was directed to grant interest under section 244A on the refund amount.
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