2016 (8) TMI 206 - AT - Income Tax

Interest on delayed grant of refund in terms of section 244A(1) - delay in grant of refund - Held that - Relevant TDS certificates were furnished alongwith the return of income and it is also irrefutable that the tax was deducted and deposited in the account of the Central Government within the stipulated period. Therefore, in our view, income-tax authorities have erred in construing that the proceedings resulting in the refund are delayed for reasons attributable to the assessee within the meaning of Sec. 244A(2) of the Act. Section 245RR prescribes that no income-tax authority or the Appellate Tribunal shall proceed to decide any issue in respect to which an application has been made to the AAR, so however, such a restriction is placed only for an assessee-applicant who is a resident of India as per the Act, whereas the appellant-assessee before us is a non-resident. Apart therefrom, we do not find any provision which places restrictions on any income-tax authority to proceed to decide any issue before it, in case an application is pending before the AAR. Be that as it may, in our view, if the proceedings resulting in refund are delayed on account of pendency of an application before the AAR, the same cannot be construed as reasons attributable to the assessee within the meaning of Sec. 244A(2) of the Act. Therefore, the aforesaid stand of CIT(A), in our view, is untenable in law. In this view of the matter, in our considered opinion, in the present case, the provisions of Sec. 244A(2) of the Act cannot be invoked by the Assessing Officer to deny interest u/s 244A(1) of the Act on account of delay in grant of refund from the period 1.4.2003 up to the date of grant of such refund, i.e., 20.7.2006. - Decided in favour of assessee.

Summary

Issues:
Claim for interest on delayed grant of refund under section 244A(1) of the Income Tax Act, 1961.

Analysis:

1. Background and Relevant Facts:
- The appeal concerns the claim for interest on delayed refund by the assessee.
- The appellant, a foreign company, claimed a refund of a substantial amount based on TDS certificates.
- Assessing Officer initially raised a demand, later rectified to grant credit for TDS.
- Dispute arose regarding interest on delayed refund from 1.4.2003 to 20.7.2006.

2. Assessee's Contentions:
- Assessee argued no delay on their part as TDS certificates were attached to the return.
- Cited judgments to support entitlement to interest from the beginning of the assessment year.

3. Revenue's Stand:
- Revenue contended that delay was partly due to the assessee and interest was rightly allowed for a specific period.

4. Tribunal's Analysis and Decision:
- Tribunal analyzed Sec. 244A(1) and (2) of the Act regarding interest on delayed refunds.
- Found that interest was allowed only for a specific period, differing from the assessee's claim.
- Tribunal examined reasons for delay and whether they were attributable to the assessee.

5. Conclusion and Tribunal's Decision:
- Tribunal held that delay was not due to the assessee and interest should have been granted from 1.4.2003 to 20.7.2006.
- Rejected Revenue's argument regarding delay and upheld assessee's claim for interest.
- Directed the Assessing Officer to re-determine the interest due to the assessee as per Sec. 244A(1) of the Act.

6. Additional Observations:
- Tribunal disagreed with the CIT(A)'s decision to refer the issue to higher authorities, stating it was not justified.
- Overall, the appeal of the assessee was allowed, and the order of the CIT(A) was set aside.

This detailed analysis showcases the Tribunal's thorough examination of the facts, legal provisions, and arguments presented by both parties, leading to a clear decision in favor of the assessee's claim for interest on delayed refund.