9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2022 (8) TMI 532 - HC - Income TaxPayment of interest u/s 244A on the amount of refund payable to the assessee - CIT(A) concluded that the claim of interest by the respondent for the refund amounts to 'interest on interest' and held that it is beyond the scope of Section 244A - ITAT allowed the claim - contention of the Revenue that since the refunded amount was deposited by the assessee towards 'interest' due to the Revenue, any award of interest on the refund would amount to 'interest on interest' is factually incorrect - HELD THAT - Revenue has not disputed that the payment of interest by the respondent u/s 234D and Section 220(2) was in pursuance of the demand raised by the Revenue, which demand subsequently has been found to be incorrect and the money has become due and payable by the Revenue to the assessee. It would be relevant to note here that in the judgment of Preeti N. Aggarwala 2017 (5) TMI 308 - DELHI HIGH COURT the predecessor Division Bench took note of the pending reference to the larger Bench in Sutlej Industries Limited 2016 (1) TMI 1353 - DELHI HIGH COURT and observed that the issue involved in the said reference pertains to refund of excess self assessment tax whereas, the issue determined in the judgment in Preeti N. Aggarwala (supra) was payment of interest on the amount of refund payable to the assessee u/s 220A. The issue arising in the present appeal is authoritatively answered by the predecessor Division Bench in Preeti N. Aggarwala 2017 (5) TMI 308 - DELHI HIGH COURT and we do not find any substance in the contention of the learned counsel for the Revenue that present appeal must await the decision of the larger Bench. The said judgment was also followed by the Supreme Court in the case of Universal Cable 2019 (12) TMI 1081 - SC ORDER to hold that there is reason to deny payment of interest to the deductor who has deducted the tax at source and deposited the same with the treasury. The Supreme Court rejected the submission of the Revenue that interest can only be granted to an assessee under Section 244A of the Act and not to a deductor of the tax at source. The judgment of the Supreme Court in the case of Gujarat Fluoro Chemicals 2013 (10) TMI 117 - SUPREME COURT arose on issue as regards payment of interest in the event of the failure of Revenue to refund the interest payable within the statutory period. The Supreme Court held that it is the interest provided under the statute which may be claimed by an assessee from the Revenue and no other interest on statutory interest is payable. In the present case, as noted above, the assessee has been found entitled to refund of money deposited by it upon re-computation by the Revenue and interest thereon is liable to be paid under Section 244A(1)(b) as held by this Court in Preeti N. Aggarwala (supra).
Issues Involved:
1. Entitlement to interest on refund under Section 244A of the Income Tax Act, 1961. 2. Whether the interest awarded by ITAT amounts to 'interest on interest'. 3. Applicability of the pending reference to the larger Bench in Sutlej Industries Limited vs. CIT. Detailed Analysis: 1. Entitlement to Interest on Refund under Section 244A of the Income Tax Act, 1961: The primary issue revolves around whether the respondent is entitled to interest on the refund of amounts deposited as interest under Sections 234D and 220(2) of the Income Tax Act. The ITAT allowed the respondent's appeal, granting interest on the refund as per Section 244A(1)(b) of the Act. The ITAT relied on the judgment of the Division Bench in Preeti N. Aggarwala v. Chief Commissioner of Income Tax & Anr., which held that the assessee is entitled to interest on the sum refunded due to a reduction in taxable income. 2. Whether the Interest Awarded by ITAT Amounts to 'Interest on Interest': The Revenue argued that awarding interest on the refund amounts to 'interest on interest', which is beyond the scope of Section 244A. However, the court clarified that the refunded amount, although initially deposited as interest, does not retain the character of 'interest' in the hands of the assessee. The payment of the refund by Revenue to the assessee is a return of money and does not constitute 'interest'. The court referred to the definition of 'interest' under Section 2(28A) of the Act, concluding that the refunded amount does not meet the criteria of 'interest'. Therefore, the contention that awarding interest on the refund amounts to 'interest on interest' was deemed factually incorrect. 3. Applicability of the Pending Reference to the Larger Bench in Sutlej Industries Limited vs. CIT: The Revenue contended that the issue should await the judgment of the larger Bench in Sutlej Industries Limited vs. CIT, which pertains to the entitlement of interest on the refund of self-assessment tax. The court found no merit in this argument, distinguishing the present case from the pending reference. The court noted that the issue in the present proceedings does not pertain to the refund of self-assessment tax but to the refund of amounts deposited as interest under Sections 234D and 220(2) of the Act. The court emphasized that the issue at hand is authoritatively answered by the Division Bench in Preeti N. Aggarwala, which dealt with the payment of interest on the amount refunded to the assessee under similar circumstances. Conclusion: The court upheld the ITAT's decision, affirming that the respondent is entitled to interest on the refund under Section 244A(1)(b) of the Act. The court dismissed the Revenue's appeal, finding no substantial question of law and no infirmity in the ITAT's order. The judgment reinforced the principle that the government is obligated to pay interest on refunds due to the assessee, ensuring compensation for the period of undue retention of money by the Revenue.
|
