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TMI Blog2006 (1) TMI 469X X X X Extracts X X X X X X X X Extracts X X X X ..... ve due dates for payment of tax deducted at source. In the meantime, on the respective due dates, the assessee paid withholding tax before remitting the interest abroad. The approvals under section 10(15)( iv )( c ) were received subsequently. When the assessee applied for refund of excess withholding tax paid, the same was denied. However, the assessee filed an appeal against the said order which was disposed off by the CIT(A)-XXV, Mumbai vide order No. CIT(A)/XXV/Jt. CIT(TDS)/Rg.I/188 2000-01, dated 16-1-2001 directing the Assessing Officer to issue the said refund relating to both the years. The order of the CIT(A) has been confirmed by the Tribunal in ITA Nos. 2161 2162/Mum./01 vide its order dated 31-5-2004. The Assessing Officer has given the appeal effect of the CIT(A) by granting the refund of TDS of Rs. 35,41,589. However, the Assessing Officer did not allow interest under section 244(A). Aggrieved by the same, the assessee preferred appeal before the CIT(A). Reliance was placed on the decision of the Supreme Court in the case of ITO v. Delhi Development Authority [2001] 252 ITR 772 and the Board Circular No. 549, dated 31-10-1989. Further reliance was placed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... stated that the amount paid by the assessee was on account of TDS only and this amount was paid voluntarily, being a good citizen of the country, as the approval was awaited from the Ministry of Finance. It was further submitted that for a moment, if the approval could not have been received then the assessee would have been found an assessee in default and order under section 201 may have passed by the Assessing Officer. Since the assessee being a good citizen was of the view that it should not involved in any litigation, therefore, voluntarily paid the amount of TDS and the same was refunded on the directions of the CIT(A). Accordingly, it was submitted that the amount of refund received by the assessee has to be treated as amount paid under the provisions of Income-tax. Therefore, the assessee is entitled for interest under section 244A. 8. We have heard the rival submissions and considered them carefully. We have also perused the various case laws along with Board circulars on which the reliance was placed by the respective parties and found that the CIT(A) was justified in rejecting the claim of the assessee. In the scheme of taxation as provided for under the Act, an ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the foreign collaborator is made and/or returned to the Indian company following cancellation of the contract in another assessment year. In all the cases mentioned above, where either the income does not accrue to the non-resident or excess tax has been deducted thereby resulting in refund being due to the Indian enterprise which deposited the tax, at present a refund can be issued only if a valid claim is made by filing a return. In the absence of any statutory provision empowering the Assessing Officer to refund the tax deducted at source to the person who has deducted tax at source, the Assessing Officer insist on filing of the return by the person in whose case deduction was made at source. Even adjustment of the excess tax or the tax erroneously deducted under section 195 is not allowed. This has led to a lot of hardship as the non-resident in whose case the deduction has been made is either not present in the country or has no further dealings with the Indian enterprise thus making it difficult for a return to be filed by the non-resident." 9. Accordingly, the Board decided that any type of case referred above in the circular, a refund may be made independent of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of demand has been issued under section 156 and the tax has been paid in excess of such demand. In the present case, undisputedly no notice of demand under section 156 was raised, therefore, no tax was paid either under the provisions of the Act or in excess. Therefore, in our considered view, no interest can be allowed where the refund amount was not paid as per the provisions of law. The contention of the assessee that being a good citizen he has paid the TDS amount may be reasonable contention; however, if the amount paid was not under the provisions of law then, in our considered view no interest is allowable under section 244A. The decision in the case of ITO v. DDA [2001] 252 ITR 772 (SC) and in the case of Vasantlal Tulsidas Agrawal v. CIT [2002] 254 ITR 255 (Guj.) have been considered by the CIT(A) and they were found distinguishable. In the case of DDA ( supra ), the Assessing Officer held "DDA as responsible for not deducting tax under section 194A of the I.T. Act and issued notice of demand for tax and recovery. The Appellate Tribunal set aside the order of the ITO and directed the refund of the amount recovered from DDA. On a writ petition, the Hon ble Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d since on the tax being so deposited by the person denying his liability to deduct tax at source, the same is to be treated as a payment of tax on behalf of the person from whose income the deduction is made and credit is to be given to him for the amount so deducted, the refund can only be claimed by the person from whose income-tax is so deducted or paid." It was held by the Tribunal that; "once the appellant succeeds in the appeal against deduction of tax at source in accordance with sections 195 and 200, the revenue authorities have to proceed on the basis that the appellant did not have any liability to make the impugned deduction. As a corollary to that position, a successful appellant cannot be said to be even under an obligation to issue certificate under section 203 i.e., TDS certificate. On the appellant being successful in appeal under section 248, on the facts of the instant case, the provisions of section 198 ceased to be relevant because once an income was held to be exigible to tax under the Act, the question of taxability on gross amount or net amount in the hands of recipient was wholly irrelevant and absolutely academic. As far as section 199 is concerned, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax Act to make payment on account of interest on such payments. Therefore, provisions of section 244A cannot be held as applicable on the facts of the present case. 15. We have seen the Board Circular Nos. 769 and 790 and found that they are benevolent circulars and these circulars were issued by the Board to mitigate hardship faced by certain assessees who have deducted the TDS and paid to the Government account. However, on a later stage, the agreement was cancelled or the deductees were not able to refund or were not liable to file return of income. Therefore, in these circumstances the Board directed its officers to allow the refund to the assessee with the approval of the Chief Commissioner concerned. In the Circular No. 790, it was clearly clarified that interest under section 244A was not to be paid because such payments were not on account of tax. 16. In view of the facts and circumstances, we hold that the CIT(A) was justified in rejecting the claim of the assessee. Accordingly, we hold that CIT(A) was justified in rejecting the claim of the assessee and confirmed the order of the CIT(A) for both the years. 17. In the result, the appeals filed by the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
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