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TMI Blog2017 (11) TMI 589X X X X Extracts X X X X X X X X Extracts X X X X ..... view and that consequently, the High Court was incorrect in its view that since a discretionary power has been exercised, no concomitant right was found for refund of interest to the assessee. - Civil Appeal No. 4335 of 2012 - - - Dated:- 1-11-2017 - Rohinton Fali Nariman And Sanjay Kishan Kaul, JJ. For the Appellant : Mr. Preetesh Kapur, Adv. Mr. Mohit chaudhary, Adv. Mr. Ashok A.Kulkarni, Adv. Ms. Puja Sharma, Adv. MR. Kunal Sachdeva, Adv. Mr. Balwinder Singh Suri, Adv. Ms. Garima Sharma, Adv. Mr. Ranjit B.Raut, Adv. Mrs. Bina Gupta, AOR Ms. Puja Sharma, AOR Mrs. Anil Katiyar, AOR For the Respondent : Mr. K.Radhakrishnan, Sr. Adv. Mr. Arijit Prasad, Adv. Ms. Rashmi Malhotra, Adv. Mrs. Anil Katiyar, AOR Mr. B. V. Balaram Das, AOR Mr. M.S.Syali, Sr. Adv. Mr. Rustom B. Hathikhanawala, AOR Mr. Mayank Nagi, Adv. Mr. Vikrant A.Maheshwari, Adv. Mr. Tarun Singh, Adv. JUDGMENT R. F. Nariman, J. The question which this appeal raises is whether the High Court of Karnataka at Bangalore was correct in holding that the assessee in the present case was not entitled to interest under Section 244 (A) of the Income-Tax, 1961 Act, when refund arose to it on account of inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court judgment in Needle Industries (supra) and pointed out to us that this very judgment has been affirmed by this Court in Sandvik Asia Ltd. Vs. Commissioner of Income Tax I, Pune and Others 2006 (2) SCC 508. According to him, since Section 244(A) is wider than the pre-existing Section 241, it is clear that all the judgments which deal with Section 241 apply with all force to the facts of this case. He also relied upon the judgment of this Court in Commissioner of Income Tax, Mumbai Vs. Anjum M.H.Ghaswala and Ors. 2002 (1) SCC 633 para 34 in particular, to show that when the power to waive interest payable under a substantive provision of the Act was given by a circular of the Board to the Settlement Commission, interest could be so waived and that a circular of the Board gave such power which was exercised by the Settlement Commission in the present case. According to him, the judgments of the C.I.T. (Appeals) and the Tribunal are, therefore, correct and ought not to have been set aside by the High Court. Mr. K.Radhakrishnan, learned senior counsel appearing for the respondent-Revenue, emphasised the expression due to which is present in Sections 240 and 244(A) and would, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to and including assessment year 1989-90, made it clear that it would apply where a refund is due to the assessee in pursuance of an order referred to in Section 240. It is only if the Assessing Officer does not grant the refund within three months from the end of the month in which such order is passed, that the Central Government shall pay to the assessee simple interest on the amount of refund due. We are in this appeal directly concerned, however, with Section 244(A) of the Act which reads as follows: Where refund of any amount becomes due to the assessee under this Act], he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated in the following manner, namely :- (a) where the refund is out of any tax collected at source under Section 206C or paid by way of advance tax or treated as paid under Secttion 199, during the financial year immedaitely preceding the assessment year, such interest shall be calculated at the rate of one-half percent for every month or part of a month comprised in the period,- i) from the 1st day of April of the assessment year to the date on which th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee for delay in payment of refund as a result of an order passed in appeal, etc., from the date following after the expiry of three months from the end of the month in which such order was passed to the date on which refund was granted. The rate of interest under all the three sections was 15 per cent annum. 11.3. These provisions, apart from being complicated, left certain gaps for which interest was not paid by the Department to the assessee for money remaining with the Government. To remove this inequity, as also to simplify the provisions in this regard, the Amending Act, 1987, has inserted a new Section 244A in the Income Tax Act, applicable from the assessment year 1989-90 and onwards which contains all the provisions for payment of interest by the Department for delay in the grant of refunds. The rate of interest has been increased from the earlier 15 per cent annum to 1.5% per month or part of a month, comprised in the period of delay in the grant of refund. The Amending Act, 1987, has also amended sections 214, 243 and 244 to provide that the provisions of these sections shall not apply to the assessment year 1989-90 or any subsequent assessment years. (emphasis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elevant is whether any amount has become due to an assessee, and further the phrase any amount will also encompass interest. This view has been accepted by various High Courts such as the Delhi, Madras, Kerala High Courts etc. In Commissioner of Income-Tax, Bhopal Vs. H.E.G.Limited 2010 (15) SCC 349, this Court was squarely confronted with the meaning of the expression where refund of any amount become due to the assessee in Section 244(A)(1). This question was answered as follows: 5.In the present case, as stated above, there are two components of the tax paid by the assessee for which the assessee was granted refund, namely TDS of ₹ 45,73,528 and tax paid after original assessment of ₹ 1,71,00,320. The Department contends that the words any amount will not include the interest which accrued to the respondent for not refunding ₹ 45,73,528 for 57 months. We see no merit in this argument. The interest component will partake of the character of the amount due under Section 244-A. It becomes an integral part of R. 45,73,528 which is not paid for 57 months after the said amount became due and payable. As can be seen from the facts narrated above, this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l. The right to claim refund is automatic once the statutory provisions have been complied with. However, Mr. K.Radhakrishnan, learned senior counsel appearing for the respondent-Revenue, has strongly relied upon the decision of this Court in Ghaswala's case (supra). In this judgment, this Court held that the Settlement Commission was introduced into the Income-tax Act for the purpose of quick settlement of cases before it, so that the the tax due to the Revenue gets collected at the earliest. The object of this exercise is not to assist tax evaders. In so holding, this Court held that Section 245(D)(6) being procedural in nature, cannot be used to locate any power to waive interest, if it is not otherwise waived under some other substantive provision in the Income-Tax Act. Ultimately, this Court arrived at the conclusion that the Commission cannot either waive or reduce interest which is statutorily payable unless there is express power to do so in that behalf. However, while so saying, the Court went on to clarify that the circulars issued pursuant to the powers under Section 119 of the Act, which empower the authorities under the Act to waive or reduce interest, may be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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