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TMI Blog2019 (2) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... of April of the Assessment Year to the date on which the refund is granted, provided the return is filed before the due date, specified in sub-section 1 of Section 139 of the Act. Here, the reference “from the 1st day of April of the Assessment Year” which is the starting point for computing the interest payable, must be to the Assessment Year, in which, the tax was deducted at source. Since this expression has to be read along with the main body of clause (a) which refers to the refund arising out of, inter alia, of the tax treated to have been paid as per Section 199 of the Act. Any other view, would be holding untenable since, the Revenue which has received the tax deducted at source from the payments to be made to the Assessee and appropriate the same, would refund the same but the interest would be accounted much later when the return giving rise to the refund, is filed. - Decided against revenue - INCOME TAX APPEAL NO. 1230 OF 2016 - - - Dated:- 29-1-2019 - AKIL KURESHI M.S. SANKLECHA, JJ. Mr. Arvind Pinto, for the Appellant. Mr. Sanjiv M. Shah, for the Respondent. P.C: This Appeal is filed by the Revenue to challenge the judgment of the Income Ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e at prescribed rates. Section 199 of the Act pertains to credit for tax deducted. Sub-section 2. of Section 199 provides that any sum referred to in sub-section (1A) of Section 192 of the Act and paid to the Central Government, shall be treated as the tax paid on behalf of the person in respect of whose income such payment of tax has been made. 4 Section 244A of the Act pertains to income on refunds. Relevant portion of the said Section reads as under: 244A(1): 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 section 199, during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of one-half per cent 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 the refund is granted, if the return of income h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o fall under clause (b), the question of applicability of the explanation would certainly arise. In the present case, however, for the reasons to follow, we are of the opinion that the Assesses case falls under clause (a). 6. We may recall, clause (a) covers situation where the refund is out of any tax collected at source or paid by way of advance tax or treated as paid under Section 199 of the Act. This reference to treat tax as paid under Section 199 of the Act, would clearly cover the tax deducted at source. In the present case, the Assessee had suffered deduction of tax at source at the time of payments. In that view of the matter, the case of the Assessee would clearly be covered under clause (a) to subsection (1) of Section 244 of the Act. In such a situation, this clause provide that, interest shall be calculated at the rate of % for every month or part thereof, comprising a period from the 1st day of April of the Assessment Year to the date on which the refund is granted, provided the return is filed before the due date, specified in sub-section 1 of Section 139 of the Act. Here, the reference from the 1st day of April of the Assessment Year which is the starting ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and is not procedural. The principles for grant of interest are the same as under the provisions of section 244 applicable to assessments before April 1, 1989, albeit with clarity of application as contained in section 244A. The Department has also issued Circular clarifying the purpose and object of introducing section 244A of the Act to replace sections 214, 243 and 244 of the Act. It is clarified therein, that, since there was some lacunae in the earlier provisions with regard to non-payment of interest by the Revenue to the assessee for the money remaining with the Government, the said section is introduced for payment of interest by the Department for delay in grant of refunds. A general right exists in the State to refund any tax collected for its purpose, and a corresponding right exists to refund to individuals any sum paid by them as taxes which are found to have been wrongfully exacted or are believed to be, for any reason, inequitable. The statutory obligation to refund carried with it the right to interest also. This is true in the case of assessee under the Act. Providing for payment of interest in case of refund of amounts paid as tax or deemed tax or advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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