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TMI Blog2021 (10) TMI 1254X X X X Extracts X X X X X X X X Extracts X X X X ..... sposed of by this common order for the sake of convenience. 2. Though the assessee has raised several grounds, we find that the only effective issue to be decided in these appeals is as to whether the assessee is entitled to interest u/s 244A of the Act on refunds admittedly due to it by an order of the Hon'ble Income Tax Settlement Commission, but granted to it after a delay of 98 months, in the facts and circumstances of the case. 3. We have heard the rival submissions and perused the materials available on record. We find that M/s ING Vysya Bank Ltd has been merged with M/s Kotak Mahindra Bank Ltd with effect from 01.04.2015. The assessee is an Indian Listed Public Limited Company carrying on its business of banking. Apart from regular banking business, the assessee has entered into leasing transaction from the previous year relating to Asst Year 1997-98 with the approval of Reserve Bank of India (RBI). The assessee's income thus derived from banking activities as also from leasing transactions to the course of new leasing business. 3.1. The assessee filed an application dated 10.07.2000 u/s 245C of the Act for the Asst Years 1994-95 to 1999-2000 before the Hon'ble Income Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dered opinion, is against the plain reading of the above observations of the ITSC. We find that the above observations of the ITSC nowhere state that the assessee is disentitled to interest u/s 244A of the Act beyond March 2008. The significance of mentioning March 2008 in the order of ITSC is that ITSC passed its order u/s 245D(4) of the Act in March 2008. Obviously it becomes functus officio beyond March 2008. Hence they had specifically stated as a matter of abundant caution that their order does not deal with interest liability after March 2008 as it is beyond their jurisdiction. We find that the revenue had completely misinterpreted the observations of ITSC in the manner convenient to it, thereby depriving the legitimate interest that is otherwise due to assessee u/s 244A of the Act on the refund amount due. Once the ITSC passes the order u/s 245D (4) of the Act and if the department chooses not to grant the determined refunds to the assessee in time, then the interest u/s 244A of the Act shall become automatically eligible to the assessee as per law. 4.1. The ld AR submitted that one of the reason for denying interest u/s 244A of the Act to the assessee is that the refund de ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m the date of furnishing of return of income to the date on which the refund is granted, in a case not covered under sub-clause (i); (aa) where the refund is out of any tax paid under section 140A, 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, from the date of furnishing of return of income or payment of tax, whichever is later, to the date on which the refund is granted: Provided that no interest under clause (a) or clause (aa) shall be payable, if the amount of refund is less than ten per cent of the tax as determined under sub-section (1) of section 143 or on regular assessment; (b) in any other case, 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 or periods from the date or, as the case may be, dates of payment of the tax or penalty to the date on which the refund is granted. Explanation.-For the purposes of this clause, "date of payment of tax or penalty" means the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer shall serve on the assessee a notice of demand in the prescribed form specifying the amount of the excess interest paid and requiring him to pay such amount; and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly. (4) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989, and subsequent assessment years : Provided that in respect of assessment of fringe benefits, the provisions of this sub-section shall have effect as if for the figures "1989", the figures "2006" had been substituted. 4.3. It could be seen that section 244A of the Act uses the expression 'any amount due' to the assessee under this Act, which manifestly includes refunds determined by the ITSC u/s 245D(4) of the Act also. We find from the order of the ITSC that interest u/s 244A of the Act had indeed been calculated upto March 2008 by ITSC itself. The total amount of refunds determined by the ITSC pursuant to its final order becomes the 'amount due' to the assessee. If the said determined refund is immediately given to the assessee, then there is no ob ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... CC No. 10437/2009, filed by the Department, are also dismissed, with no order as to costs. 4.4. We find that the ld AR also rightly placed reliance on yet another decision of Hon'ble Supreme Court in the case of Union of India vs Tata Chemicals Ltd reported in 363 ITR 658 (SC) wherein it was held as under:- 37. A "tax refund" is a refund of taxes when the tax liability is less than the tax paid. As per the old section an assessee was entitled for payment of interest on the amount of taxes refunded pursuant to an order passed under the Act, including the order passed in an appeal. In the present fact scenario, the deductor/assessee had paid taxes pursuant to a special order passed by the assessing officer/Income Tax Officer. In the appeal filed against the said order the assessee has succeeded and a direction is issued by the appellate authority to refund the tax paid. The amount paid by the resident/deductor was retained by the Government till a direction was issued by the appellate authority to refund the same. When the said amount is refunded it should carry interest in the matter of course. As held by the Courts while awarding interest, it is a kind of compensation of use an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ook at the aforesaid section shows that the aforesaid section is even wider than section 244 and is not restricted to refund being issued to the assessee in pursuance to an order referred to in Section 240. Under this Section, it is enough that the refund become due under the Income-tax Act, in which case the assessee shall, subject to the provisions of this Section, be entitled to receive simple interest. The objects and reasons for the aforesaid amendment state: "11.2 Insertion of a new section 244A in lieu of sections 214, 243 and 244,- Under the provisions of section 214, interest was payable to the assessee on any excess advance tax paid by him in a financial year from the 1st day of April next following the said financial year to the date of regular assessment. In case the refund was not granted within three months from the date of the month in which the regular assessment was completed, section 243 provided for further payment of interest. Under section 244, interest was payable to the assessee 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 orde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion on the amount of refund due under the Act. The interest is to be granted simultaneously with the refund and there should normally be no reason to grant refund without adding the entitled interest. In the case of Sandvik Asia Ltd. v. CIT [280 ITR 643], the Hon'ble Supreme Court, inter alia, adversely commented upon the delay in grant of interest on refund and awarded compensation to the assessee for the said delay by the department. While taking this view, the Supreme Court referred to the judgment of the Gujarat High Court in the case of D.J. Works v. Dy. CIT [195 ITR 227] wherein the High Court had held that though there is no specific provision for payment of interest on interest, but if interest on the refund is wrongfully retained, interest on interest would be payable. The Court further held that even assuming that there was no provision in the Act for payment of compensation, on general principles, compensation was payable to the assessee for the delayed payment of interest. The Court also recommended that action be initiated against the officers responsible for the delay. 2. It is necessary to remind all Assessing Officers that while granting refund to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for payment of interest on the refund of excess amount/tax collected by the Revenue, cannot shrug off its apparent obligation to reimburse the deductors lawful monies with the accrued interest for the period of undue retention of such monies. The State having received the money without right, and having retained and used it, is bound to make the party good, just as an individual would be under like circumstances. The obligation to refund money received and retained without right implies and carries with it the right to interest. " 3. In view of the above judgment of the Apex Court it is settled that if a resident deductor is entitled for the refund of tax deposited under section 195 of the Act, then it has to be refunded with interest under section 244A of the Act, from the date of payment of such tax. 4. Accordingly, it is advised that no appeals may henceforth be filed on this ground by the officers of the department and appeals already filed on this issue may not be pressed upon. 5. This may be brought to the notice of all concerned." 4.8. We find from perusal of provisions of section 244A of the Act that the said section does not draw any distinction between 'tax' an ..... X X X X Extracts X X X X X X X X Extracts X X X X
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