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TMI Blog2022 (4) TMI 345X X X X Extracts X X X X X X X X Extracts X X X X ..... o preface the operative portion of the Reference Order, which reads thus: "9. The amendment brought in the year 2017 according to us is only clarificatory in nature. The Department which would have ordinarily refunded the amounts due with interest on finalisation of proceedings cannot be mulcted with the liability of interest for the period in which amounts were retained, by reason only of defects in TDS certificates which could not be accepted or processed for the purpose of credit to tax payable; and effecting refund if found in excess. The Department would not be concerned as to at whose hands the default was occasioned since the obligation to submit the proper TDS form is on the assessee who claims such credit of the tax deducted at source. However, our finding being contrary to what has been held by the Division Bench of this Court, we are of the opinion that the matter requires reference to a Larger Bench." 3. State Bank of India/assessee filed W.P.(C) No. 319283/2007 for quashing or setting aside Exts.P1, P2, P3, P4 and P5, and for a further direction for payment of interest which was rejected by the orders impugned in the writ petition. The circumstances necessary for di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ause, "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. "(IA) In a case where a refund arises as a result of giving effect to an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264, wholly or partly, otherwise than by making a fresh assessment or reassessment, the assessee shall be entitled to receive, in addition to the interest payable under subsection (1), an additional interest on such amount of refund calculated at the rate of three per cent per annum, for the period beginning from the date following the date of expiry of the time allowed under sub-section (5) of section 153 to the date on which the refund is granted. (1B) Where refund of any amount becomes due to the deductor in respect of any amount paid to the credit of the Central Government under Chapter XVII-B, such deductor shall be entitled to receive, in addition to the said amount, simple interest thereon calculated at the rate of one-half per cent for every month or part of a month comprised in the period, from the date on whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case is not attracted, for, the delay is not on account of assessee's commission or omission. He lays much emphasis on Larsen and Toubro Ltd and Union Bank of India cases (supra) and argues that there is no legal ground available for disagreeing with the view taken in the said judgments, and the ratio is applicable in all fours. Referring to the Tata Chemicals Limited case, he argues that the Supreme Court in extenso considered the scheme of refund, right of the assessee for interest, and the denial of interest claim as unjustified. The assessee could get the defects pointed out in the TDS certificates cured and the time taken does not result in denial of interest to the assessee. He argued that the Reference Order dated 24.01.2019, in substance, calls upon this Court to view the claim of interest of assessee for the period where delay attributed to the assessee is concerned. In other words, the Full Bench could also decide whether the view taken by this Court in the judgment inter-parties applies to the Assessment Years on hand and the interpretation placed on Section 244A of the Act is tenable or not? 5. Per contra, Mr Christopher Abraham argues that the decisions re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... time taken by the assessee to cure the defects. 5.2 On the other hand, by any standard for inaction, commission or omission of the assessee in completing the assessment, the Department cannot be mulcted with the compensatory amount by way of interest. According to him, the interpretation now placed by the assessee would render sub-section (2) completely otiose. In support of his argument, he relies on the judgments in L. Madanlal Steels Ltd. v. Chief Commissioner of Income-Tax (2015) 370 ITR 205 (T&AP); Pala Marketing Co-operative Society Ltd. v. Commissioner of Income-Tax (2016) 389 ITR 304 (Ker.); Escorts Ltd. v. Commissioner of Income-Tax (2002) 257 ITR 468 (Del.); and Kerala State Civil Supplies Corporation Ltd. v. Joint Commissioner of Income-Tax (Assessment) (2006) 282 ITR 647 (Ker.). Therefore, it is argued that the reasons expressed by the Division Bench in the Reference Order are tenable. 6. After perusing the judgments, we notice that these judgments relied on by the appellant do not throw light on the point noted by the Division Bench in the Reference Order or deal with the effect of sub-section (2) of Section 244A of the Act. We find it helpful to refer to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; *** 37 A "tax refund" is a refund of taxes when the tax liability is less than the max 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 and retention of the money. collected unauthorisedly by the Department. When the collection is illegal. there is corresponding obligation on the Revenue to refund such amount with interest inasmuch as they have retained and enjoyed the money deposited. Even the Department has understood the object ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is payable on refund of excess tax received for the delayed period in finalisation of assessment on account of assessee's fault (wholly or partially). The construction principles are well established and familiar enough that by applying the golden rule of construction, the section must receive a meaning, as spelt out in the enactment. Section 244A, when construed by the golden rule of interpretation, we hold that refund of any amount firstly becomes due to the assessee upon order of assessment made by the assessing officer. In addition to a refund of excess tax received or collected, the assessee is also entitled to interest on the excess refunded by order of assessment; however, the period of interest is governed by Section 244A (2). Section 244A (2) provides that the period taken by the assessee to cure the defects in finalising the assessment is excluded for interest calculation. As it stood for the applicable assessment years, sub-Section (2) merely refers to reasons attributable to the assessee. Therefore, omission or commission in the return filed by the assessee resulting in a delay in assessment is attributable to the assessee; hence, the time taken to cure those omissions ..... X X X X Extracts X X X X X X X X Extracts X X X X
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