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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 ..... 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 and defects is excluded for interest calculation. Having availed the time for rectifying the defects and claiming interest for the defect rectification time is unavailable. Such an interpretation does not fit into the requirement of filing a return fully compliant with the order of assessment, levy of interest, refund etc. The period taken by the assessee for curing the defects cannot be excluded while calculating interest; then, for no fault of the Department, the Department is called upon to compensate by way of interest. For the above discussion, and by relying on judgments of the Supreme Court in Tata Chemicals Limited . [ 2014 (3) TMI 610 - SUPREME COURT] and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sary for disposing of the Reference are as follows: 3.1 The appellant, for the Assessment Years 1992-93, 1993-94, 1995-96 and 2001-02 claimed interest on refund of surplus TDS effected in the respective years. The Revenue did not accept the appellant s interest claim while refunding the excess amount received for the return period. Hence, the writ petition was filed to set aside the orders rejecting the assessee s claim for interest during the delayed period. The issue is considered, and turns around on Section 244A of the Act, which reads as under: 244A. Interest on refunds. (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, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nth comprised in the period, from the date on which (a) claim for refund is made in the prescribed form; or (b) tax is paid, where refund arises on account of giving effect to an order under section 250 or section 254 or section 260 or section 262, to the date on which the refund is granted. ( 2) If the proceedings resulting in the refund are delayed for reasons attributable to the assessee or the deductor, as the case may be,] whether wholly or in part, the period of the delay so attributable to him shall be excluded from the period for which interest is payable under sub-sections (1) or (1A) or (1B), and where any question arises as to the period to be excluded, it shall be decided by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner whose decision thereon shall be final. ***** (emphasis supplied) 4. Mr Kumar contends that the assessee's claim is for a refund of excess tax collected or deducted as advance tax, self-assessment tax paid, tax paid on regular assessment etc. The assessee has the right to claim interest along with a refund. In the case on hand, the delay in finalisation of return is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r Christopher Abraham argues that the decisions relied on by the assessee; namely, Larsen and Toubro Ltd; Union of India, and inter-parties judgment in State Bank of Travancore- cannot be said as laying down a principle of law concerning Section 244A of the Act. Section 244A (1) reads that: (a) if refund of any amount becomes due to the assessee under this Act, (b) the assessee is subject to the provisions of this section, entitled to receive in addition to the refund amount, (c) simple interest thereon calculated as per Section 244A(1)(b). Section 244A(2), which is part of Section 244A, deals with: (a) if the proceedings resulting in a refund, are delayed for reasons attributable to the assessee, (b) whether wholly or in part, (c) the period of the delay so attributable to the assessee shall be excluded from the period for which interest is payable under sub-section (1) or (1A) or (IB), (d) a question as to the period to be excluded be decided by the Principal Commissioner, whose decision shall be final. 5.1 Mr Christopher Abraham argues that the plain or textual interpretation of Section 244A sub-section (1) on the one hand, and sub-section (2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (2) of Section 244A of the Act. We find it helpful to refer to the following excerpts from the Tata Chemicals Limited judgment at this juncture of our consideration. 30. The refund becomes due when deducted at source, advance tax paid, self-assessment tax paid and tax paid on regular assessment exceeds tax chargeable for the year as a result of an order passed in appeal or other proceedings under the Act. When refund is of any advance tax (including tax deducted/collected at source), interest is payable for the period starting from the first day of the assessment year to the date of grant of refund. No interest is, however, payable if the excess payment is less than 10 per cent of tax determined under Section 143(1) or on regular assessment. No interest is payable for the period for which the proceedings resulting in the refund are delayed for the reasons attributable to the assessee (wholly or partly). The rate of interest and entitlement to interest on excess tax are determined by the statutory provisions of the Act. Interest payment is a statutory obligation and non-discretionary in nature to the assessee. In tune with the aforesaid general principle, Section 244-A is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... posited. Even the Department has understood the object behind insertion of Section 244-A, as that, an assessee is entitled to payment of interest for money remaining with the Government which would be refunded. There is no reason to restrict the same to an assessee only without extending the similar benefit to a resident/deductor who has deducted tax at source and deposited the same before remitting the amount payable to a non-resident/ foreign company. 38. Providing for payment of interest in case of refund of amounts paid as tax or deemed tax or advance tax is a method now statutorily adopted by fiscal legislation to ensure that the aforesaid amount of tax which has been duly paid in prescribed time and provisions in that behalf form part of the recovery machinery provided in a taxing statute. Refund due and payable to the assessee is debt-owed and payable by the Revenue. The Government, there-being no express statutory provision 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 St ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ble to the assessee; hence, the time taken to cure those omissions and defects is excluded for interest calculation. Having availed the time for rectifying the defects and claiming interest for the defect rectification time is unavailable. Such an interpretation does not fit into the requirement of filing a return fully compliant with the order of assessment, levy of interest, refund etc. The period taken by the assessee for curing the defects cannot be excluded while calculating interest; then, for no fault of the Department, the Department is called upon to compensate by way of interest. 6.3 For the above discussion, and by relying on judgments of the Supreme Court in Tata Chemicals Limited and Sandvik Asia Ltd cases, we hold that the assessee is not entitled to interest for the period taken by the assessee for curing the defects or omissions in the return or in the annexures filed along with the returns. In other words, the interregnum period, i.e., the period taken by the assessee for rectifying the defects or curing the omissions, does not entail the receipt of interest. We agree with the view expressed by the Division Bench in the Order under Reference. The appeal fails ..... 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