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TMI Blog2024 (2) TMI 991X X X X Extracts X X X X X X X X Extracts X X X X ..... year and be spread over in all relevant assessment years for the purpose of calculation of Income Tax. The relief under Section 89 is to be considered at the time of calculating payable amount of tax. There is no such provision in IT Act to refund the amount of relief granted under Section 89 as it is. There may be situation wherein even after adjusting / grant of relief under Section 89 of IT Act, assessee may be liable to pay tax. Amount of relief is adjustable or deductable from the amount of tax. Relief under Section 89 is a relief or rebate not a refund. First question is answered accordingly. Rectification of mistake u/s 154 - Relief under Section 89 of IT Act was duly extended to petitioner as claimed by him in petition and therefore, there was no mistake on the part of respondent in calculating refundable amount to the tune of Rs. 2,05,030/-. Whether petitioner is entitled for interest @ 18% p.a. despite statutory stipulation for payment of interest in Section 244(1)(b) of IT Act ? - Chartered Accountant calculated total payable amount of interest to Rs. 1,04,565/- in his both reports whereas Income Tax Department has paid interest to the tune of Rs. 1,08,650/- which is hig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Punjab and Sindh Bank and was placed under suspension by Bank in a departmental enquiry on 29.02.1996 and ultimately terminated. 2.1 Order of termination was challenged by petitioner before this Court successfully and this Court by order dated 04.07.2008 passed in M.C.C. No. 960/2007 arising out of Writ Appeal No.901/2006 set aside termination and ordered to treat petitioner as an employee under suspension from 01.03.1996 to 16.04.2007 and to pay subsistence allowance for the said period. 2.2 Bank calculated subsistence allowance amounted of Rs. 20,90,354.96 for the aforesaid period, but while paying said subsistence amount deducted Rs. 5,25,000/- towards TDS u/s 192 of IT Act and paid balance amount of Rs. 15,09,309/- to petitioner. Deducted amount was deposited as tax with Income Tax Department by Bank. 2.3 Petitioner preferred Contempt Petition no. 1003 / 2008 before this Court complaining deduction of TDS by bank authorities, which was disposed off by order dated 18.02.2010 with a liberty to petitioner to assail deduction of income tax by way of filing Writ Petition as well as to approach Income Tax Authority for refund of amount deducted towards income tax in accordance wit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... abalpur on 01.10.2012 and not challenged before any forum and original order passed by A.O. on 30.08.2011 under Section 154 of IT Act was also merged with appeal order and these orders have attained finality and could not be revised by A.O. subsequently. 2.9 In furtherance of order passed by JCIT, on 09.05.2017, ITO, Ward-1(1), Jabalpur issued a notice under Section 154/155 of IT Act informing petitioner that order dated 05.12.2014 needs to be rectified by withdrawing relief of Rs. 2,81,797/- allowed u/s 89(1) and to revise total income from Rs. 20,87,090/- to Rs. NIL as shown by petitioner in the original return of income. 2.10 Petitioner preferred W.P. no. 9494/2017 and challenged notice issued by ITO dated 09.05.2017 seeking quashment of notice and compliance of order dated 05.12.2014, whereby A.O. allowed relief u/s 89(1) to petitioner. 2.11 ITO, Ward-1(1), Jabalpur passed an order on 01.08.2017 under Section 154 of IT Act and declined to grant any refund to petitioner by holding that order passed u/s 154 of IT Act on 05.12.2014 was not in conformity with the provisions of section 154 and accordingly, documents obtained during proceedings u/s 154 are against the provisions of L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resent petition. 3. With the consent of parties, matter is heard finally. Petitioner s submissions: 4. Petitioner Shri Gurmit Singh Vilkhu submits that this Court by order dated 14.02.2019 quashed show cause notice dated 09.05.2017 and subsequent order dated 01.08.2017 with a direction to refund amount as mentioned in order dated 05.12.2014 passed by ITO, whereby petitioner was found entitled to claim benefit under Section 89(1) of IT Act, therefore, principal refundable amount should be equallent to the amount of relief Rs. 2,81,797/- instead of Rs. 205030/- calculated by ITO. He further submits that relief under Section 89 (1) of IT Act was calculated and comes to Rs. 2,81,797/- which is not in dispute as calculation sheet attached with impugned communication also reflects same amount towards relief granted under Section 89(1). He further submits that W.P. No. 9494/2017 was allowed and it was directed to pay amount along with interest therefore, principal amount cannot be treated as refund, it is judgment debt and therefore he is entitled for simple interest @ 18% p.a., however, the ITO has allowed interest @ 0.5% per month only. Petitioner prays for issuance of appropriate direc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ption in respect of any amount received or receivable on such voluntary retirement or termination of his service or voluntary separation has been claimed by the assessee under clause (10-C) of Section 10 in respect of such, or any other, assessment year. 6.1 Apex Court in the matter of K.C. Joshi v. Union of India, (1985) 3 SCC 153 after considering provisions of section 89 of IT Act held as under : 17. Now that the amount is being paid in one lump sum, it is likely that the employer may take recourse to Section 192 of the Income Tax Act, 1961 which provides that any person responsible for paying any income chargeable under the head salaries shall, at the time of payment, deduct income tax on the amount payable at the average rate of income tax computed on the basis of the rates in force for the financial year in which the payment is made, on the estimated income of the assessee under this head for that financial year. If therefore the employer proceeds to deduct the income tax as provided by Section 192, we would like to make it abundantly clear that each appellant would be entitled to the relief under Section 89 of the Income Tax Act which provides that where, by reason of any po ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for not adding said amount for the purpose of assessment of income tax payable on the amount of salary received for the relevant financial year and be spread over in all relevant assessment years for the purpose of calculation of Income Tax. The relief under Section 89 is to be considered at the time of calculating payable amount of tax. There is no such provision in IT Act to refund the amount of relief granted under Section 89 as it is. There may be situation wherein even after adjusting / grant of relief under Section 89 of IT Act, assessee may be liable to pay tax. Amount of relief is adjustable or deductable from the amount of tax. Relief under Section 89 is a relief or rebate not a refund. First question is answered accordingly. 7. Coming to the facts of the case, order dated 14.02.2019 passed in W.P. No. 9494/2017 was not assailed by any party before Apex Court and, therefore, same has attained finality by which it was decided that order passed by ITO on 05.12.2014 was wrongly reconsidered under Section 154 of IT Act and proceedings initiated on the basis of show cause notice dated 09.05.2017 were held misplaced, misconceived and perverse and resultantly, show cause notice d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... countant of this Court, however, petitioner is claiming amount of relief as refundable amount, whereas relief amount and refundable amount are two different figures. Total amount received by petitioner during the assessment year was Rs. 20,90,355/- out of which deduction was allowed under Section 80 C to the tune of Rs. 3266/ and after deducting the said amount aggregate income comes to Rs. 20,87,090/-. 7.4 When tax was calculated on aggregate income of Rs. 20,87,090/-, gross tax comes to Rs. 5,31,127/-, surcharge was payable @ 10% of amount of gross tax, which was calculated to Rs. 53,113/- and education cess @ 3% on total of gross tax and surcharge was payable to the tune of Rs. 17527/-. After adding surcharge and education cess total payable income tax was Rs. 6,01,767/- (5,31,127 +53,113 +17,527 = 6,01,767). By allowing relief under section 89 of IT Act, the income received by petitioner was spread over from assessment year 1996-97 to 2008-09 and therefore the liability of tax was reduced and relief under Section 89 was granted to the tune of amount of Rs. 2,81,797/- and net payable tax was calculated to Rs. 3,19,970/- (6,01,767 2,81,797 = 3,19,970/-). TDS of Rs. 5,25,000/- was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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): Provided that where refund arises as a result of an order passed by the Assessing Officer in consequence of an application made by the assessee under sub-section (20) of Section 155, 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 such application to the date on which the refund is granted; (aa) where the refund is out of any tax paid under Section 140-A, 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 p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c once the statutory provisions have been complied with . 8.3 Payment of interest is statutory obligation and cannot be denied. Interest has been calculated by respondent accordance with section 244A(1)(a)(ii) of IT Act, whereas the present case would fall outside clauses (a) and (aa) of this provision and therefore fall within the residuary clause namely clause (b) of section 244A(1). Petitioner has claimed interest complaining that refundable amount was paid only after the order passed by this court, hence petitioner has become entitled to claim interest on said amount from the date on which the liability was determined till it is refunded. As stated above claim for interest on the delayed amount is payable as per section 244A(1)(b) of IT Act. The rate of interest provided under section 244A(1)(b) is one-half % per month. 8.4 Respondent has allowed interest @ 0.5% per month from 27.10.2010 to 25.04.2019 calculated upon refundable amount of Rs. 2,05,030/- to the tune of Rs. 1,08,650/- and paid net amount of Rs. 3,13,680/-, which is according to the provisions of Section 244A(1)(b) of IT Act. Chartered Accountant of this Court has also submitted his report that interest is payable ..... X X X X Extracts X X X X X X X X Extracts X X X X
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