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TMI Blog2024 (6) TMI 567X X X X Extracts X X X X X X X X Extracts X X X X ..... and circumstances of this case wherein as relied the case of Supreme Court of India in Union of India Vs. Tata Chemicals Ltd. [ 2014 (3) TMI 610 - SUPREME COURT ] stating that the Interest payment is a statutory obligation and non-discretionary in nature to the assessee. In tune with the aforesaid general principle, Section 244A is drafted and enacted. The language employed in Section 244A of the Act is clear and plain. It grants substantive right of interest and is not procedural. Thus we are of the considered opinions that Lower authority has committed illegality and perversity while denying the interest on the DDT refund amount and the impugned order is not legally sustainable in the eyes of law and accordingly set aside. We therefore accordingly hold that the appellant/assessee is very much entitled to payment of interest on the already ordered DDT refund from the date of payment of excess tax/additional tax till the payment of interest in pursuance of this order. Assessee appeal allowed. - SHRI. PRASHANT MAHARSHI, ACCOUNTANT MEMBER AND SHRI. RAJ KUMAR CHAUHAN, JUDICIAL MEMBER For the Assessee : Shri. Ketan Ved For the Department : Shri. H. M. Bhatt (Sr. D.R.) ORDER PER RAJ K ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assing the order under section 143(3) Dividend Distribution Tax was determined at Rs. 20,51,297/- and additional income tax already paid on DDT was Rs. 2,91,37,928/- and as such requested to issue balance refund of Rs. 2,70,86,631/-. The Ld. AO has disposed off the said application vide order dated 30.10.2019 and has computed the liability of Dividend Distribution Tax as under: Particulars Amount (Rs.) Dividend declared by Piem Hotels. 17,14,50,000 Less: Dividend received from foreign subsidiary company as per section 115O(1A) of the Act. 15,93,80,000 Amount for the purpose of computing DDT liability. 1,20,70,000 Tax Payable @ 16.995% 20,51,297 Tax Paid 2,91,37,928 DDT Refund 2,70,86,631 7. The said order was challenged in appeal before the Ld. CIT(A) on the ground that the Ld. AO erred in not granting interest either under section 244(A) of the Act or under any other provision of law while granting refund of DDT of Rs. 2,70,86,631/-. 8. It was prayed before the Ld. CIT(A) that the Ld. AO be directed to compute the interest in accordance with the provision of law and issue further refund accordingly. The appellant/assessee further alleged that where the DDT refund is granted, inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le this Court, while spelling out the scope of the power of a High Court under Act 226 of the Constitution, ruled that an error which has to be established by a long-drawn process of reasoning on points where there may conceivably be two opinions cannot be said to be an error apparent on the face of the record. A decision on a debatable point of law is not a mistake apparent from the record (see Sidhamappa v. Commissioner of Income Tax, Bombay). The power of the officers mentioned in S. 154 of the Income-tax Act, 1961 to correct 'any mistake apparent from the record. The above principle of law, laid down by the Supreme Court, is binding on all including me under Article 141 of Constitution of India. Therefore, I now turn to see whether there may conceivably be two opinions in the matter and whether the issue is something which can be established by a long-drawn process of reasoning on points on which there may conceivably be two opinions as pronounced in the above judgments by the Supreme Court. 4. Relevant Section 244A of the Act provides, Interest on refunds. 244A. (1) Where refund of any amount becomes due to the assessee under this Act, he shall, subject to the provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the prescribed form specifying the amount of the excess interest paid and requiring him to pay such amount; and such notice of dermand 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. 5. Clause (a) is obviously not applicable in the present case. Words of sub-section (1) are clearly for both clause (a) and (b) below it. These read, 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: The words, Where refund of any amount becomes due to the assessee under this Act are sweeping enough to take into their fold all refunds arising under the Act. No distinction or exclusion is made or provided. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. In the absence of an express provision as contained in clause (a), it cannot be said that the interest is payable from the 1st of April of the assessment year. Simultaneously, since the said payment is not made pursuant to a notice issued under Section 156 of the Act, Explanation to clause (b) has no application. In such cases, as the opening words of clause (b) specifically referred to as in any other case , the interest is payable from the date of payment of tax. The sequel of our discussion is the resident/deductor is entitled not only the refund of tax deposited under Section 195(2) of the Act, but has to be refunded with interest from the date of payment of such tax. 5.1. The above judgment is in the subject of interest on refund arising out of TDS unlike this case where refund is out of DDT. Thus, the facts are different. In UOI Ors. v. Dhanwanti Devi Ors. (1996) 6 SCC 44the Supreme Court held. 9 ...... Every judgment must be read as applicable to the particular facts proved. since the generality of the expressions which may be found there is not intended to be exposition of the whole law, but governed and qualified by the particular facts of the case in which such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2019 under section 154 of the Act in which it was claimed that rectification of the mistake apparent from record is necessary wherein interest has not been refunded in violation of section 244A of the Act. Since in para 2 of the impugned order, the Ld. CIT(A) has discussed and observed that it is seen that after filing of this appeal on 06.12.2019, the appellant filed another rectification petition on 12.12.2019 specifically seeking interest under section 244A on the refund of Rs. 2,70,86,631/- which was dismissed on 30.09.2020 , hence, the order dated 30.09.2020 of the Ld. AO on the said rectification application become relevant and reproduced as under because the said rectification petition was dismissed by this order. In this case, order u/s.154 was passed on 30.10.2019 determining Dividend Distribution Refund of Rs.2,70,86,631/-. Assessee vide letter dated 12.12.2019 stated that while passing order u/s.154, eligible interest u/s 244A was not granted. It is further submitted by the assessee that the delay in issue of refund is not due to any fault on the part of the Company. but because of the department's system which was not designed to grant refund which is legally due t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee u/s154 of the Act for granting interest u/s 244 of the Act onto excess of DDT paid is not a mistake apparent from record and hence the said petition is hereby rejected. 12. Thus, the reasons for dismissal of the rectification petition by the Ld. AO can be briefly summarized as under: i. The assessee s case does not falls under section 244(A) or 244A(1)(a) or 244A(1)(aa). ii. Further, in the explanation to section 244A(1)(b), it is amply clear that intention of the legislature is to grant refund of excess payment made for regular payment of penalty, where the notice of demand is issued under section 156 of the Act but in assessee s case there is no such demand notice served under section 156 of the Act. iii. The Dividend Distribution Tax is not a tax but an additional tax payable by the assessee under section 115-O, therefore, under section 244A of the Act, it is nowhere mentioned that the interest on account of this section should be paid on excess of additional taxes paid by the appellant/assessee. 13. The dismissal of the appeal by the Ld. CIT(A) can be summarized as under: i. The legislation never intended to grant interest in cases where some tax is paid without any demand n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m para no.6.5 is relevant and reproduced as under: Regarding the interest on the refund granted by the AO under section 244A of the Act, let us understand the provisions of section 244A which is reproduced below: (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 paid under section 115WJ or 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 percent for every month or part of a month comprised in the period from the 1std day of April of the assessment year to the date and which the refund is granted. Provided that no interest shall be payable if the amount of refund is less than ten per cent of the tax as determined under sub- section (T) of section 115WE or sub-section (1) of section 143 or on regular assessment (b) In any other case, such interest shall be calculat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid by the department to the assessee for money remaining with the Government. To remove this inequity, as also to simplify the provisions in this regard, the Act, 1987 has inserted a new section 244A in the Income-tax Act. applicable from the assessment year 1989-90 and onwards, which contains ap the provisions for payment of interest by the department on delay in the grant of refunds. We also find that support for our conclusion in the Judicial precedents on the issue of interest on refund due u/s. 244A(1)(b) of the Act. IT is not out of place to point out the Income Tax department has in a similar way contended ar various judicial forums across the country that there are no provisions for payment of interest on refund due to self- assessment tax and all in the cases the appellant and judicial authorities have held that interest has to be granted u/s. 244A(1)(b) on sell assessment tax. Reference can be made to the following case laws which have upheld the grant of interest on refund of self-assessment tax: (1) Asst Comm. of Income tax vs. M/s Kerala Transport Co. -2013 (10) TMI 1232 9 Kerala High Court) (2) Comm, of Income tax, Coimbatore vs ABT Industries Ltd. 2013-TIOL- 332-H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Act. Section 244A(1)(a) would govern refunds out of Advance tax and tax deducted at source while Section 244A(1)(b) of the Act would govern all other refunds including tax paid on self assessment. This view is also supported by CBDT Circular No.549 dated 30 October 1989; and (c) The explanation to Section 244A(1)(b) would have no application to the present facts. This is particularly so as no amount has been paid in excess of the demand specified under Section 156 of the Act. For all the above reasons, it is submitted that the petition be allowed. 6. As against the above, Mr. Arvind Pinto, appearing for the revenue in support of the impugned order, submits as under:- (a) The amount paid by the petitioner on self- assessment was even according to the petitioner not tax payable. This, he submits, is evident from the computation of income filed by the petitioner where they claim a refund of Rs.47.15 lacs. Consequently, the amount paid in excess, not being tax, would entitle the petitioner only to the refund of the principal amount paid and not any interest thereon; (b) The Apex Court decision in Tata Chemicals Ltd. (supra), would have no application to the present facts as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advance tax or tax deducted at source or penalty, interest shall be payable for the period starting from the date of payment of such tax or penalty and ending on the date of the grant of the refund. (Refer to example III in para 11.8). (Emphasis supplied) The inferences to be drawn from the Board's circular is clear that if refund is out of any tax other than out of advance-tax or tax deducted at source, interest shall be payable from the date of payment of tax and ending on the date of the grant of refund. It is to be noted that nowhere does the CBDT even remotely suggest that interest is not payable by the Department on self- assessment tax. Moreover, the amount paid under Section 140A of the Act on self-assessment is an amount payable as and by way of the tax after noticing that there is likely to be shortfall in the taxes already paid. Thus, this payment is considered to be a tax under the aforesaid provision. 18. In the light of the settled law referred above and also relied by the Ld. AR on behalf of the assessee, we have examined the order of the Ld. CIT(A) to find out if the same is legally sustainable in view of the settled law as discussed above. Para 5 and 5.4 of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich have been cited by the appellant and mentioned at Para 2 hereinabove. Significantly, even the Supreme Court said in UOI v. Tata Chemicals Ltd (2014) 363 ITR 658 (SC)that in such other cases, neither clause (a) nor clause (b) is applicable. The relevant portion is reproduced below: 39. In the present case, it is not in doubt that the payment of tax made by resident/ depositor is in excess and the department chooses to refund the excess payment of tax to the depositor. We have held the interest requires to be paid on such refunds. The catechize is from what date interest is payable, since the present case does not fall either under clause (a) or (b) of Section 244A of the Act. In the absence of an express provision as contained in clause (a), it cannot be said that the interest is payable from the 1st of April of the assessment year. Simultaneously, since the said payment is not made pursuant to a notice issued under Section 156 of the Act, Explanation to clause (b) has no application. In such cases, as the opening words of clause (b) specifically referred to as in any other case , the interest is payable from the date of payment of tax. The sequel of our discussion is the resid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t they seem to be more concerned about the rectification of the order and has spoken less about the entitlement of assessee to the interest on refund. Both Ld. AO and Ld. CIT(A) seems to have misinterpreted the provision of section 244A(1) which is the only provision applicable in case of the assessee and there is no requirement of applicability of subsequent part of section 244A. The subsequent part of the section has been wrongly applied by the Ld. lower authority on the wrong presumption that in the case of assessee no notice under section 156 was issued. Moreover, the finding recorded by the Ld. Coordinate Bench i.e., ITA No. 301/Kol/2015, ITC Ltd. Vs. Commissioner of Income Tax, Kolkata dated 03.02.2016 perfectly covers the facts and circumstances of this case where the Ld. Coordinate bench has relied the case of Supreme Court of India in Union of India Vs. Tata Chemicals Ltd. referred (supra) stating that the Interest payment is a statutory obligation and non-discretionary in nature to the assessee. In tune with the aforesaid general principle, Section 244A is drafted and enacted. The language employed in Section 244A of the Act is clear and plain. It grants substantive right ..... X X X X Extracts X X X X X X X X Extracts X X X X
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