2010 (6) TMI 414 - HC - Income Tax

High Court upholds Tribunal's directive on interest under Income-tax Act; emphasizes timely tax compliance

The High Court of Bombay dismissed the appeal challenging the Tribunal's directive to the Assessing Officer to grant interest under section 244A of the ... Refund – Interest on refund – during the course of the assessment proceedings – Section 244A(2) provides that in the event the proceeding resulting in refund has been delayed for reasons attributable to the assessee, the period of delay so attributable shall be excluded from the period for which the interest is payable. In the present case, section 244A(2) is clearly not attracted - The proceeding resulting in the refund was not delayed for reasons attributable to the assessee. Though the TDS certificates were not submitted with the return and were filed during the course of the assessment proceedings, the Tribunal has noted that the tax was in fact deducted at source at the right time. In the circumstances, the Tribunal is correct in holding that since the benefit of TDS has been allowed to the assessee, interest under section 244A could not be denied only on the ground that the TDS certificates were not furnished with the return of income. Tax was deducted and deposited in the exchequer in time. Section 244A (2) is not attracted. Issues:- Correctness of the order of the Tribunal directing the Assessing Officer to grant interest under section 244A of the Income-tax Act, 1961.Analysis:The High Court of Bombay was presented with an appeal under section 260A of the Income-tax Act, 1961, focusing on the Tribunal's directive to the Assessing Officer regarding the grant of interest under section 244A. The case revolved around the assessment year 2000-01, where the assessee initially declared an income of Rs. 89.75 crores, later revised to Rs. 80.75 crores. The Assessing Officer determined the income at Rs. 97.09 crores under section 115JA. During the assessment proceedings, TDS certificates amounting to Rs. 1,44,34,030 were submitted. The issue at hand was the applicability of section 244A(2) concerning the delay in refund proceedings attributable to the assessee. Despite the TDS certificates not being initially furnished with the return, the Tribunal noted that the tax was deducted at the correct time and deposited accordingly. As a result, the Tribunal held that interest under section 244A should not be denied solely based on the absence of TDS certificates with the return. The delay in refund proceedings was not due to the assessee's actions, leading to the conclusion that section 244A(2) was not applicable in this scenario. Consequently, the appeal was dismissed as it did not raise any substantial question of law.This judgment underscores the importance of timely tax compliance and the impact on interest calculations under section 244A. It clarifies that the mere absence of TDS certificates with the return does not warrant the denial of interest if the tax was deducted and deposited correctly. The decision provides clarity on the interpretation of section 244A(2) in cases where delays in refund proceedings are not attributable to the assessee, emphasizing the equitable application of tax laws.