TaxTMI 
TaxTMI 
1980 (11) TMI 91
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....e satisfied on an objective consideration of the facts present that the grant of refund is likely to adversely affect the Revenue in case the order giving rise to the refund is made the subject matter of an appeal or further proceeding Sec. 244 provides. Where a refund is due to the assessee in pursuance of an order referred to in s. 240 and the ITO does not grant the refund within a period of three months from the end of the month in which such order is passed the Central Government shall pay to the assessee simple interest at twelve per cent per annum on the amount of refund due from the date immediately following the expiry of the period of three months aforesaid to the date on which the refund is granted This section is self explanatory and it provides in unmistakable term that where a refund is due to the assessee in pursuance of an order referred to in s. 240 viz, as a consequence of any appellate proceeding and if the ITO does not grant the refund within a period of three months, the Central Government shall pay interest at 12 per cent per annum on the amount of refund calculated in the manner specified in that section. 3. It has to be remembered that in both the cases no....
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.... appeals against these assessments came up before the AAC there was an assessment made for the asst. yr.1957-58 on identical ground under identical circumstances. That appeal came u for consideration before the Tribunal also The Tribunal by its order, dt. 29th March, 1966 in ITA No. 377/1964-65 held that the technical fee received by the assessee from the Indian company was not liable to tax in India as the services were rendered outside India. This decision of the Tribunal was not accepted by the Revenue and a reference on a question of law was pending in the High Court This was the position obtaining when the AAC took up the appeals for the subsequent assessment years, which are now under consideration. After adverting to these circumstances, the AAC held that 35 per cent of the technical services fee could be taken as net income that had accrued to the assessee in Indian and that amount alone should be brought to tax. There were then further appeals both by the assessee and the department, to the Tribunal. 7. In the meantime, the reference that was made to the High Court relating to the asst. yr. 1957-58 had been decided by the High Court holding that the service charges receiv....
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....ding pending and as we have already pointed out earlier, the provisions of s. 231 of the Act to withhold the refund have not been brought into operation i.e. invoked Therefore, the refund that has become due as a consequence of the order of the Tribunal not having been granted without the assessee having to may any application on that behalf earned interest under s. 244 of the IT Act. Because that section is mandatory in nature and as we have already extracted, the Central Govt. shall pay to the assessee simple interest at 12 per cent per annum on the amount of refund due from the date of expiry of three months aforesaid Even this refund has not been granted nor any interest on this amount. This is one party of the present proceedings. 9. The second part is that the appeal preferred by the assessee in the Supreme Court against the decision of the Madras High Court had been decided on 11th April, 1977 reversing the Madras High Court decision and accepting the view expressed by the Tribunal This decision was also reported in 1977 CTR (SC) 209 : (1977) 108 ITR 335. (SC). As a consequence of the decision of the Supreme Court no amount became taxable in India and the entire amount of t....
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....erred to in s. 240 which went to the Supreme Court was the order relating to the asst. yr. 1957-58 and not for the years under appeal and, therefore, that order could not be the order giving rise ot refund in respect of which the Central Govt. Has to pay interest. 11. After hearing the learned counsel for the assessee and the ld. Deptl. Rep at length we find ourselves unable to support the order of the ld. CIT (A). It is first a misconstruction on the part of the CIT (A) to think that the order of the Tribunal dt. 31st Oct., 1975 whereby the Tribunal directed recomputation of income after allowing certain expenditure did not give rise to any refund. The ld. Counsel for the assessee had been vehement that those orders did result in refund although he was not able to give the precise figures nor the Deptl. Rep was in a position to support the order of the CIT (A) by pointing out the necessary figures to us. The CIT (A) should have given a direction to work out the refund if any and the allowed the interest. He was in our opinion not justified in assuming that the order of the Tribunal did not give rise to any refund and then holding that refund was not due and, therefore, no interes....
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....reme Court Judgment. The three months period from the end of the month in which the Supreme Court judgment, was passed would expire by July, 1977. Since no refund has been granted within that period, the assessee would be entitled to interest on that amount from July, 1977. We see no reason or justification to deny the assessee interest on any ground from the date of the judgment of the Supreme Court. The decision of the Supreme Court gave rise to the refund and the order of the Tribunal gave the necessary direction to the ITO to implement the order of the Supreme Court. It is this aspect in our view that was missed by the CIT(A) when he held what the assessee was no entitled to interest. We are however not impressed by the arguments of the ld. Counsel that the interest should be allowed from the date of the order of the Tribunal viz., 31st Oct., 1975 for the simple reason that order did not result in the grant of the refund to the assessee That order has to be construed in the light of the law obtaining then which means applying the High Court decision that the technical fee received by the assessee is taxable and all that the assessee was entitled to was only a deduction for expe....
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....s the ld. Deptl. Rep. modified his stand by submitting that the prohibition to entertain the appeal would apply only in cases where no order this been passed by the refusing to allow interest. If an order had been passed by the IAC refusing or granting interest that order may become appealable but in case where no order passed there is no order to be applied against and therefore no appeal lies We are unable to accept the plea of the Deptl. Rep because the scheme of s. 240, which grants refund as a consequence of orders passed on the appeals and s. 244, which grants interest on delayed grant of refund one thing is very clear that is in both the cases it is the Department that has to take action suo motto without the assessee having to make any claim in that behalf. Whether the sections are so clear and when the responsibility is so squarely put on the shoulders of the Revenue it is the Revenue that has to pass orders granting refund and also interest if the requirements of s. 244 are to be satisfied In a case wee the Revenue overlooked either intentionally or otherwise, ignores or shirks or deliberately decline to discharge this obligation, a cause of action does arise to the asses....