TaxTMI 
TaxTMI 
2017 (6) TMI 1158
X X X X Extracts X X X X
X X X X Extracts X X X X
....w the interest as also a portion of the refund claim on the ground of non-confirmation from the deductors. The petitioners would assert that denial of interest and a part of refund claim is violative of their rights under Section 244-A of the Act and that they are entitled to be compensated by way of further interest over interest. Shorn of unnecessary details, the relevant background aspects of the matter are as follows: The petitioner No.1 is said to be a Co-operative Bank engaged in the business of banking and claim to be exempted from the payment of income tax on the income derived from the interest on securities as per the provisions contained in Section 80 P (2)(a)(i) of the Act. During the financial years 1999-2000 to 2002-2003, corresponding to the Assessment Years 2000-2001 to 2003-2004 respectively, the petitioner bank made huge investments in the Central, State and Trustee Securities and earned income through interest over such deposits. The case of the petitioners had been that the concerned organizations with whom the investments were made for the said Assessment Years, deducted TDS on the interest income under Section 193 of the Act to the tune of Rs. 2,24,07,94....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed time limit as per section 139(4). 5. A factual report has been submitted by the CCIT, Shillong on the application of the Bank. On examination it is found that it is a case of genuine hardship. 6. Keeping in view the facts and circumstances of this case, the Central Board of Direct Taxes in exercise of the power conferred under clause (b) of sub-section (2) of Section 119 of the Income Act 1961, hereby condones the delay in filing return to claim refund for Assessment Years 2000-01, 2001-02, 2002-03 and 2003-04 and directs the Assessing Officer to allow the claim of refund, subject to verification, for the aforesaid Assessment Years as per Instruction No.13 of 2006. No interest should be paid on these refund claims." For the reason that in the aforesaid order dated 19.10.2011, interest had been disallowed on refund, the petitioner No.2 made another petition to the CBDT on 11.01.2012 to consider the payment of interest on the refund claim as per the provisions of Section 244-A of the Act. This prayer was, however, declined by the CBDT by way of its communication dated 25.01.2012, while stating as under:- "I am directed to refer to your letter No.MCAB/....
X X X X Extracts X X X X
X X X X Extracts X X X X
....,78,429/- were issued to them towards the refund allowed but even those cheques returned unpaid for want of double signatures and then, the respondents issued the fresh cheques. Aggrieved of the aforesaid orders dated 19.10.2011 and 25.01.2012 by CBDT denying interest over refund as also the aforesaid assessment orders dated 30.12.2013, the petitioners have preferred this writ petition essentially with the contentions that denial of refund to the tune of Rs. 11,44,821/- on the alleged ground of non-confirmation of TDS from the concerned deductors is not sustainable because the assessee had given complete details of the deductors and had furnished TDS certificates discharging its onus and want of confirmation from the deductors cannot be a ground for denying the refund which is otherwise admissible in law; and that denial of interest over the refund amount remains entirely unjustified and is contrary to the provisions contained in Section 244-A of the Act, which invest the petitioners with a statutory right of receiving interest at the rate provided therein over the amount that had remained in deposit with the department. It is also submitted that under sub-section (2) of Section....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... any claim for interest over interest is sustainable. It is also submitted that the cheques of refund had to be re-issued because earlier cheques carried a minor technical error but only six days extra time was taken in the process. The petitioners have filed a rejoinder affidavit with the submissions that the matter of delay was brought to the notice of the CBDT in the petition dated 26.02.2008 but thereafter, neither the CBDT nor the Assessing Officer dealt with the matter with reasonable expedition with the result that ultimately, the refund amount was received by the petitioner-bank only in the month of May, 2014 and therein too, a part of the amount was not refunded on an untenable ground, of want of confirmation. Hence, the petitioners assert on their entitlement to the reliefs as claimed. Before proceeding further, we may indicate in the passing that earlier, a Division Bench of this Court, while considering this petition on 26.05.2015 and 16.06.2015, pondered over an entirely different issue as to why Income Tax department is not charging tax from tribals whose source of earning is situated within the municipal area of Shillong. Thereafter, on 15.09.2015, the Division....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... found it to be a case of genuine hardship and condoned the delay, there was no reason that the respondents yet chose to deny the interest over the refund. Learned counsel has referred to and relied upon the decisions in the case of Union of India v. Tata Chemical Limited: (2014) 6 SCC 335 and National Horticulture Board v. Union of India: (2002) 125 Taxman 922 (P&H). Per contra, learned counsel for the respondents has vehemently argued that sub-section (2) of Section 244-A puts restrictions on payment of interest when the process of refund is delayed on account of the reasons attributable to the assessee; and in the present case, when the assessee-bank chose not to make the claim for refund for an abnormally long length of time, and even the delayed claim was not made to the concerned authority in the first place, and the prayer for condonation was submitted before the CBDT after a long delay, the CBDT had rightly exercised its discretion in declining interest even while condoning the delay. Learned counsel has referred to and relied upon the decision of Hon"ble Kerela High Court in the case of Pala Marketing Co-Op. Society Ltd. v. Commissioner of Income Tax: WP (C) No.17664 of....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d for reasons attributable to the assessee, 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, and where any question arises as to the period to be excluded, it shall be decided by the Chief Commissioner or Commissioner whose decision thereon shall be final." On a plain reading with their ordinary meaning, evident it is that the aforesaid provisions invest the assessee with a right to receive simple interest, on the refund of any amount that has become due for refund under the Act, as per the method provided in the sub-clauses of sub-section (1) thereof. Of course, sub-section (2) of Section 244-A ibid. puts a restriction on payment of interest but only to the extent that if the proceedings resulting in refund are delayed for the reasons attributable to the assessee, the assessee is not entitled to interest for the period of delay which is attributable to him. It is not the provision that whenever there is a delay in claiming refund, the assessee has to be denied interest as a matter of course. Contrary to this, as per sub-section (2) of Section 244-A ibid., only the period of delay attributa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....the proceedings on the basis of which he becomes entitled to refund, then the period of delay is to be excluded from the total period for which becomes payable. However, there is nothing in the plain language of sub-sections (1) and (2) of section 244A from which it can be inferred that the assessee can be deprived of the interest in respect of the period during which his application for refund remains pending before the competent authority. 6. The argument of Shri Sawhney that the submission of an application for award of interest is implicit in the Scheme of section 244A and interest cannot be claimed by the assessee as if right unless there is an unexplained delay in deciding such application sound attractive but lacks merit and deserves to be rejected because a reading of the plain language of section 244A(1) and its two clauses makes it clear that the right to receive interest on the amount of refund does not depend on the submission of an application by the assessee. Rather, it follows as a natural corollary to the assessee's right to receive refund. Therefore, the mere fact that the application filed by the petitioner was decided expeditiously cannot be made a groun....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... Hon"ble Kerela High Court has ruled that the interest is to be denied a matter of course in every case of delay in claiming refund. In any event, the said decision cannot be read as laying down any law contrary to the plain statutory provisions of Section 244-A and the law declared by the Supreme Court. Taking up the facts of the present case, it is noticed that there had, of course, been an initial delay on the part of the petitioners inasmuch as the claim for refund of TDS deducted and deposited in the Assessment Years 2000-2001, 2001-2002, 2002-2003 and 2003-2004 was for the first time made only on 05.10.2006 by filing the returns and that too with an incorrect PA Number. The revised returns with freshly obtained correct PA Number for the said Assessment Years were filed only on 08.03.2007. Even then, the petitioners did not take requisite steps for filing appropriate petition before the concerned authority i.e., the Central Board of Direct Taxes for condonation of delay. Such a petition was filed before the CBDT only on 26.02.2008. On the factual aspect of the matter as noticed hereinabove, we are satisfied that the delay in claiming refund, from the date it should have ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... to deny interest altogether to the petitioners. The contentions of the learned counsel for the respondents that the petitioners had accepted the CBDT orders and hence, are not entitled to claim interest has only been noted to be rejected. As observed, the right of receiving interest is available to the petitioners as per the statute and nothing of any estoppel could be considered operating against the petitioners over the statutory provisions contained in Section 244-A of the Act. Thus, we are clearly of the view that the impugned orders dated 19.10.2011 and 25.01.2012 in so far the respondent No.1 had declined the payment of interest over the refundable amount of tax and consequential denial of interest in the impugned assessment orders dated 30.12.2013 cannot be approved; and in modification of the impugned orders, the petitioners deserve to be allowed interest on the refundable amount of tax w.e.f. 26.02.2008. Question No.2: As to whether in the impugned orders dated 30.12.2013, the Assessing Officer has wrongly declined refund of TDS amounting to Rs. 11,44,821/- for want of confirmation from the deductors? Learned counsel for the petitioners has argued that t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e assessee feel cheated. There is no fault on the part of the petitioner. The fault, if any, lay with the deductor. In the instant case, nothing had been indicated that the fault lay with the petitioner in furnishing false details." The principles aforesaid, in our view, directly apply to the present case too and we see no reason that refund of the said amount of Rs. 11,44,821/- was denied to the petitioners in the aforesaid assessment orders dated 30.12.2013. The claim of the petitioners in this regard deserves to be allowed. Question No.3 As to whether the petitioners are entitled to compensation for delayed payment of interest in the form of interest over interest? Learned counsel for the petitioner has, with strong reliance on the decision of Hon"ble Supreme Court in the case of Sandvik Asia Ltd. v. Commissioner of Income Tax-I, Pune and others: [2006] 280 ITR 643 (SC) has argued that in the present matter, the petitioners have been deprived of interest on the refund amount as per the statute for a long length of time, and hence, the present one is a fit and proper case where the petitioners be awarded compensation, particularly for inordinate delay on the par....