2019 (11) TMI 86

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....und voucher dated 20.07.2015 ought to have been granted in June, 2010 and, therefore, interest was duly allowable for delay in granting the amount of refund. 2. That the CIT(A) also erred in not correctly appreciating the decisions of Hon'ble Delhi High Court and of Supreme Court in regard to the matter and failed to appreciate that as per the decisions interest is duly allowable on amount of refund for delay in granting the same and since granting of refund of Rs. 2,14,64,710/- was delayed for the period June, 2010 to July, 2015, interest for the delayed period was duly allowable to the appellant company. 3. That the CIT(A) also failed to appreciate that it is not a question of allowing interest on interest but the issue is of allowing interest on the amount of refund allowable to the appellant company and in terms of provisions of Section 240 of the Act amount refundable consist of tax as well as interest allowable to an assessee. 4. That the CIT(A) also failed to appreciate that since the refund allowable to the appellant company had been wrongly withheld by the Department for the period of more than 5 years, the Department was liable to pay intere....

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....rcumstances of the case the Assessing Officer had issued the intimation u/s 143(1) of the Act on 28.03.2016. The assessee had paid advance tax of Rs. 25 crore and TDS of Rs. 71,40,120/-. The refund of Rs. 4,28,50,269/- was adjusted against the demand of Assessment Year 2003-04 on 31.07.2006. In the intimation issued u/s 143(1) of the Act, the period for which interest was allowed, started on 01.04.2005 to 31.03.2006. The assessee was aggrieved by non-grant of interest for the period 01.04.2006 to 30.06.2006 i.e. till the date of adjustment of the refund and moved an application u/s 154 in this regard. The said interest was granted to the assessee totaling to Rs. 6,42,754/- on 20.07.2015 against non-granting of the interest for the period within which the interest due to the assessee was withheld. Another refund was determined by the second intimation issued dated 13.10.2007, after the assessee had filed revised return of income on 13.10.2007. The total refund due was Rs. 8,20,15,357/- comprising of Rs. 8,16,64,925/- determined vide order dated 13.10.2007 & Rs. 3,50,434/- determined by order passed u/s 154 of the Act dated 10.05.2010. The refund of Rs. 8.20 crore was granted o....

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....reliance was placed by him on the order of Hon'ble Delhi High Court in the case of CIT vs Indian Farmer Fertilizer Co-operative Ltd.(supra) which in turn applied the ratio laid down in the case of CIT vs Gujarat Fluoro Chemicals [2013] 358 ITR 291 (SC) on the ground that it was a decision of Larger Bench. The Ld.AR for the assessee stressed that even the decision in the case of CIT vs HEG Ltd. (supra) is a decision of Larger Bench and the said decision was not before the Hon'ble Apex Court in the case of CIT vs Gujarat Fluoro Chemicals (supra). He also referred to the instruction of the CBDT and pointed out that the Assessing Officer have been directed that while granting refund to the assessee, care should be taken to ensure that any interest payable u/s 244A of the Act, should be granted simultaneously with the grant of refund. 8. The Ld.DR for the Revenue pointed out that the claim of interest made by the assessee on the refund granted to the assessee, was not correct. Referring to the provisions of section 244A(a) of the Act, she pointed out that the said section does not talk of interest on interest. He also pointed out that the decision of Hon'ble Supreme Court in the case....

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.... grievance. But it was not so; interest for certain periods was issued on 20.07.2015. For this period during which interest due to the assessee was withheld by the Department, the present appeal has been filed by the assessee seeking grant of interest on the aforesaid refund determined on account of interest of Rs. 2.14 crores. 11. The provisions of section 244A(1)(a) of the Act talks of interest due to the assessee on account of any tax collected at source or paid by advance during the Financial Year. Sub-clause (aa) talks of refund arising on account of tax paid u/s 140A of the Act and clause (b) of 'any other case'. The assessee claims that its case falls in sub-clause (b) of section 244A(1) of the Act. The grievance is that incase the amount was paid to the assessee, when it was due then no interest was to be further paid; but since it was not paid on the due dates, the assessee is entitled to claim the interest on such late payment of interest due to it. The issue which needs to be adjudicated is whether such interest is interest on interest, to be allowed to the assessee. 12. The Hon'ble Supreme Court in Sandvik Asia Limited vs CIT & Ors. (supra) had laid down the propo....

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....tute which may be claimed by an assessee from the Revenue and no other interest on such statutory interest, was to be allowed. 16. Both decisions of the Hon'ble Supreme Court are of three judges' Bench. In the latest decision, the Hon'ble Supreme Court in the case of K.Lakshmanya & Co. vs CIT (supra) had held as under:- 9. "When it comes to interest on refund, section 244, which applied to assessment years up to and including assessment year 1989-90, made it clear that it would apply where a refund is due to the Assessee in pursuance of an order referred to in Section 240. It is only if the Assessing Officer does not grant the refund within three months from the end of the month in which such order is passed, that the Central Government shall pay to the assessees simple interest on the amount of refund due." 17. The Hon'ble Apex Court in the case of K.Lakshmanya & Co. vs CIT (supra) referred to the provisions of section 244A of the Act and observed that the section was wider in scope than section 244 and it covered cases where refund became due under the Income Tax Act, 1961, in which case "the assessee shall, subject to the provisions of this Section, be entitled to....

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.... and is not procedural. The principles for grant of interest are the same as under the provisions of Section 244 applicable to assessments before 01.04.1989, albeit with clarity of application as contained in Section 244A. 31. The Department has also issued a Circular clarifying the purpose and object of introducing Section 244A of the Act to replace Sections 214, 243 and 244 of the Act. It is clarified therein, that, since there was some lacunae in the earlier provisions with regard to non-payment of interest by the Revenue to the Assessee for the money remaining with the Government, the said Section is introduced for payment of interest by the Department for delay in grant of refunds. A general right exists in the State to refund any tax collected for its purpose, and a corresponding right exists to refund to individuals any sum paid by them as taxes which are found to have been wrongfully exacted or are believed to be, for any reason, inequitable. The statutory obligation to refund carried with it the right to interest also, This is true in the case of Assessee under the Act. 19. "The above extract would clearly show that a corresponding right exists, to refund....