TaxTMI 
TaxTMI 
TaxTMI 
2018 (12) TMI 1836
X X X X Extracts X X X X
X X X X Extracts X X X X
.....2015. In the said order , the ld AO took the figure of refund originally determined at Rs. 200,87,14,868/- and calculated the interest for the period 1.4.95 to 4.7.97 u/s 244A of the Act at Rs. 56,24,40,163/-. As against the refund actually determined by the ld AO, only partial refund was actually granted to the assessee to the tune of Rs. 148,78,12,496/- comprising of tax portion of Rs. 120,06,40,310/- and interest portion of Rs. 28,71,72,186/-. . The ld AO while calculating the interest on refunds for the periods subsequent to 4.7.97 , calculated interest on the refund originally determined at Rs. 200.87 crores minus the tax portion of the refund already granted to the assessee at Rs. 120.06 crores as stated supra. This is being objected by the assessee before us. 4. We find that the ld CITA had merely directed the ld AO to calculate the interest u/s 244A of the Act correctly as per law without really getting into the dispute . Against this action of the ld CITA, both the assessee as well as the revenue are in appeal before us. 5. We have heard the rival submissions. We find that the ld AO had calculated interest u/s 244A of the Act for the period 1.4.95 to 4.7.97 on the refun....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of Union Bank of India supra except with variance in figures and dates. Hence the decision rendered in the case of Union Bank of India supra would apply with equal force for the assessee before us. The relevant operative portion of the decision in the case of Union Bank of India are reproduced below:- 3.2 During the course of hearing before us, Ld. Counsel strongly relied upon the orders of the Tribunal in assessee's own case for A.Y. 1988-89 (ITA No. 571/Mum/2013) and A.Y. 2001-02 (ITA NO. 574/Mum/2013) disposed by the order dated 23.06.2014 and also upon the order dated 22.07.2015 in ITA No. 918/Mum/2014 for A.Y. 2005-06. It was further submitted by him that this issue stands squarely covered in favour of the assessee by the judgment of Hon'ble Delhi High Court in the case of India Trade Promotion Organisation v. CIT [2014] 361 ITR 646/[2013] 38 taxmann.com 233 which has been considered by the Tribunal while deciding this issue in favour of the assessee. It was also submitted that the assessee is not claiming interest on interest; and the only prayer of the assessee is to make adjustment of the refund issued earlier in the same manner as tax paid by the assessee to the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ssee refund should first be adjusted against interest payable and only the balance amount shall be adjusted against tax refundable and in this process the balance refund due would work out to Rs. 3,52,28.442/- on which the assessee is entitled to interest u/s. 244A of the Act whereas the Assessing Officer calculated the balance refund clue at Rs. 2,03,99,541/-(tax component) and Rs. 1,58,28,901/- (interest component). Reason for such calculation was that according to the Assessing Officer no interest is payable on interest due in which event, even if there is substantial delay in interest payable, the assessee can be made to wait unendingly without payment of interest. Though, before the Assessing Officer as well learned CIT (A), the assessee's claim of interest u/s. 244A is not properly focused but sum and substance of the assessee's case before us is that in the event of adjustment of refund against interest due to the assessee tax refund due shall work out to Rs. 3.62 crores on which the assessee would be entitled to get interest u/s. 244A of the Act. In this regard the assessee relied upon the order of Hon'ble Delhi High Court in the case of India Trade Promotion Or....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he case of HEG Limited and the SLP was granted and civil appeal was registered. The Supreme Court thereupon answered the question against the Revenue in the following words:- Therefore, this is not a case where the assessee is claiming compound interest or interest on interest as is sought to be made out in the civil appeals filed by the Department. The next question which we are required to answer is - what is the meaning of the words "refund of any amount becomes due to the assessee" in Section 244A? In the present case, as stated above, there are two components of the tax paid by the assessee for which the assessee was granted refund, namely TDS of Rs. 45,73,528 and tax paid after original assessment of Rs. 1,71,00,320. The Department contends that the words "any amount" will not include the interest which accrued to the respondent for not refunding Rs. 45,73,528 for 57 months. We see no merit in this argument. The interest component will partake of the character of the "amount due" under Section 244A. It becomes an integral part of Rs. 45,73,528 which is not paid for 57 months after the said amount became due and payable. As can be seen from the facts narrated above, this i....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... ' 3.6 The facts of the case before us are similar in the sense that here also only part amount was refunded in the first phase by the department and when the balance amount was paid by the department in the second phase, the assessee was entitled for interest on the balance amount of refund due. Thus, from the aforesaid observations of Hon'ble Delhi High Court, we can say that it is not a case of payment of interest on interest. Thus, in view of these facts and aforesaid judgments, Ld Counsel contended that Ld. CIT (A) had wrongly applied the judgment of Hon'ble Supreme Court in the case of Gujarat Fluoro Chemicals (supra), since it was not applicable on the facts of this case. 3.7 Further, it was also held by Hon'ble High Court that the department ought to follow the same procedure and rules while collecting tax and while issued refunds. We have gone through the provisions of section 140A(1); explanation to the aforesaid section provides as under: "Explanation - Where the amount paid by the assessee under this sub-section falls short of the aggregate of the tax and interest as aforesaid, the amount so paid shall first be adjusted towards the interest ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s per law, along with interest. Some of the useful observations are reproduced hereunder for the sake of better clarity in deciding the issue before us: '37. A "tax refund" is a refund of taxes when the tax liability is less than the tax paid. As per the old section an assessee was entitled for payment of interest on the amount of taxes refunded pursuant to an order passed under the Act, including the order passed in an appeal. In the present fact scenario, the deductor/assessee had paid taxes pursuant to a special order passed by the assessing officer/Income Tax Officer. In the appeal filed against the said order the assessee has succeeded and a direction is issued by the appellate authority to refund the tax paid. The amount paid by the resident/deductor was retained by the Government till a direction was issued by the appellate authority to refund the same. When the said amount is refunded it should carry interest in the matter of course. As held by the Courts while awarding interest, it is a kind of compensation of use and retention of the money collected unauthorizedly by the Department. When the collection is illegal, there is corresponding obligation on the revenue to ....