AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 567
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....yed that the learned AO be directed to compute the interest in accordance with the provisions of section 244A of the Act and issue refund accordingly. Grant of interest on the principle of fairness and natural justice b.Without prejudice to Ground No 1, if the provision of section 244A is at all held to be not applicable in case of DDT refund, then the learned AO be directed to grant interest on principle fairness and natural justice and denial of unjust enrichment. It is prayed that the learned AO be directed to compute the interest on principle of fairness and natural justice." 3. The brief facts giving rise to the present appeal are as under: - 4. The appellant is engaged in the business of running hotels. The appellant owns and manages various five-star hotels in India. The appellant filed its Return of income (ROI) electronically on 30.11.2019 for the A.Y. 2014-15, wherein the appellant claimed refund of Dividend Distribution Tax (DDT) amounting to Rs. 2,70,86,631/- in schedule DDT of Income Tax Return Form. 5. The Ld. Assessing Officer i.e., Assistant Commissioner of Income Tax, Circle 3(2)(2), Mumbai (hereinafter referred to as the "AO") vide his order dated 30.10.201....
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....n the Ld. AO be directed to grant interest on the principle of natural justice. 9. The Ld. CIT(A) has passed the order under section 250 of the Act dated 13.09.2023. The appeal of the appellant/assessee was dismissed holding that the case was not fit for rectification order under section 154 of the Act and as such there was no illegality in the Ld. AO's order wherein, he has declined to rectify the mistake if any under section 154 of the Act. 10. In order to proceed further, it is necessary to find out the detailed reasons given by the Ld. CIT(A) for dismissing the appeal. Therefore, para 3 onwards of the judgment of Ld. CIT(A) is relevant and reproduced as under: - 3. "As mentioned in Para-2 above, the sole issue in this appeal is whether there was any infirmity in AO's order u/s 154 declining to grant interest u/s 244A of the Act was right or wrong. Section 154 of the Act reads, "Rectification of mistake. 154. (1) With a view to rectifying any mistake apparent from the record an income-tax authority referred to in section 116 may --- (a) amend any order passed by it under the provisions of this Act" 3.1. So, the conditions precedent for passing rectification order....
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.... determined under sub-section (1) of section 115WE or sub-section (1) of section 143 or on regular assessment; (b) in any other case, such interest shall be calculated at the rate of one-half per cent for every month or part of a month comprised in the period or periods from the date or, as the case may be, dates of payment of the tax or penalty to the date on which the refund is granted Explanation-For the purposes of this clause, "date of payment of tax or penalty means the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand. (2) If the proceedings resulting in the refund are delayed 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. (3) Where, as a result of an order under sub-section (3) of section 115WE or section 115WF or section 115WG or sub-section (3) of section 143 or section 144 or se....
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....hen payment of DDT is termed as payment of 'additional income tax in Section 1150 of the Act. But in the Explanation, the date of payment of tax has been given a special definition which is somewhat restrictive and different from normal meaning of the term. By this Explanation, 'date of payment' is defined as the date on which tax mentioned in demand notice u/s 156 is paid in excess of demand mentioned in that notice. In case of Dividend Distribution Tax (DDT), no such demand notice was issued and, so, the beginning date for this calculation is not available. This creates a problem how to calculate the interest, or, for that matter, whether interest can be granted at all, or, even larger question as to whether the legislation intended to grant interest in cases where some tax is paid without any demand notice. That two opinions on the issue can be conceived, or in other words, there can be conceivably two opinions, is evident from the fact that the issue has been subject matter of several case laws, some of which have been cited by the appellant and mentioned at Para 2 hereinabove. Significantly, even the Supreme Court said in UOI v. Tata Chemicals Ltd (2014) 363 ITR 65....
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.... judicial utterances are made in the setting of the facts of a particular case. Circumstantial flexibility, one additional or different fact may make a world of differencebetween conclusions in two cases (see Padma Sundara Rao v. State of Τ.Ν. - [(2002) 3 SCC 533]). 5.3. Appellant has cited the order of ITC Ltd v. CIT (cited at Para - 2 supra). But the present appeal before me is of Mumbai and the jurisdictional Bombay High Court held in CIT v. Thane Electricity Supply Ltd. [1994] 206 ITR 727(Bom) overruled the judgment in the case of CIT v. Smt. Godavari Saraf [1978] 113 ITR 589 (Bom) holding that the decision of one High Court was not a binding precedent for another High Court or Lower Courts outside the jurisdiction. 5.4. The fact emanating from the above discussion is that the issue is not clear cut it. is not an issue where there cannot conceivably be two opinions. Therefore, it cannot be said that the mistake is apparent from records. Consequently, respectfully, following the decision of hon'ble Supreme Court in T. S. Balaram, ITO vs. Volkart Brothers (supra), I am of the opinion that the case is not fit for rectification order u/s. 154 of the Act and, hence, t....
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....n 260C or paid by way of advance tax or treated as paid under section 199..... (aa) where the refund is out of any tax paid under section 140A.......... (b) in any other case, such interest shall be calculated at the rate of [one-half per cent for every month or part of a month comprised in the period or periods from the date or, as the case may be, dates of payment of the tax or penalty to the date on which the refund is granted. Explanation For the purpose of this clause, 'date of payment of tax or penalty' means the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand." Thus, assessee's case is not falls under section 244A(1)(a) or 244A(1)(aa). Further in the explanation to section 244A(1)(b), it is amply clear that intention of the legislature is to grant refund of excess payment made for regular payment or penalty, where the notice of demand is issued u/s 156 of the Income Tax Act. In assessee's case there is no such demand notice u/s 156 was served. Also, here it is pertinent to mention that distribution of profits as "dividend" being appropriation of profits, ....
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....matter was decided in favour of the appellant/assessee. The Ld. AR further referred and relied the case of Hon'ble High Court of Bombay in Stock Holding Corporation of India Ltd. Vs. N. C. Tewari, Commissioner of Income Tax, Mumbai City-III reported as [2015] 53 taxmann.com 106 (Bombay). It is further argued that the ratio of these two judgments perfectly covers the facts and circumstances of the case of the assessee and the assessee was within his legal and statutory right to seek interest under section 244A of the Act which has been wrongly denied by both the Ld. Lower Authorities. 15. The Ld. DR on behalf of the revenue has argued that the orders of lower authorities are perfectly and legally valid and there is no illegality and perversity and has defended the impugned order as well as the order of the Ld. AO saying that since two opinions were possible in this case hence, the rectification was not legally possible as has been rightly held by the Ld. CIT(A). Regarding the denial of interest on the excess DDT which has been ordered to be refunded by the Ld. AO on the application of the assessee it is argued that there was no question of payment interest in the absence of any pro....
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....ction 115-0 lays down that- Notwithstanding anything contained in any other provision of this Act and subject to the provisions of this section, in addition to the income tax chargeable in respect of the total income of a domestic company for any assessment year, any amount declared, distributed or paid by such company by way of dividends (whether interim or otherwise) on or after the 1 day of April, 2003, whether out of current or accumulated profits shall be charged to additional income-tax (hereinafter referred to as tax on distributed profits) " Thus, where any refund arises on account of excess payment of DDT, it is a refund becoming due to the assessee under the Act and interest under Section 244A is applicable on the same. Clause (a) of Section 244A(1) deals with refunds that arise on account of excess payment of advance tax, TDS/TCS. Clause (b) of section 244A(1) applies to refunds that arise "in any other case". As such, Clause (b) is of wide import and any payment which does not fall in clause (a), are covered under clause (b) like refund of excess tax payment made against demand raised, refund of excess self-assessment tax paid, refund of excess DDT paid, ref....
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.... has clearly held that: ....Interest payment is a statutory obligation and non-discretionary in nature to the assessee. In tune with the aforesaid general principle, Section 244A is drafted and enacted. The language employed in Section 244A of the Act is clear and plain. It grants substantive right of interest 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 clearly of application as contained in Section 244A; In view of above provisions, we find that the assessee is very much entitled to have the refund along with the interest. Therefore, we deem it that the AO's order is not erroneous in so far as it is prejudicial to the revenue. Hence provisions of section 263 are not applicable and should be dropped we allow this ground of appeal of the assessee accordingly." 17. In Stock Holding Corporation of India Ltd. referred (supra) the matter pertains to refund of amount alongwith interest payable under section 244A(1)(b) on refund of excess amount paid on self-assessment tax. Para 5 to 7 are relevant and reproduced as under: - "5. Mr. Jitendra Jain, learned....
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....on 156 of the Act is issued to the petitioner. In this case, according to him, it was issued on the date of the assessment order. 7. We have considered the rival submissions. On a bare analysis of Section 244A(1) of the Act it is clear that amount paid by the petitioner as tax on self-assessment would not stand covered by Section 244A(1)(a) of the Act. This is so as it is neither the payment of tax by way of advance tax or by way of tax deducted at source. Thus tax paid on self-assessment would fall under Section 2444(1)(b) of the Act, i.e. a residuary clause covering refunds of amount not falling under Section 244A(1) of the Act. The revenue contends that in the absence of tax on self-assessment finding mention in Section 244A(1)(a) of the Act, no interest is payable under Section 244A(1) of the Act and Section 244A(1)(b) of the Act would have no application. This contention is opposed to the meaning of the provision disclosed even on a bare reading. If the tax paid is not covered by clause (a) of Section 244A(1), it falls within clause (b), which is a residuary clause. Besides, this contention stands negatived by the CBDT Circular bearing No.549 dated 31 October 1989 wherein ....
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....owing manner, namely:" The words, "Where refund of any amount becomes due to the assessee under this Act are sweeping enough to take into their fold all refunds arising under the Act. No distinction or exclusion is made or provided. As far as this part is concerned, the only question to be asked is whether the refund is arising under the Act. Here, the answer is yes However, as the words "subject to the provisions of this section indicate, such omnibus provision is qualified by the provisions of Section 244A. If any exclusion is provided in the section, interest will be subject to that. Now, from the words of clause (b) and Explanation it appears that by the words "in any other case", all types of refunds under the Act are covered. Thereafter, the calculation procedure is provided in which the period will be from date of payment of tax to date of granting refund. So far, there is no complexity particularly when payment of DDT is termed as payment of 'additional income tax in Section 1150 of the Act. But in the Explanation, the date of payment of tax has been given a special definition which is somewhat restrictive and different from normal meaning of the term. By this Explanati....
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....decision of hon'ble Supreme Court in T. S. Balaram, ITO vs. Volkart Brothers (supra), I am of the opinion that the case is not fit for rectification order u/s. 154 of the Act and, hence, there is no infirmity in AO's order declining to rectify by passing order u/s 154 of the Act." 19. It is evident from the observations of the Ld. CIT(A) that in the beginning para 5 of his order, he has proceeded in right direction holding that the words "where refund of any amount becomes due to the assessee under this Act" are sweeping enough to take into their fold all refunds arising under the act but the Ld. CIT(A) seems to be distracted in his subsequent observation of para 5 and specifically para 5.4 where he conclude that in this case it cannot be said that mistakes were apparent from records because two opinions were possible in this case and accordingly held that it was no fit case for rectification of order under section 154 of "the Act" and for that reason, he has observed that there was no illegality in the Ld. AO's order declining to rectify under section 154 of the Act. 20. On perusal of the order under section 154 of the Act dated 30.10.2019, it is noticed that the L....