AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (6) TMI 567
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....") in accordance with the provisions of the Act. It is prayed 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....
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....further prayed that if the provision of section 244(A) was not applicable in case of interest on DDT refund, then 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 ---....
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....ril of the assessment year to the date on which the refund is granted: Provided that no interest shall be payable if the amount of refund is less than ten per cent of the tax as 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 Commissio....
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....y 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 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 t....
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....Rai case are concerned, it is to be noted that the decision in the said case was rendered in a different factual scenario altogether. There is always peril in treating the words of a judgement as though they are words in a legislative enactment, and it is to be remembered that 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 c....
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....4A as per clause (b) of section 244A. On verification of clause (b) of section 244A, it is seen that assessee's claim is not genuine. For better clarity, the relevant portion of section 244A(b) is reproduced below: "244A(1)......... (a) where the refund is out of any tax collected at source under section 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 th....
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....an be rectified under section 154 of the Act. 14. We have heard the Ld. AR of the appellant/assessee who has argued that both the lower authorities i.e., the Ld. AO and Ld. CIT(A) has committed illegality in their orders as they have not followed the law referred and already decided by the coordinate bench in ITA No. 301/Kol/2015, ITC Ltd. Vs. Commissioner of Income Tax, Kolkata dated 03.02.2016 wherein similar 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 impug....
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....ate or, as the case may be, dates of payment of the tax or penalty to the date on which the refund is granted... From the aforesaid provisions of Section 244A we find that it applies to all refunds that arise under the Income Tax Act. The Section begins with where refund of any amount becomes due to the assessee under this Act. DDT is nothing but an "additional income tax" for which the charging section is section 115-0 of the Income tax Act, Section 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....
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....High Court) (3) Addl. CIT vs Royal Bank of Scotland N.V. [2011] 15 taxmann. Com 333 (Kolkata Tribunal) (4) CIT vs Vijaya bank [TS-481-High Court-2011 (KAR)] (Karnataka High Court) (5) CIT Vs SIV Industries Ltd. (2007-2 TMI 30 (HC)9Madras High Court) In fact, recently the Supreme Court in the case of Union of India v. Tata Chemicals Ltd. (2014) 43 taxmann.com 240 (SC)has upheld the right of a deductor to claim interest on excess TDS deposited to and refunded by revenue subsequently. The Supreme Court 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 t....
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....eon; (b) The Apex Court decision in Tata Chemicals Ltd. (supra), would have no application to the present facts as the petitioners therein had deducted a larger quantum of tax then liable to be deducted in view of an order passed by the authorities under the Act. In this case, the petitioner has made the payment voluntarily and not consequent to any order passed under the Act and (c) In the alternative and without prejudice to any interest is at all to be allowed to the petitioner, the same can only be from the aforesaid, it is submitted that, if the date on which the notice under Section 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 refun....
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....so relied by the Ld. AR on behalf of the assessee, we have examined the order of the Ld. CIT(A) to find out if the same is legally sustainable in view of the settled law as discussed above. Para 5 and 5.4 of the impugned order the Ld. CIT(A) are relevant and reproduced as under: - "5. Clause (a) is obviously not applicable in the present case. Words of sub-section (1) are clearly for both clause (a) and (b) below it. These read, "Where refund of any amount becomes due to the assessee under this Act, he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated in the following 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....
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....ation to clause (b) has no application. In such cases, as the opening words of clause (b) specifically referred to "as in any other case", the interest is payable from the date of payment of tax. The sequel of our discussion is the resident/deductor is entitled not only the refund of tax deposited under Section 195(2) of the Act, but has to be refunded with interest from the date of payment of such tax. 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, 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 un....