Content Provider | Supreme Court of India |
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e-ISSN | 30484839 |
Language | English |
Access Restriction | NDLI |
Subject Keyword | Income Tax Act Liability of Revenue for payment of interest |
Content Type | Text |
Resource Type | Law Order |
Jurisdiction | India |
Case Type | Appeal |
Court | Supreme Court of India |
Disposal Nature | Appeal Dismissed |
Headnote | INCOME TAX ACT, 1961: s.244-A - Liability of Revenue for payment of interest on refund of tax made to resident/deductor u/s 240 - Held: The language of s. 244-A is precise, clear and unambiguous - Sub-s. (1) of s.244A speaks of interest on refund of the amounts due to an assessee under the Act - Assessee is entitled for the said amount of refund with interest thereon as calculated in accordance with clauses (a) and (b) of sub-s. (1) of s.244A - In calculating the interest payable, the Section provides for different dates from which the interest is to be calculated - Interest payment to assessee is a statutory obligation and non-discretionary in nature - s. 244-A grants substantive right of interest and is not procedural - The principles for grant of interest are the same as under the provisions of s.244 applicable to assessments before 01.04.1989, albeit with clarity of application as contained in s. 244A - Department has also issued Circular clarifying the purpose and object of introducing s.244A to replace ss.214, 243 and 244 - It is clarified therein that since there were some lacunae in the earlier provisions with regard to non-payment of interest by revenue to assessee for the money remaining with Government, the said Section is introduced for payment of interest by the Department for delay in grant of refunds - The statutory obligation to refund carried with it the right to interest also - This is true in the case of assessee under the Act.s.244-A - Entitlement of resident/deductor to interest on refund of excess deduction or erroneous deduction of tax at source u/s 195 - Held: The object behind insertion of s.244A, is that an assessee is entitled to payment of interest for money remaining with the Government which would be refunded - There is no reason to restrict the same to an assessee only without extending the similar benefit to a resident/deductor who has deducted tax at source and deposited the same before remitting the amount payable to a non-resident/foreign company - The obligation to refund money received and retained without right implies and carries with it the right to interest - In the instant case, it is not in doubt that the payment of tax made by resident! depositor is in excess and the department chooses to refund the excess payment of tax to the depositor - The catechize is from what date interest is payable, since the case does not fall either under clause (a) or (b) of s.244A - In the absence of an express provision as contained in clause (a), it cannot be said that the interest is payable from the 1st of April of the assessment year - Simultaneously, since the said payment is not made pursuant to a notice issued u/s 156, Explanation 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 - Thus, the resident/deductor is entitled not only the refund of tax deposited u/s 195(2), but has to be refunded with interest from the date of payment of such tax. Circulars issued by Central Board of Direct Taxes - Held: Circulars issued by the Board in exercise of its powers u/s 119, of the Act would be binding on the income tax authorities even if they deviate from the provisions of the Act, so long as they seek to mitigate the rigour of a particular Section for the benefit of the assessee. Tax refund - Held: A "tax refund" is a refund of taxes when the tax liability is less than the tax paid - In the instant case, 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 Government till a direction was issued by appellate authority to refund the same - When the said amount is refunded it should carry interest in the matter of course - Awarding interest is a kind of compensation of use and retention of the money collected unauthorizedly by Department - When the collection is illegal, there is corresponding obligation on the revenue to refund such amount with interest in as much as they have retained and enjoyed the money deposited. Interpretation of Statues: Golden rule - Held: It is cardinal principle of interpretation of statutes that the words of a statute must be understood in their natural, ordinary or popular sense and construed according to their grammatical meaning unless such construction leads to some absurdity or unless there is something in the context or in the object of the Statute to the contrary - The golden rule is that the words of a statute must prima facie be given their ordinary meaning - It is yet another rule of construction that when the words of a statute are clear, plain and unambiguous, then courts are bound to give effect to that meaning irrespective of the consequences. |
Judge | N/A |
Neutral Citation | 2014 INSC 144 |
Petitioner | Union Of India Through Director Of Income Tax |
Respondent | M/s Tata Chemicals Ltd. |
SCR | [2014] 3 S.C.R. 298 |
Judgement Date | 2014-02-26 |
Case Number | 6301 |
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