Income Tax Appellate Tribunal - Mumbai
Kotak Mahindra Finance Limited vs The Dy. Commissioner Of Income-Tax on 29 October, 2004
Equivalent citations: [2005]93ITD7(MUM), (2005)93TTJ(MUM)500
ORDER
O.K. Narayanan, A.M.
1. This appeal is filed by the assessee. The relevant assessment year is 1992-93. The appeal is directed against the order passed by the CIT(A)-Central-II at Mumbai, on 13-7-2001. The appeal arises out of the proceedings completed Under Section 154 of the Income-tax Act 1961.
2. The assessee-company had filed its return of income on 31-12-1992. The return was revised on 6-1-1993. An intimation Under Section 143(1)(a) was passed on 25-1-1993. A refund of Rs. 1,87,43,157 including interest of Rs. 17,03,023 was determined as per the said intimation. The refund was partly adjusted against the demand due for the assessment year 1990-91. The balance-of the refund was paid to the assessee-company. The assessment was later concluded Under Section 143(3) of the Income-tax Act. The assessee-company appealed against the said order before the CIT(A). Certain modifications were granted by the CIT(A). The said modifications were given effect to the order passed on 12-12-1994, as a result of which a further refund of Rs. 19,16,698 was granted by the Assessing Officer.
3. While the matters were resting so, the assessee-company filed some more TDS certificates before the Assessing Officer in March 1997. Those TDS certificates filed by the assessee-company in March 1997 amounted for Rs. 16,32,575. In order to give credit for those TDS certificates, the Assessing Officer passed a rectification order on 1-10-1997 allowing credit for TDS certificate worth Rs. 14,77,162. An interest of Rs. 4,07,734 was also determined thereon.
4. As the above rectification resulted in further refund to the assessee-company, interest was to be allowed thereon. The interest was calculated with effect from 1-4-1997.
5. The assessee-company was aggrieved on the question of the period for which the interest was to be given by the Assessing Officer on the amount of additional refund. The matter went in first appeal. The CIT(A) through his order dated 4-6-1999, directed the Assessing Officer to recalculate the interest as per the provisions of law after going through the relevant facts. In compliance thereof, the Assessing Officer passed his order on 21-7-1999. Again the Assessing Officer granted interest only with effect from 1-4-1997.
6. The issue was again taken in first appeal. The following grounds were urged before the CIT(A).
(i) The Assessing Officer has erred in not allowing interest Under Section 244A on the amount of refund arising out of TDS for the period of delay in filing TDS certificate.
(ii) The interest on refunds arising out of tax paid Under Section 199 is required to be calculated from 1sl day of April of the assessment year to date on which the refund is granted.
(iii) The assessee is entitled to interest Under Section 244 A from 1st day of April of the assessment year to the date on which refund is granted."
7. After hearing the matter in detail, the CIT(A) confirmed the order of the Assessing Officer and dismissed the appeal filed by the assessee. The conclusion arrived at by the CIT(A) is extracted below:-
"Now, let me revert to provisions of Section 244 A of the Act. Sub-section (1) of the said section provides that where refund of any amount be comes 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
(a) ...........
(b) ...........
Thus, the expression "subject to the provisions of this section" used in Sub-section (1) has immense significance which covers the whole section. The provisions of Sub-section (2) of Section 244A inter alia; provides that for the purpose of computing the period of delay under Sub-section (1); any period of delay attributable to the assessee shall be excluded. It is a state of clear admission by the appellant company that TDS certificates for a sum of Rs. 14,77,162/- were furnished before the A.O. as late as in March, 1997. Hence; the delay is squarely attributable to the appellant company. Equity is out of place in a tax law and-one can not invoke the aid of the rule of estoppel of any other equitable doctrine subject the assessment to tax. I am; therefore; of the view that the Assessing Officer has correctly taken the stand as per provisions-of Section 244A(1)(a) r.w. Sub-section (2) thereof that interest on refund is payable only from 1st April 1997, i.e. the day when TDS certificates were furnished before him till 1st October, 1997; i.e.; the day when the refund was granted to the appellant company and accordingly; the or4er of the A.O. is confirmed."
8. It is against the above that the assessee has come in appeal before us.
9. The grounds raised in this appeal by the assessee are as follows:-
"On the facts and the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals), Central-II, Aayakar Bhavan, Mumbai (hereinafter referred -to-as "the CIT(A)") erred in upholding the Assessing Officer's order for not granting interest under Section 244A on the amount of refund arising out of TDS for the period of delay in filing TDS certificates. The appellants submit that in terms of provisions of Section 244A(1), interest on refunds arising out of tax paid under Section 199 is required to be calculated from first day of April of the assessment year to the date on which refund is granted and, therefore, no period can be excluded for the purpose of calculation of interest."
10. Shri Farrokh Irani, the learned Counsel appearing for the assessee-company argued on the subject at length. The learned Counsel contended that Section 244A(1) provides for payment of interest on refund due to an assessee. Clause (a) of the above Sub-section provides that where the refund has been due against the tax deducted and paid at source Under Section. 199, interest shall be worked out for the period commencing from the first day of April of the assessment year. The learned Counsel submitted that this is a general rule regarding payment of interest on refund arising out of TDS payments. He further explained that there is an exception to the above general rule as provided in Sub-section (2) of Section 244A. According to the said Sub-section (2), the period of delay caused in the proceedings resulting in the refund shall be excluded from the period for which interest is payable, provided not the delay is attributable to the assessee. The learned Counsel placed great emphasis on the expression "the proceedings resulting in the refund", given in Sub-section (2). The learned Counsel submitted that "proceedings" in this context meant those proceedings of assessment or any other proceedings under the Income-tax Act which determines the tax liability of an assessee and consequently the refund due to an assessee. The learned Counsel submitted that it does not refer to the filing of TDS certificates or the Act of filing such certificates by an assessee. In the present case, the assessee-company has not caused any delay in completing the assessment to determine the tax liability of the assessee-company. The assessee-company has not caused any delay in any other proceedings relating to the determination of tax or the determination of the refund due to the assessee. The delay was caused only in the matter of filing certain set of TDS certificates before the Assessing Officer. The filing of TDS certificates before the Assessing Officer does not amount to "proceedings". Therefore any delay in filing the TDS certificates cannot be treated as the delay caused by an assessee in completing the proceedings which would result in the refund.
11. The learned Counsel further submitted that, in the present case, the delay was caused for the reasons beyond the control of the assessee-company. The assessee-company did not gain any tiling by purposefully delaying the filing of TDS certificates. The assessee-company was so eager to file all the TDS certificates in time so that the assessee-company receives refunds in time. It was against its own interest, to delay the filing of TDS certificates before the Assessing Officer. In the present case, the delay was caused for the reasons that the persons who deducted the tax at source in the account of the assessee-company delayed furnishing the certificates against such TDS. The assessee-company had no control over the conduct of those persons who infact deducted the tax at source in the account of the assessee-company.
12. The learned Counsel submitted that if this reasonable interpretation of the provisions contained in Sub-section (2) of Section 244A is not adhered to, it would result in gross injustice to the assessee. The learned Counsel submitted that in a case where an assessee was able to file all the TDS certificates before the Assessing Officer in time, the assessee would get the refund immediately and if there was a delay, the interest for the period beginning from the first day of April of the assessment year. In a case where an assessee, for reasons beyond its control, filed TDS certificates belatedly, the assessee received the refund belated and also lost interest for the earlier period beginning from the first day of April of the assessment year. In both the cases the tax has been deducted during the previous year itself and was paid over to the Government within the time stipulated by law. Therefore in both cases, the Government enjoyed the funds collected through TDS, from both the assessees' but only for the technical reason that the second assessee has delayed in filing the TDS certificates before the Assessing Officer, the said assessee was discriminated and lost interest for the earlier period commencing from the first day of April of the assessment year. He submitted that this is a clear case of injustice.
13. The learned Counsel submitted that all these points were considered by the SMC-II of ITAT Mumbai Bench in the case of Komaf Financial Services Limited v. DCIT in ITA No. 409/Mum/2000 dated 29th November, 2001. In that case the assesseee had filed TDS certificates along with the return of income. Credit was given for the prepaid taxes of Rs. 2,337. The assessee pointed out that credit for TDS of Rs. 1,99,369 was not given by the Assessing Officer. The rectification was sought for. Long after the correspondences made by the assessee, the Assessing Officer pointed out certain mistakes in the TDS certificates. These mistakes were rectified by the assessee-company. Thereafter the Assessing Officer gave credit for the additional amount of TDS and granted interest thereon. While granting the interest, the Assessing Officer excluded the period of delay in finally resubmitting the rectified TDS certificates. While disposing of the appeal filed in the above circumstances, the Tribunal came to the following findings :-
"(i) The words "proceedings resulting in refund" refer to the proceedings which are taken for determination of the refund such as the assessment order, rectification order, order giving effect to appellate or revisional order, etc. The delay must be attributable to the assessee and such delay must have occurred before the proceedings resulting in the refund are finalized.
(ii) The Government of India have had the benefit of the use of the funds right from the due dates and therefore it would be inequitable to deny the assessee's claim for interest. Interest is compensation for the use of the monies.
(iii) In that particular case, the delay was not caused because of the assessee."
14. The learned Counsel therefore submitted that the interest may be ordered to be computed with effect from 1st April of the assessment year involved in this appeal.
15. Shri Prawin Kumar, the learned D.R. submitted that the facts of the case considered by the Tribunal (SMC-II Bench, Mumbai) in the case of Komaf Financial Services Limited, are entirely different, In the said case the IDS certificates were filed by the assessee along with the return of income. Even after filing the TDS certificates, the proper amount of refund was not determined in that case. After protracted correspondences entered into by the assessee, finally, the Assessing Officer sought to redetermine the correct amount of refund. It was at that point of time, the Assessing Officer had pointed out certain defects in the TDS certificates filed by the assessee. The defects were not pointed out by the Assessing Officer before that. It is seen therefore that the responsibility of the delay in determining the correct amount of refund could not be attributed to the assessee; It is in that circumstances, the Tribunal has held that no interest can be denied for the period of delay.
16. As far as the present case is concerned, the learned D.R. submitted that even though the return of income was filed by the assessee on 31-12-1992, the additional set of TDS certificates was filed only in March 1997. There is a long delay in filing those TDS certificates. It is not because of the fault of the Assessing Officer or of the Department. The delay was occurred only because of the conduct of the assessee. In such circumstances, the provisions contained in Sub-section (2) of Section 244A are squarely applicable and the assessee cannot claim interest for the period of delay.
17. We heard both sides in detail. We agree with the learned D.R. that the facts of the present case are quite different from the facts of the case considered by the Mumbai Tribunal in the case of Komaf Financial Services Limited. In that case, the assessee was not responsible for the delay. In the present case, the assessee alone is responsible for the delay. Even though the return of income was filed on 31-12-1992, final set of TDS certificates were filed only in March 1997. The long delay was caused in determining the exact amount of refund because of the delay caused in filing the TDS certificates. We understand that the delay in filing the TDS certificates was beyond the control of the assessee. That may be the aspect of the case. It may be the misfortunate of the assessee that it did not collect the TDS certificates in time. The delay might be beyond the control of the assessee-company. But all these arguments do not go to help the assessee to support its arguments. This is because there is no provision in the scheme of Section 244 A to condone such delay if it was caused even if for the reasons beyond the control of the assessee.
18. Interest is to be calculated always on the basis of eligible period. In determining the eligible period for the levy of interest, the delay caused on account of the assessee need to be excluded. The law does not permit to go beyond this. Therefore, the reasons which caused the delay in filing the TDS certificates should not come in the way of the determining the issue.
19. To continue to state the facts of the case, as already stated, there was a long delay in filing the TDS certificates before the assessing authority. We fully agree with the finding of the Tribunal in the case of Komaf Financial Services Limited that "the proceedings resulting in the refund" means the proceedings of assessment or rectification proceedings or any proceedings contemplated in the Act in determining the refund payable to an assessee. In the present case, the final portion of the refund was determined through the proceedings completed Under Section 154 of the Income-tax Act, 1961. The said proceedings Under Section 154 was necessitated because of the late filing of the TDS certificates by the assessee-company. If the TDS certificates were filed by the assessee-company in time, along with the return of income, the final instalment of the refund would have determined in the proceedings concluded Under Section 143(1)(a) itself. Or it would have been determined in the assessment completed Under Section 143(3). Or it would have been still determined in the proceedings completed by the Assessing Officer to give effect to the orders passed by the CIT(A). The assessee did not file the TDS certificates before the Assessing Officer during any of those proceedings. It is long after the close of the assessment proceedings, that the remaining TDS certificates were filed before the Assessing Officer.
20. It is to be seen that a refund can be determined by the Assessing Officer only on the basis of producing the proof for payment of tax. This is applicable to TDS also. Therefore, a refund genninated from the TDS payments could be determined only on production of the TDS certificates.
21. In the present case, the final instalment of refund was determined in a proceeding Under Section 154 as the Assessing Officer had to rectify the assessment order to accommodate the final set of TDS certificates produced by the assessee, belatedly. Therefore, it is to be seen that the final instalment of the refund has been determined long after the assessment proceeding was completed. This delay was caused because of the late filing of the TDS return.
22. In the above circumstances, the application of the provisions contained in Sub-section (2) of Section 244 A is automatic. The period of delay need to be excluded from the eligible period considered for the calculation of interest. Therefore, we find that the Assessing Officer has rightly excluded the period of delay. The assessee is not entitled to claim interest on the last instalment of refund from the period beginning from 1st April of the impugned assessment year.
23. In result this appeal filed by the assessee is liable to be dismissed. Order accordingly.