Gujarat High Court
Kalpesh Jayantilal Lakdawala vs Chief Commissioner Of Income Tax-1, ... on 8 April, 2025
Author: Bhargav D. Karia
Bench: Bhargav D. Karia
NEUTRAL CITATION
C/SCA/10003/2024 JUDGMENT DATED: 08/04/2025
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IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
R/SPECIAL CIVIL APPLICATION NO. 10003 of 2024
FOR APPROVAL AND SIGNATURE:
HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
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Approved for Reporting Yes No
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KALPESH JAYANTILAL LAKDAWALA
Versus
CHIEF COMMISSIONER OF INCOME TAX-1, SURAT & ANR.
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Appearance:
MR DARSHAN B GANDHI(9771) for the Petitioner(s) No. 1
MR SP MAJMUDAR(3456) for the Petitioner(s) No. 1
KARAN G SANGHANI(7945) for the Respondent(s) No. 1,2
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CORAM:HONOURABLE MR. JUSTICE BHARGAV D. KARIA
and
HONOURABLE MR.JUSTICE D.N.RAY
Date : 08/04/2025
ORAL JUDGMENT
(PER : HONOURABLE MR. JUSTICE BHARGAV D. KARIA)
1. Heard learned advocate Mr.S.P.Majmudar for the Petitioner and learned Senior Standing Counsel Mr. Karan G.Sanghani for the Respondents.
2. Rule returnable forthwith. Learned Senior Standing Counsel Mr. Karan G. Sanghani waives service of notice of rule for the Page 1 of 21 Uploaded by BINA SHAH(HC00353) on Tue Apr 22 2025 Downloaded on : Sat May 03 01:03:43 IST 2025 NEUTRAL CITATION C/SCA/10003/2024 JUDGMENT DATED: 08/04/2025 undefined Respondents.
3. Having regard to the controversy arising in this petition which is in narrow compass, with the consent of the learned advocates for the respective parties, the petition is taken up for hearing.
4. By this petition under Article 227 of the Constitution of India the Petitioner has challenged the Order dated 06.11.2023 passed by the Respondent No.1 under Section 119(2)(b) of the Income Tax Act, 1961 (for short "the Act").
5. The brief facts of the case are as under :-
5.1 The Petitioner filed his return of income for the Assessment Year 2020-21 on 04.01.2021 by declaring gross income of Rs.2,70,110/- under Section 139(1) of the Act.
5.2 It is case of the Petitioner that the land admeasuring 2529-13- 06 sq.mtr situated at Surat belonging to the Petitioner was acquired by the Surat Municipal Corporation under the provisions of the Land Page 2 of 21 Uploaded by BINA SHAH(HC00353) on Tue Apr 22 2025 Downloaded on : Sat May 03 01:03:43 IST 2025 NEUTRAL CITATION C/SCA/10003/2024 JUDGMENT DATED: 08/04/2025 undefined Acquisition Act, 1894. Reference Case No.09 of 2008 was jointly filed by the Petitioner and his family members which was disposed of by the learned 6th Additional Senior Civil Judge, Surat on 08.02.2019 and higher rate of compensation was determined.
5.3 It is the case of the Petitioner that Surat Municipal Corporation by letter dated 03.02.2021 informed the Petitioner and the other joint owners regarding deduction of Tax Deducted at Source (TDS) in the cases where the share of each individual was not identifiable. The Petitioner thereafter preferred an application dated 16.07.2021 to determine his share of compensation before the Court which was disposed of on 04.09.2021 and the share of the Petitioner in the compensation deposited by the Surat Municipal Corporation was determined.
5.4 The Petitioner thereafter received the compensation amounting to Rs.1,87,01,650/- [Compensation of Rs.1,27,74,590/- + TDS of Rs.25,54,918/- + interest of Rs.59,27,060/- + TDS of Rs.11,85,412/-]. The Petitioner also received an additional interest of Page 3 of 21 Uploaded by BINA SHAH(HC00353) on Tue Apr 22 2025 Downloaded on : Sat May 03 01:03:43 IST 2025 NEUTRAL CITATION C/SCA/10003/2024 JUDGMENT DATED: 08/04/2025 undefined Rs.11,78,851/- by cheque from the Civil Court which was credited in the bank account on 24.09.2021.
5.5 It is case of the Petitioner that extended due date for filing the return of income for the Assessment Year 2020-21 expired on 31.05.2021. Therefore, the Petitioner could not file revised return of income offering income of compensation received on compulsory acquisition of land.
5.6. The Petitioner, thereafter, on receipt of the compensation in the month of September, 2021 retrieved FORM 26AS from the Income Tax Portal and found that the the Surat Municipal Corporation has deposited the TDS in the account of the Petitioner at the time of deposit of the compensation with the Court on 06.07.2019 and amount of TDS was deposited with the Government on 16.10.2019.
5.7 It is case of the Petitioner that when the Petitioner filed his original return of income on 04.01.2021, the proportionate TDS was Page 4 of 21 Uploaded by BINA SHAH(HC00353) on Tue Apr 22 2025 Downloaded on : Sat May 03 01:03:43 IST 2025 NEUTRAL CITATION C/SCA/10003/2024 JUDGMENT DATED: 08/04/2025 undefined not reflected in the FORM 26AS and therefore, the Petitioner could not include the amount of compensation which was deposited by the Surat Municipal Corporation with the Court in the return of income.
5.8. The Petitioner therefore filed an application on 08.02.2023 for condonation of delay in filing the revised return of income for the Assessment Year 2020-21 under Section 119(2)(b) of the Act, so as to claim the refund of TDS deducted by the Surat Municipal Corporation of amounting to Rs.37,40,000/-.
5.9. Thereafter, the Respondent No.2 - Jurisdictional Assessing Officer issued a notice dated 24.04.2023 calling upon the Petitioner to submit:- (i) the documents in respect of compulsory acquisition of land; (ii) TDS certificate for the Assessment Year 2020-21; (iii) Copy of FORM 26AS for the Assessment Year 2020-21; (iv) Copy of return filed for the Assessment Year 2020-21 and (v) Computation of Income and detailed reasons for not filing the revised return of income on or before 31.05.2023.Page 5 of 21 Uploaded by BINA SHAH(HC00353) on Tue Apr 22 2025 Downloaded on : Sat May 03 01:03:43 IST 2025
NEUTRAL CITATION C/SCA/10003/2024 JUDGMENT DATED: 08/04/2025 undefined 5.10. The Petitioner by reply dated 24.05.2023 submitted the bank statement showing the credit of the compensation in the bank account along with the documents of the compulsory acquisition of the land. It appears that thereafter the case of the Petitioner was transferred from the Office of the Principal Commissioner of Income Tax to the office of the Chief Commissioner of Income Tax- Respondent No. 1 and by letter dated 03.10.2023 against the same details were asked from the Petitioner.
5.11 The Petitioner again submitted all the details by reply dated 10.10.2023 followed by the letter dated 12.10.2023 along with the bank statement and documents relating to compulsory acquisition of land. The Respondent No.1 thereafter passed the impugned order dated 06.11.2023 rejecting the application filed by the Petitioner for condonation of delay in filing the revised return of income.
6. Being aggrieved, the Petitioner has preferred this petition.
7. Learned advocate Mr.S.P.Majmudar for the Petitioner Page 6 of 21 Uploaded by BINA SHAH(HC00353) on Tue Apr 22 2025 Downloaded on : Sat May 03 01:03:43 IST 2025 NEUTRAL CITATION C/SCA/10003/2024 JUDGMENT DATED: 08/04/2025 undefined submitted that the Respondents -authorities ought to have ordered to condone the delay in filing the revised return of income while exercising the jurisdiction and powers vested in him under Section 119(2)(b) of the Act because the compensation received by the Petitioner for compulsory acquisition of land is not taxable under the provisions of the Act and as such the Petitioner would be entitled to receive the refund of the tax deduced at source by the acquiring body i.e. Surat Municipal Corporation.
7.1 It was submitted that the Petitioner filed the return of income for the Assessment Year 2020-21 on 04.01.2021. The Petitioner did not receive the compensation though deposited by the Surat Municipal Corporation with the Court in the month of July, 2021 because the share of the Petitioner was not determined at that particular point of time. It was submitted that by Order dated 04.09.2021 passed by the learned 6th Additional Senior Civil Judge, Surat, the share of the Petitioner was determined out of the total compensation awarded to the joint owners of the land and thereafter, the Petitioner received the compensation from the Court. It was Page 7 of 21 Uploaded by BINA SHAH(HC00353) on Tue Apr 22 2025 Downloaded on : Sat May 03 01:03:43 IST 2025 NEUTRAL CITATION C/SCA/10003/2024 JUDGMENT DATED: 08/04/2025 undefined therefore submitted that the Petitioner could not show the amount of compensation in the original return of income on 04.01.2021 to claim the refund of TDS of Rs.37,40,330/-.
7.2 It was further submitted that the Respondents-authorities have failed to consider that the Petitioner was not liable to pay any tax on the amount of compensation received on compulsory acquisition of the non-agriculture land of the Petitioner pursuant to the award passed in LAR No.9 of 2008, which was sufficient cause for the Petitioner to pray for condonation of delay for filing the revised return of income. It was submitted that the genuine hardship was already disclosed by the Petitioner for not filing the revised return of income for refund claim of the tax deducted at source. 7.3 Learned advocate Mr. Majmudar also referred to and relied upon the Circular No.36 of 2016 dated 25.10.2016 to demonstrate that the compensation received by the Petitioner is not taxable under the provisions of the Act and therefore, the tax deducted at source by the acquiring body is to be refunded to the Petitioner and for that Page 8 of 21 Uploaded by BINA SHAH(HC00353) on Tue Apr 22 2025 Downloaded on : Sat May 03 01:03:43 IST 2025 NEUTRAL CITATION C/SCA/10003/2024 JUDGMENT DATED: 08/04/2025 undefined purpose, the only remedy available to the Petitioner is to file revised return after the delay in filing such return is condoned under Section 119 of the Act.
7.4 It was therefore submitted that if the delay in filing the revised return is not condoned, the Petitioner would suffer loss of Rs. 37,40,330/- and the Government is not entitled to retain such amount of tax deducted at source as the Petitioner is not liable to pay any tax on the amount of compensation on compulsory acquisition of the land in question.
8. On the other-hand, learned Senior Standing Counsel Mr. Karan Sanghani for the Respondents submitted that the Petitioner ought to have verified FORM 26AS before filing the return of income on 04.01.2021 because on perusal of the FORM 26AS for the Assessment Year 2020-21, relevant to Financial Year 2019-20, the transaction date is mentioned as 06.07.2019 and date of booking is shown as 16.10.2019 as both these dates are well before the date of filing of return of income by the Petitioner on 04.01.2021. Page 9 of 21 Uploaded by BINA SHAH(HC00353) on Tue Apr 22 2025 Downloaded on : Sat May 03 01:03:43 IST 2025
NEUTRAL CITATION C/SCA/10003/2024 JUDGMENT DATED: 08/04/2025 undefined 8.1 It was submitted that the transaction date means the date of credit of payment of income (whichever is earlier) and date of booking means the date on which the TDS return is processed and the amount booked in FORM 26AS and this date would be the date after the TDS return is filed. It was therefore submitted that the plea taken by the Petitioner is nothing but an after thought as the Petitioner was well aware of the amount which was received on compulsory acquisition of the land from Surat Municipal Corporation.
8.2 Learned Senior Standing Counsel Mr. Sanghani referred to and relied upon the Circular No.9 of 2015 dated 09.06.2015 in respect of condonation of delay in filing refund claim to submit that as per the said Circular, the Respondent is required to ensure that the income/loss declared and/or refund claim is correct and genuine. It was submitted that the Petitioner did not provide any specific details during the proceedings for condonation of delay before the Respondents in respect of the nature of land and without determining the nature of income, the application of the provision of relevant Page 10 of 21 Uploaded by BINA SHAH(HC00353) on Tue Apr 22 2025 Downloaded on : Sat May 03 01:03:43 IST 2025 NEUTRAL CITATION C/SCA/10003/2024 JUDGMENT DATED: 08/04/2025 undefined section and the taxability was not possible. It was therefore submitted that one of the condition mentioned in the said Circular was not fulfilled by the Petitioner as the Petitioner failed to discharge the onus upon him to substantiate that the amount received by the Petitioner was exempt from tax.
8.3 It was therefore submitted that the impugned order is passed after taking into consideration the submissions made by the Petitioner and the documents available on record which clearly shows that there is no genuine hardship on the part of the Petitioner to disclose the amount of compensation at the time of filing of return on 04.01.2021, and therefore, the Petitioner cannot now pray for condonation of delay in filing the revised return as the Petitioner has already missed the bus for such claim.
9. Having heard the learned advocates appearing for the respective parties and taking into consideration the facts of the case, it is not in dispute that the Petitioner was awarded the compensation for compulsory acquisition of the land in question by the Surat Page 11 of 21 Uploaded by BINA SHAH(HC00353) on Tue Apr 22 2025 Downloaded on : Sat May 03 01:03:43 IST 2025 NEUTRAL CITATION C/SCA/10003/2024 JUDGMENT DATED: 08/04/2025 undefined Municipal Corporation as per the award passed by the Civil Judge, Senior Division under the provisions of the Land Acquisition Act, 1894. It is also apparent from the material place on record that the Petitioner received the compensation in the month of September 2021 after the order of determining the share of the Petitioner passed by the Court on 04.09.2021. The Petitioner therefore could not show the amount of compensation in the original return filed on 04.01.2021. The Petitioner therefore was prevented by sufficient cause to claim the refund of the amount of tax deducted at source by the Surat Municipal Corporation at the time of deposit of the compensation with the Court. In such circumstances, the Respondents-authorities ought to have allowed the application of the Petitioner to condone the delay in filing the revised return to claim the refund of the TDS of Rs.37,40,330/- deposited by the Surat Municipal Corporation. The reasoning given by the Respondents- authorities while rejecting the application do not commensurate with the facts of the case inasmuch as the Respondents have failed to consider that the compensation received by the Petitioner was exempted from tax and therefore, the Petitioner is entitled to get the Page 12 of 21 Uploaded by BINA SHAH(HC00353) on Tue Apr 22 2025 Downloaded on : Sat May 03 01:03:43 IST 2025 NEUTRAL CITATION C/SCA/10003/2024 JUDGMENT DATED: 08/04/2025 undefined refund of the TDS which was deposited by the acquiring body with the Government and for that purpose, the Petitioner is required to file the revised return which can be possible only if the delay in filing such revised return is condoned by exercising the powers vested in Section 119 of the Act. The objection of Section 119 of the Act is to see that the Assessee are even not put to any unnecessary hardships to claim any refund which otherwise is eligible to get. Section 119(2)(b) reads as under :-
(b) the Board may, if it considers it desirable or expedient so to do for avoiding genuine hardship in any case or class of cases, by general or special order, authorise 11[any income-tax authority, not being a Commissioner (Appeals)] to admit an application or claim for any exemption, deduction, refund or any other relief under this Act after the expiry of the period specified by or under this Act for making such application or claim and deal with the same on merits in accordance with law;
9.1 On perusal of the above provisions, the Respondents- authorities were required to consider the facts of the case more particularly when the Petitioner admittedly has not received the compensation till the due date of filing of return on 31.05.2021 and when the Petitioner received such compensation, the delay in filing the revised return is required to be condoned so that the Petitioner gets the refund of the TDS deposited by the acquiring body in the Page 13 of 21 Uploaded by BINA SHAH(HC00353) on Tue Apr 22 2025 Downloaded on : Sat May 03 01:03:43 IST 2025 NEUTRAL CITATION C/SCA/10003/2024 JUDGMENT DATED: 08/04/2025 undefined Government, as such compensation received by the Petitioner is not taxable under the provisions of the Act.
9.2 This Court in case of Ramjibhai Lavabhai Undhad Vs. Chief Commissioner of Income Tax reported in [2023] 157 taxmann.com.706 (Gujarat) in similar facts after considering the cases where the authorities have granted the application to condone the delay while exercising the powers under Section 119(2)(b) of the Act has held as under :-
"9.Therefore, the impugned orders rejecting the applications to condone the delay are required to be quashed and set aside in each petition with a direction to condone delay under section 119(2)(b) of the Act,1961 as per order dated 25.10.2019 passed by the respondent in case of similarly situated persons, however, with a rider to direct the Assessing Officer to issue refund with interest on the amount of refund claim from the date of deposit by the Executive Engineer, Irrigation department till the date of granting of refund.
10. For passing such direction of issuance of the refund with interest under section 244A of the Act, similar reasons as given by this Court in case of Special Civil Application No.12466/2021 and other allied matters are adopted and reproduced as under:
"8. The Hon'ble Apex Court in case of Union of India v. Hari Singh and others (Judgment dated 15.09.2017 passed in Civil Appeal No.15041/2017)reported in (2018) 15 SCC 201, observed as under:
"2. An admitted fact which is common in all these appeals is that while disbursing the compensation, the Land Page 14 of 21 Uploaded by BINA SHAH(HC00353) on Tue Apr 22 2025 Downloaded on : Sat May 03 01:03:43 IST 2025 NEUTRAL CITATION C/SCA/10003/2024 JUDGMENT DATED: 08/04/2025 undefined Acquisition Collector had deducted the tax at source and deposited the same with the Income Tax Department. These appellants preferred the writ petition in the High Court stating that no such deduction at source was permissible in view of the provisions of Section 194-LA of the Income Tax Act, 1961, since the land which was acquired was agricultural land and this provision categorically mentions that in respect of agricultural land, tax at source is not to be deducted.
3. There is no quarrel about the position of law mentioned above. After examining this provision, the High Court had passed an order in Risal Singh v. Union of India [Risal Singh v. Union of India, 2010 SCC OnLine P&H 276 : (2010) 321 ITR 251] directing the Income Tax Department to refund the amount to the Collector with a direction to the Collector to determine whether the compensation is paid for property other than agricultural land or otherwise and whether deduction of tax at source was permissible under any provision of law. The manner in which the Land Acquisition Collector has to proceed further after determining the aforesaid issue is contained in Para 8 of Writ Petition No. 9912 of 2009 decided on 11-1-2001, which is reproduced below:
"8. Accordingly, we allow this petition and direct the Income Tax Department to refund the amount to the Collector within one month from the date of receipt of a copy of this order. Thereafter, the Collector will determine whether compensation paid is for property other than agricultural land or otherwise and whether deduction of tax at source was permissible under any provision of law. Whether deduction is permissible or not will be decided by the Collector within two months from the date of receipt of a copy of this order. If deduction is found not permissible the amount will be refunded to the petitioners not later than three months from receipt of a copy of this order. It is made clear that this order will not affect the right of the Income Tax Department to take such action as may be permissible under the law."Page 15 of 21 Uploaded by BINA SHAH(HC00353) on Tue Apr 22 2025 Downloaded on : Sat May 03 01:03:43 IST 2025
NEUTRAL CITATION C/SCA/10003/2024 JUDGMENT DATED: 08/04/2025 undefined Similar directions in Sant Ram v. Union of India [Sant Ram v. Union of India, 2009 SCC OnLine P&H 9638] are given in the other case as well.
9. After the aforesaid observations, the Apex Court issued the following directions:
"7.1 The respondents shall file appropriate returns before the Assessing Officer(s) in respect of Assessment Years in question within a period of two months from today in case they feel that the compensation in respect of land belonging to them which had been acquired was agricultural land, and claim refund of the tax which was deducted at source and deposited with the Income Tax Department. On the filing of these returns, the Assessing Officer(s) shall go into the aforesaid question and wherever it is found that the compensation was received in respect of agricultural land, the tax deposited with the Income Tax Department shall be refunded to these respondents.
7.2 While determining as to whether the compensation paid was for agricultural land or not, the Assessing Officer(s) will keep in mind the provisions of section 28 of the Land Acquisition Act and the law laid down by this Court in Commissioner of Income Tax, Faridabad v. Ghanshyam (HUF) [2009 (8) SCC 412] in order to ascertain whether the interest given under the said provision amounts to compensation or not"
10. In view of the above decision, the Income Tax department has allowed the application made by the applicant to condone the delay in filing the return of the income to claim the refund and also issued the refund. However, the respondent did not grant any interest on the amount of refund though the delay cannot be said to be attributable to the petitioners in the facts of the case.
11. Instruction No.7/2013 dated 15.07.2013 was issued pursuant to the directions issued by the Delhi High Court in the case of Court On its Own Motion v. Commissioner of Income Tax (supra), that in no case interest u/s 244A of the Act be denied to the assessee where the assessee is not at fault. In the facts of the case, the petitioners-assessees were Page 16 of 21 Uploaded by BINA SHAH(HC00353) on Tue Apr 22 2025 Downloaded on : Sat May 03 01:03:43 IST 2025 NEUTRAL CITATION C/SCA/10003/2024 JUDGMENT DATED: 08/04/2025 undefined not at fault for not filing the return of income to claim the refund as the deductor i.e. Executive Engineer, Irrigation department neither informed the petitioners about the deduction of tax nor Form-16A which is mandatory was issued. On the contrary, when the petitioners made representations by informing the Executive Engineer, Irrigation department about the wrong mentioning of the provision for deduction of tax in Form No. 26AS issued as per return of TDS to be filed by the deductor, no reply was given. Therefore, it is clear that the petitioners were not at fault for the delay caused in filing the return of income claiming the refund of the tax deducted at source as no tax was payable by the petitioners on the amount of interest under section 194LA of the Act, 1961.
12. The Hon'ble Apex Court in case of Tata Chemicals Limited (supra) while considering the issue of payment of interest in case of refund has held as under:
"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 refund such amount with interest in as much as they have retained and enjoyed the money deposited. Even the Department has understood the object behind insertion of Section 244A, as that, an assessee is entitled to payment of interest for money Page 17 of 21 Uploaded by BINA SHAH(HC00353) on Tue Apr 22 2025 Downloaded on : Sat May 03 01:03:43 IST 2025 NEUTRAL CITATION C/SCA/10003/2024 JUDGMENT DATED: 08/04/2025 undefined 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.
38. Providing for payment of interest in case of refund of amounts paid as tax or deemed tax or advance tax is a method now statutorily adopted by fiscal legislation to ensure that the aforesaid amount of tax which has been duly paid in prescribed time and provisions in that behalf form part of the recovery machinery provided in a taxing Statute. Refund due and payable to the assessee is debt-owed and payable by the Revenue. The Government, there being no express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, cannot shrug off its apparent obligation to reimburse the deductors lawful monies with the accrued interest for the period of undue retention of such monies. The State having received the money without right, and having retained and used it, is bound to make the party good, just as an individual would be under like circumstances. The obligation to refund money received and retained without right implies and carries with it the right to interest. Whenever money has been received by a party which ex ae quo et bono ought to be refunded, the right to interest follows, as a matter of course."
13. It is true that in the said case, the refund was claimed in the return of income which was filed in time. However, the ratio of the said judgment is with regard to the entitlement of the assessee to receive interest on the amount of refund when the collection was illegal and the revenue was obliged to refund such amount with interest as money so deposited is retained and enjoyed by the revenue whereas in the facts of the present case delay in filing the return of income is not attributable to the petitioners and such fact is also not in dispute as the respondent has condoned delay and granted refund to the petitioners.
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NEUTRAL CITATION C/SCA/10003/2024 JUDGMENT DATED: 08/04/2025 undefined
14. Reliance placed by the respondent authority on Circular No.9/2015 is also misplaced because paragraph no.6(ii)of the said circular is to the effect that no interest will be admissible on belated claim of refund when such application is for supplementary claim of refund i.e. claim of additional amount of refund after completion of assessment for the same year. Therefore, reliance placed by the respondent upon the said circular for denying the interest on the refund claim of the petitioners is misplaced. As held by the Apex Court in case of Tata Chemicals Limited (supra), the respondent is liable to pay the interest on the amount of refund claim as such amount was wrongly collected because of provisions of section 194LA as no tax was liable to be deducted from the amount of interest paid to the petitioners on the acquisition of agricultural land. The Hon'ble Apex Court has therefore, held that money received and retained without right carries with it right to interest and whenever money received by a party which ex ae quo et bono ought to be refunded, the right to interest follows as a matter of course.
15. It is not in dispute that the amount of refund is already paid to the petitioners and therefore, as a natural corollary, the petitioners are entitled to have the right to get interest on such amount of refund claim.
16. Even as per sub-section(2) of section 244A of the Act, 1961, as it existed during the relevant AY 2013-2014, when the proceedings resulting in the refund are not delayed for reasons attributable to the assessee whether wholly or in part, the period of the delay so attributable only can be excluded from the period for which interest is payable under subsections (1) or (1A)or (1B) to section 244A of the Act, 1961. In the facts of the case, the words "or the deductor, as the case may be," which is inserted with effect from 01.04.2017 would not be applicable as the petitioners have been permitted to file the refund claim for the AY 2013-2014 after condonation of delay and such delay in claiming the refund cannot be said to be attributable to the petitioners as the petitioners were not made aware about the deduction of tax at source by the deductor in absence of issuance of Form Page 19 of 21 Uploaded by BINA SHAH(HC00353) on Tue Apr 22 2025 Downloaded on : Sat May 03 01:03:43 IST 2025 NEUTRAL CITATION C/SCA/10003/2024 JUDGMENT DATED: 08/04/2025 undefined No.16-A which was mandatorily required as per Rule 31(3) of the Rules." 11. In view of the foregoing reasons, the petitions succeed and are accordingly allowed. The respondents are directed to pass the order to condone the delay in filing the return for the Assessment Year 2013-2014 and to issue the refund with interest under section 244A of the Act, 1961 from the date of deposit of the amount of TDS till date of payment of refund as per provisions of section 244A of the Act, 1961. Such exercise shall be completed within a period of 12 weeks from the date of receipt of a copy of this order. Rule is made absolute to the aforesaid extent. No order as to costs.
10. Mr. Karan Sanghani, learned Senior Standing Counsel also submitted that that the Petitioner is liable to pay the tax on the interest component which was received by the Petitioner after the Order dated 04.09.2021 passed by the Court. Such contention of the learned Senior Standing Counsel Mr. Sanghani is contrary to the provisions of Act as the entire compensation received by the Petitioner is exempted from tax and therefore, no taxes is payable on any part of the compensation received by the Petitioner from the acquiring body i.e. Surat Municipal Corporation.
11. In view of the above conspectus of law, this petition succeeds and is accordingly allowed. The impugned order dated 06.11.2023 passed by the Respondents under Sections 119(2)(b) of the Act is Page 20 of 21 Uploaded by BINA SHAH(HC00353) on Tue Apr 22 2025 Downloaded on : Sat May 03 01:03:43 IST 2025 NEUTRAL CITATION C/SCA/10003/2024 JUDGMENT DATED: 08/04/2025 undefined hereby quashed and set aside and the Respondents are directed to pass the fresh order to condone the delay in filing the revised return by the Petitioner so as to process the same in accordance with law by the Assessing Officer. Such exercise shall be completed within a period of Twelve (12) weeks from the date of receipt of copy of this Court. Rule is made absolute to the aforesaid extent. No order as to costs.
(BHARGAV D. KARIA, J) (D.N.RAY,J) BINA SHAH Page 21 of 21 Uploaded by BINA SHAH(HC00353) on Tue Apr 22 2025 Downloaded on : Sat May 03 01:03:43 IST 2025