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| The Tax Publishers2019 TaxPub(DT) 8469 (SC) : (2020) 420 ITR 0111 : (2020) 312 CTR 0001 INCOME TAX ACT, 1961,
Section 244A Sections 194(7)(3) & 2(7)
Where the appellant preferred appeal against the judgment of Madhya Pradesh High Court in Universal Cables Ltd. v. CIT [MAIT No. 55 of 2003, dt. 25-6-2009] : 2011 TaxPub(DT) 0058 (MP-HC), holding that no interest under section 244A was payable, however, the appellant relied on Union of India v. Tata Chemicals Ltd. (2014) 6 SCC 335 : (2014) 363 ITR 658 (SC), wherein it was held that 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 and when the said amount is refunded, it should carry interest in the matter of course, thus, the resident/deductor is entitled not only the refund of tax deposited under section 195(2), but has to be refunded with interest from the date of payment of such tax, the Supreme Court following the above judgment allowed the appeal and directed the Department to pay interest on the amount refunded by it as prescribed under section 244A.
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Refund - Interest under section 244A - Refund of tax deducted at source - Allowability of interest on amount of TDS deducted wrongly and refunded by department
The High Court held that no interest under section 244A was payable as deductor was not an assessee under the IT Act. Appellant filed appeal against the judgment of High Court before Supreme Court and relied on the decision of this Court in the Union of India v. Tata Chemicals Ltd. (2014) 6 SCC 335 : (2014) 363 ITR 658 (SC) : 2014 TaxPub(DT) 1506 (SC), in particular, paragraph 37 of the said decision, wherein it was observed that Department has understood the object behind insertion of section 244A, as 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. Held: From the dictum in this judgment, it is clear that there is no reason to deny payment of interest to the deductor who had deducted tax at source and deposited the same with the Treasury. This observation squarely applies to the appellant. As a result, the appeal was allowed and the Department was directed to pay interest as prescribed under section 244A of the Income Tax Act as applicable at the relevant time at the earliest.
REFERRED :
FAVOUR : Appellant's favour
A.Y. :
IN THE SUPREME COURT OF INDIA
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