CONSTITUTION OF INDIA, 1950

Article 226 Section 201(1A) Sction 244A

Writ - Interest under sections 201(1A) and 244A - Excessive deduction of TDS by NHAI on direction of revenue from petitioner -

Petitioner had entered into a works contract with respondent No. 3/National Highways Authority of India ('the NHAI') on 9-4-2006 for construction of four lane road of Jhansi-Lakhnadon Section KM 132 to KM 187 on NH-26 in the State of Madhya Pradesh. The petitioner had obtained certificates from its AO at New Delhi for deduction of tax at lower rate under section 195/197. According to the petitioner, the NHAI had been deducting the tax at source on the basis of the said certificates and issuing TDS certificates to the petitioner but respondent No. 1, in relation to the financial years 2007-08 and 2008-09, vide Order, dated 30-3-2011 sought to levy TDS @ 42.23% in respect of payments which were made to the petitioner. In turn, the respondent No. 3 (NHAI) sought recovery of the said amount of TDS from the petitioner. Respondent No. 2, i.e., the Dy. CIT, New Delhi after detailed scrutiny vide orders passed under sections 154/143(3)/143(1) allowed the TDS credit in favour of the petitioner. The grievance of the petitioner was that despite the orders passed by the AO and allowing TDS credit in favour of the petitioner the respondents No. 1 and 2 had not refunded the amount of interest, which was deducted by the respondent No. 3 (NHAI) and was paid to the respondent No. 1 but the respondent No. 1 vide impugned Order, dated 14-9-2017 (Annexure P-12) without giving any opportunity of hearing to the petitioner and NHAI (respondent No. 3) rejected its claim on the ground that interest under section 201(1A) had not been levied against the petitioner but it was levied on the respondent No. 3. Held: The respondent No. 1 while passing the impugned Order, dated 14-9-2017 (Annexure P-12) had assigned the reasons that the default was detected in the case of NHAI, i.e., the respondent No. 3, which was the assessee over which the respondent No. 1 exercised jurisdiction. The NHAI was liable to deduct and deposit TDS and interest for delay but the NHAI instead of paying it out of its own coffers illegally recovered the amount from IJMC-petitioner. The charge of interest was created on NHAI and not on the petitioner and therefore, the claim of the petitioner was not justifiable. In these circumstances, the interest under section 201(1A) deducted and deposited by the respondent No. 3 (NHAI) with the office of the ACIT (TDS), Jabalpur therefore, ought to have been refunded. in the facts and circumstances of the present case, any payment of TDS by the deductor in respect of payment made to deductee-petitioner will entitle the deductee to get back such TDS with interest at the time of framing of assessment under section 143(3). In such eventuality, it was not proper to hold the deductor as assessee in default under section 201(1) nor interest could be levied under section 201(1A). The respondent Nos. 1 and 2 were directed to refund the interest amount collected under section 201(1A) from respondent No. 3 (NHAI) on behalf of the petitioner together with interest under section 244A, who in turn, shall pay the same to the petitioner in accordance with law.

REFERRED : MP Court in W.P. No. 13284/2016 decided on 23-1-2017.

FAVOUR : In assessee/petitioner's favour.

A.Y. : 2008-09 to 2011-12

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