Assessee was entitled to interest u/s 244A from 1st April of AY when return filed within extended due date – ITAT
Assessee was entitled for interest on TDS refund u/s 244A from 1st April of AY when the return was filed within extended due date
In a recent judgment, ITAT has held that the assessee was entitled for interest u/s 244A on TDS refund from 1st April of Assessment Year as return was filed within extended due date
ABCAUS Case Law Citation:
ABCAUS 3952 (2024) (04) ITAT
Important Case Laws relied upon:
Group M Media India (P) Ltd. v. DCIT (International Tax) [2023] 157 taxmann.com 487 (Bombay)
Koninklijke Philips N.V. v. DCIT (IT) [2023] 146 taxmann.com 213
In the instant case, the assessee had challenged the order passed by the NFAC in rejecting the claim of the assessee for additional interest u/s 244A of the Income Tax Act, 1961 (the Act) on the ground that the assessee had failed to prove that TDS was deducted and paid to the Govt.
The assessee was a charitable trust, entitled for exemption u/s 11 of the Act. For the relevant year, assessee had filed the return of income declaring total income at Rs. NIL, after claiming exemption u/s 11 of the Act.
As per the return of income, the assessee was entitled a refund towards TDS deducted. An intimation u/s 143(1) was passed granting refund including interest u/s 244A. in that intimation u/s 143(1), interest was calculated from 1st April of the AY to the date of passing the intimation u/s 143(1) of the Act. The actual refund was, however, received by the assessee after seven months therefrom.
Thereafter, the AO completed the assessment u/s 143(3) of the Act. In the said order, the exemption u/s 11 was allowed to the trust and the total income was computed at Rs. NIL.
In that assessment order u/sec. 143(3), the AO had reworked the interest u/s 244A of the Act. He granted the interest from the date of filing of the return till date of passing the intimation u/s 143(1). Therefore, the interest originally granted was reduced.
The assessee filed a rectification application u/s 154 of the Act clarifying that the interest computed u/s 244A was not correct. The AO passed the order u/s 154 rejecting the rectification application filed by the assessee. In that rectification order, the AO stated that assessee trust had filed return of income after the due date for filing the return u/sec 139(1) of the Act. The AO mentioned that since the assessee had filed the return belatedly, the interest u/s 244A was to be calculated from the date of filing of ITR till the date of order passed u/sec. 143(1).
Before the Tribunal the assessee contended that AO was not justified in granting interest from date of filing of return. It was submitted that the CBDT vide order No. F. No. 225/358/2018/ITA.II had extended the due date for filing the return of income and the assessee had filed the return within the extended date. Since the return was filed within the due date u/s 139(1), the assessee trust would be eligible for interest u/s 244A from 1st April of the Assessment Year.
The Tribunal noted that the NFAC had observed that the assessee without proving that the TDS deducted even remitted to the credit of the central Govt. seeking interest u/s 244A of the Act.
The assessee also relied on the decision of the coordinate bench wherein it was held that interest u/s 244A has to be granted upto the date when the actual refund was received.
The Tribunal opined that the NFAC had passed this order and observation in a very general and cryptic manner without even appreciating the intimation u/s 143(1) and the assessment order u/sec. 143(3) of the Act. It was clearly evident that the Department itself had given effect to the TDS and even also calculated the interest payable to the assessee u/sec. 244A of the Act. The grievance was only with respect to the quantification of the interest which should have been received by the assessee in this case.
The Tribunal stated that the NFAC without adjudication on this issue and overlooking all these documents have recorded an erroneous finding that the assessee has not proved TDS deducted was remitted to the credit of the central Govt. which was not at all the case emanating either from the assessment order or further intimation u/sec. 143(1) of the Act.
The Tribunal noted that the assessee had also placed reliance on the decision of the Hon’ble High Court where the Hon’ble Court has held that the interest will become payable from 1st April 2018 if the principles prescribed in section 244A of the Act are applied.
The Tribunal opined that it is sacrosanct and clear that as per the provision, the interest u/sec. 244A has to be calculated from 1st April at the rate of 6% p.a. which is the rate prescribed u/sec. 244A of the Act.
Accordingly, the Tribunal remitted matter to the file of the NFAC for de novo adjudication and come out with a speaking order as per law complying with the principles of natural justice. It was also directed that the NFAC shall take cognizance of the proposition laid by the Co-ordinate Bench while deciding the matter.
Download Full Judgment ABCAUS 3952 (2024) (04) ITAT Click Here >>
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