THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM vs. M/S STATE BANK OF TRAVANCORE HEAD OFFICE, POOJAPPURA, TRIVANDRUM

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ITA/226/2012HC KeralaKLHC01024148201204 December 2013Bench: HONOURABLE MR.JUSTICE A.M.SHAFFIQUE,HONOURABLE THE CHIEF JUSTICE DR. MANJULA CHELLUR5 pages
AI SummaryDismissed

What did the High Court hold?

The High Court held that the assessee is entitled to interest under Section 244A of the Income Tax Act for the period taken to cure defects in the TDS certificates. The Court reasoned that once credit for TDS is given, the logical consequence is the determination of interest on that tax credit. The authorities below opined that interest cannot be denied for the time taken by the assessee to cure defects in TDS certificates because no amount was due from the assessee concerning these certificates, and the amount was with the Revenue. The interest is payable due to the excess amount remaining with the Revenue, not for any delay by the Revenue in determining the refund. The Court found no reason to differ from the decisions of the Bombay High Court in CIT v. Larsen and Toubro Ltd. and the Punjab & Haryana High Court in CIT v. Punjab State Co-operative Bank, which were relied upon by the Tribunal. Accordingly, the High Court declined to interfere with the Tribunal's order.

What were the facts?

The appeal concerns assessment years 1989-90 and 1990-91. The assessee, M/s. State Bank of Travancore, faced issues with certain Tax Deducted at Source (TDS) certificates filed. Due to defects in these certificates, the assessee took time to rectify them. When the Assessing Officer recalculated the interest payable to the assessee on a refund, as directed by the appellate tribunal, interest under Section 244A of the Income Tax Act was not allowed for the period the assessee took to correct the TDS certificates. The Commissioner of Income Tax (Appeals) allowed the assessee's appeal on this point, leading the Revenue to appeal to the Income Tax Appellate Tribunal (ITAT). The ITAT dismissed the Revenue's appeal.

What were the issues?

1. Whether the assessee is entitled to interest under Section 244A of the Income Tax Act for the period taken to cure defects in TDS certificates, despite the delay being attributable to the assessee. Assessee's Contention: The assessee argued that interest on refund cannot be denied for the time taken to cure defects in TDS certificates, as no amount was due from the assessee and the excess amount was lying with the Revenue. The interest is payable on account of the excess amount remaining with the Revenue, not for any delay by the Revenue in determining the refund. Revenue's Contention: The Revenue contended that the time taken by the assessee for curing defects in TDS certificates should be considered as a delay in filing TDS certificates, and therefore, the reason contemplated under Section 244A(2) of the Income Tax Act is not applicable to assist the assessee.

Which sections of the Income-tax Act were involved?

Section 244A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF KERALA AT ERNAKULAM PRESENT: THE HON'BLE THE CHIEF JUSTICE DR. MANJULA CHELLUR & THE HONOURABLE MR.JUSTICE A.M.SHAFFIQUE WEDNESDAY, THE 4TH DAY OF DECEMBER 2013/13TH AGRAHAYANA, 1935 ITA.No. 226 of 2012 ----------------------- AGAINST THE ORDER IN ITA 395/COCH/2009 of I.T.A.TRIBUNAL, COCHIN BENCH DATED 29-03-2012 ............ APPELLANT/APPELLANT:- ----------------------------- THE COMMISSIONER OF INCOME TAX, THIRUVANANTHAPURAM,

BY ADVS.SRI.P.K.R.MENON,SR.COUNSEL, GOI(TAXES) SRI.JOSE JOSEPH, SC, FOR INCOME TAX RESPONDENT/RESPONDENT:- --------------------------------- M/S. STATE BANK OF TRAVANCORE, HEAD OFFICE, POOJAPPURA, THIRUVANANTHAPURAM - 695 012. THIS INCOME TAX APPEAL HAVING COME UP FOR ADMISSION ON 04-12-2013, THE COURT ON THE SAME DAY DELIVERED THE FOLLOWING:

Manjula Chellur, C.J. & A.M. Shaffique, J. - - - - - - - - - - - - - - - - - - - - - - - - - - - - I.T.A. No. 226 OF 2012 - - - - - - - - - - - - - - - - - - - - - - - - - - - - Dated this the 4th day of December, 2013 JUDGMENT Manjula Chellur, C.J. Heard learned Standing Counsel for the Revenue. The entire issue revolves around the issue whether the assessee was entitled for interest on the refund of the amount even with regard to the quantum or amount that was the subject of assessment proceedings so far as TDS amounts are concerned. According to the Department, the time taken by the assessee for curing defects in the TDS certificates would also come under the category of delay in filing TDS certificates, therefore, the reason contemplated under Section 244A(2) of the Income Tax Act is of no assistance to the assessee. The facts revealed are as under. 2. The proceedings before the authorities were pertaining to two assessment years, 1989-90 and 1990-91. So far as the controversy the revenue submits, on account of

ITA No. 226 of 2012 -:2:- defects in some of the TDS certificates filed by the assessee, as explanation was sought from him, assessee took some time to rectify the defects. When the assessing officer had to recompute the interest payable to the assessee, as per the directions of appellate tribunal, he did not allow interest under Section 244A of the Act in respect of the period of delay taken by the assessee for correcting the TDS certificates. This became the challenge before the Commissioner of Income Tax (Appeals) and CIT(Appeals) allowed the appeal. Therefore, the Revenue went before the Tribunal. 3. The Tribunal, at paragraph 7 of the order, has in detail reproduced the reasoning of the appellate authority and after hearing the parties, placing reliance on the decision of Bombay High Court in Commissioner of Income Tax v. Larsen and Toubro Ltd. [(2011) 330 ITR 340(Bom)] and decision of Punjab & Haryana High Court in the case of Commissioner of Income Tax v. Punjab State Co- operative Bank [2009-TIOL-21-HC-P&H-IT] opined that there

ITA No. 226 of 2012 -:3:- was no need to interfere with the decisions of the first appellate authority and rejected the appeal of the revenue. Aggrieved by the same, the revenue is before us. 4. As per the decisions referred to above, once the credit for TDS given, automatically logical consequence is determination of interest on the tax credit. Similarly the authorities below opined that the interest cannot be denied for the time taken by the appellant assessee to cure the defects in the TDS certificates as no amount is due from the assessee so far as TDS certificates and the amount was lying with the revenue. The interest is payable on account of the amount in excess of what is payable was remaining with the revenue and not for the delay caused by the revenue in determining the refund of the amount. In that view of the matter as the excess amount was remaining with the revenue, interest is to be paid on the amount to be refunded to the appellant assessee. We find no good reason to differ from the two opinions of the Division Benches of Bombay and Punjab &

ITA No. 226 of 2012 -:4:- Haryana High Courts, therefore we decline to interfere. Accordingly, the appeal is dismissed. Manjula Chellur, Chief Justice. A.M. Shaffique, Judge.

ttb/04/12

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