DISCOVERY DIGITAL NETWORK PRIVATE LIMITED,NASHIK vs. ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 1 , NASHIK

आदेश / ORDER

PER ASTHA CHANDRA, JM :

3. Aggrieved, the assessee carried the matter before the Ld. CIT(A)/NFAC who upheld the order of the Ld. AO on the ground that denial of interest u/s 244A of the Act is a rectifiable error u/s 154 of the Act and that the delay in granting credit for advance tax is attributable to the assessee as the assessee failed to claim the said credit in the return of income. The relevant findings and observations of the Ld. CIT(A) is as under :

“4.3 Ground number 1, 2, 4 and 5 taken by the appellant are with respect to withdrawal of interest granted under section 244A on advance tax which remained unclaimed in the return of income. On the above grounds, the appellant has submitted: "Section 244A, of the Act, inter alia, provides that where any amount becomes due to the assessee, the assessee is entitled to receive said amount along with interest where such refund is out of advance tax." 4.4 Further the appellant submitted: "from the bare, reading of the provision of Section 244A of the Act, it is pertinent to note that the interest u/s 244A(a) is to be granted on the advance tax paid by the assessee either from the first day of the assessment year or from the date of furnishing return of income as the case maybe. There is no prerequisite u/s 244A that the claim of credit must be made in the return of income itself. Your Honour would appreciate that there are many provisions in the Income Tax Act, which mandates to raise certain claims in the return of income. Example Section 80A(5) for claiming deduction under section 10AA, 10B, 10BA and any deduction under heading "C" of Chapter VIA, (2) Section 80 for carry forward and set off of losses u/s 72 to 74A. Therefore, it is submitted that whenever the legislature intended to enforce an embargo on the assessee to make claims in the return of income itself. it has brought into the legislation explicit provisions in that regard. Thus, in absence of any such provision in section 244A which prohibits grant of interest if the credit is not claimed in the return of income, the appellant submits that the interest under section 244A be granted on the advance tax left to be claimed in the return of income. The AO has alleged that delay in issuing refund was on account of appellant as it did not claim the same in the return of income and hence interest granted u/s 244A liable to be reversed. In this regard the appellant submits that although the credit towards the advance tax of 20,00,000/- was inadvertently not claimed in the return of income, the same was duly reflected in the Form 26AS which is issued by the Income Tax Department itself. Therefore, it could not be, denied that the AO always had the information with respect to the advance tax paid by the appellant on 17.12.2013, and it could not be alleged that the delay was attributable to the appellant. In view of the above legal and factual backdrop, it is submitted that provisions of Section 244A of the Act is clear and provides that where refund is out of advance tax, the appellant is entitled to interest under provisions of Section 244A of the Act. Further, the provisions of Section 244A does not provide for rejecting the claim of interest on account of mistakes, committed by the appellant, as in the instant case, the appellant has inadvertently missed claim of advance tax credit and the return of income. The appellant submits that interest withdrawn by the AO is bad in law and the rectification order should be quashed. 4.5 The appellant has relied on various case laws in favour of his above mentioned arguments. 4.6 As per Section 244A(2). .............. (2) If the proceedings resulting in the refund are delayed for reasons attributable to the assessee 50[or the deductor, as the case may be,] whether wholly or in part, the period of the delay so attributable to him shall be excluded from the period for which interest is payable 51 [under sub-section (1) or (1A)] 51a[or (1B)], and where any question arises as to the period to be excluded, it shall be decided by the 52 [Principal Chief Commissioner or] Chief Commissioner or 52[Principal Commissioner or] Commissioner whose decision thereon shall be final. 4.7 In the case of State Bank of India v. Chief Commissioner of Income-tax [2022] 137 taxmann.com 174 (Kerala) Hon'ble HIGH COURT OF KERALA has held that where assessee-bank claimed interest on refund of TDS amount, since delay in finalisation of return was on account of omission caused in TDS certificates assessee-bank, period taken by assessee to cure said defects was to be excluded for interest calculation as per section 244A(2). The Hon'ble Court in its order has held that: 6.2 In our view, the Supreme Court has laid down, as emphasised in the preceding paragraphs, that no interest is payable on refund of excess tax received for the delayed period in finalisation of assessment on account of assessee's fault (wholly or partially). The construction principles are well established and familiar enough that by applying the golden rule of construction, the section must receive a meaning, as spelt out in the enactment. Section 244A, when construed by the golden rule of interpretation, we hold that refund of any amount firstly becomes due to the assessee upon order of assessment made by the assessing officer. In addition to a refund of excess tax received or collected, the assessee is also entitled to interest on the excess refunded by order of assessment; however, the period of interest is governed by section 244A (2). Section 244A (2) provides that the period taken by the assessee to cure the defects in finalising the assessment is excluded for interest calculation. As it stood for the applicable assessment years, sub-section (2) merely refers to reasons attributable to the assessee. Therefore, omission or commission in the return filed by the assessee resulting in a delay in assessment is attributable to the assessee; hence, the time taken to cure those omissions and defects is excluded for interest calculation. Having availed the time for rectifying the defects and claiming interest for the defect rectification time is unavailable. Such an interpretation does not fit into the requirement of filing a return fully compliant with the order of assessment, levy of interest, refund etc. The period taken by the assessee for curing the defects cannot be excluded while calculating interest; then, for no fault of the Department, the Department is called upon to compensate by way of interest.

6.3 For the above discussion, and by relying on judgments of the Supreme Court in Tata Chemicals Limited and Sandvik Asia Ltd cases, we hold that the assessee is not entitled to interest for the period taken by the assessee for curing the defects or omissions in the return or in the annexures filed along with the returns. In other words, the interregnum period, i.e., the period taken by the assessee for rectifying the defects or curing the omissions, does not entail the receipt of interest. 4.8 In the case of Kotak Mahindra Finance Ltd. v. Deputy Commissioner of Income-tax [2005] 93 ITD 7 (MUM.) IN THE ITAT MUMBAI BENCH 'H' the Hon'ble Bench has held that 17. We heard both sides in detail. We agree with the learned D.R. that the facts of the present case are quite different from the facts of the case considered by the Mumbai Tribunal in the case of Komaf Financial Services Ltd. (supra). In that case, the assessee was not responsible for the delay. In the present case, the assessee alone is responsible for the delay. Even though the return of income was filed on 31- 12-1992, final set of TDS certificates were filed only in March 1997. The long delay was caused in determining the exact amount of refund because of the delay caused in filing the TDS certificates. We understand that the delay in filing the TDS certificates was beyond the control of the assessee. That may be the aspect of the case. It may be the misfortunate of the assessee that it did not collect the TDS certificates in time. The delay might be beyond the control of the assessee-company. But all these arguments do not go to help the assessee to support its arguments. This is because there is no provision in the scheme of section 244A to condone such delay if it was caused even if for the reasons beyond the control of the assessee.

1, 2, 4 & 5 of the appellant are dismissed.

5. The 3rd ground of appeal taken by the appellant is 3. Erred in withdrawing interest granted under section 244Aof the Act by invoking provisions of section '154 of the Act without appreciating the fact that the decision on a debatable point of law cannot be regarded as a mistake apparent from record amenable for rectification under section 154; 5.1 In favour of the above grounds the appellant has submitted Section 154 of the Act, inter-alia empowers the tax officer to amend an audit order passed by the tax officer, in order to rectify any mistake appearance from the record. In this regard, it is well settled law that a debatable point cannot be a reason for rectification u/s 154. Further, in order to invoke section 154 for rectification of the mistake, the mistake sought to be rectified should be a mistake apparent on the record and must be an obvious and patent mistake and not something which could be established by long drawn process of reasoning on the point in issue on which there may be conceivably two opinions. A decision on a debatable point of law cannot be regarded as a mistake appear on the face of the record amenable for rectification under section 154 of the Act. 5.2 The appellant has cited various case laws in favour of his argument, the appellant has further submitted that in view of the above factual and legal backdrop, it is submitted that withdrawal of interest granted under section 244A of the Act under section 154 of the Act is a debatable point of law since the provisions of the Act does not provide for rejecting the claim for interest on account of a mistake committed by an appellant. Accordingly, the same is not a mistake, apparent from record and cannot be rectified under the provision of section 154 of the Act. In view of the same, the appellant submits that interest withdrawn by the AO is bad in law and the rectification order should be quashed. 5.3 In the case of CIT Vs Parry Agro Industries Ltd. [2018] 94 taxmann.com 462 (Kerala)/[2018] 256 Taxman 359 (Kerala) Hon'ble Kerala High Court has held that where assessee's claim for deduction of various expenses in relation to granite business was allowed, in view of fact that no such business was actually commenced in relevant year and expenditure was incurred only on market survey conducted abroad, AO was justified in passing rectification order under section 154 whereby expenditure claimed as deduction was disallowed. 5.4 Furthermore in the case of CIT Vs. Steel Strips Ltd. [2011] 11 taxmann.com 361 (Punjab & Haryana)/[2011] 200 Taxman 368 (Punjab & Haryana) Hon'ble P

& Н High Court has held that overlooking of statutory provision is clearly a mistake apparent on record, and on that basis, rectification under section 154 is clearly admissible. 5.5 Thus in view of the above case laws the 3rd ground of appeal taken by the appellant is dismissed.”

1. Erred in upholding the order u/s. 154 of the Act dated 22nd March 2022, by holding that denial of interest u/s. 244A of the Act was rectifiable error u/s. 154 of the Act.

2. Erred in upholding denial of interest u/s. 244A of the Act, amounting to Rs. 20,00,000/-, by holding that the delay in granting credit for advance tax was on account of the Assessee as it had failed to claim the said credit in the return of income.

3. Failed in not appreciating the fact that the credit for advance tax ought to have been allowed in the original assessment proceedings as the same was reflected in Form 26AS and as such it could not be held that the delay in proceedings was attributable to the Appellant.

4. Erred in upholding interest u/s. 234D of the Act on the withdrawal of interest under section 244A of the Act. The appellant craves leave to add, to amend, vary or alter including by substitution any of the grounds of appeal as they or their representatives may think fit at any time before or during the hearing of the above appeal and further craves leave to consider each of the grounds of appeal as without prejudice to each other.”

5.1 In support of its above arguments, the Ld. AR filed a legal compilation comprising of the following cases :

5.2 Referring to the decision of ESS Singapore Branch vs. DCIT 165 taxmann.com 645 (Del.), the Ld. AR submitted that in this case the Assessing Officer while giving appeal effect had restricted the benefit of TDS to amount which was claimed in the return of income on the ground that amount reflected in Form 26AS was not claimed by assessee in its return and the Tribunal observed that the stand as taken by the Assessing Officer is clearly rendered unsustainable insofar as it restricts the claim of the assessee to the disclosures made in the return of income. It would be wholly illegal and inequitable for the Revenue to give short credit to the tax duly deducted and deposited based on the claim that may be made in a return of income.

Order pronounced in the open court on 21st November, 2025.