S. 195, S. 244A. When tax which was deducted at source and deposited with the Government pursuant to an order passed u/s. 195(2) of the Act is refunded to the assessee, upon the CIT(A) deciding the appeal in favor of the assessee, the assessee is entitled

13. 
    2009 TIOL 602 ITAT Mum.

Addl DIT
v. Reliance Infocomm Ltd.

ITA No. 6100 to
6110/M/2008

Dated : 9-9-2009

S. 195, S. 244A.
When tax which was deducted at source and deposited with the Government
pursuant to an order passed u/s. 195(2) of the Act is refunded to the assessee,
upon the CIT(A) deciding the appeal in favor of the assessee, the assessee is
entitled to refund of amount paid with interest u/s.244A.

Facts :

The assessee
approached the DDIT, International Taxation, with a request to issue a
certificate for making payment to M/s. ECI Telecom — NGTS Ltd., Israel, for
purchase of certain software for the purpose of operation of Wireless
Telecommunication Network, without deduction of tax at source. The DDIT passed
an order u/s.195(2) of the Act holding that the payment was in the nature of
‘Royalty’ and accordingly, tax was required to be deducted at source. The
assessee deducted the tax and made payment to the authorities as directed by
the aforesaid order passed by the DDIT.

The assessee
preferred an appeal against the said order u/s.195(2) of the Act, which was
allowed by CIT(A). Pursuant to the appeal order, the DDIT passed an order
giving effect to the order of CIT(A) and granted refund of amount paid by the
assessee but did not grant interest on the amount refunded on the ground that
refund has arisen not under the Income-tax Act as such.

Aggrieved, assessee
preferred an appeal to the CIT(A) who held that the assessee was entitled to
interest u/s.244A of the Act on the refund of TDS u/s.195.

Aggrieved by the
order of CIT(A) directing the DDIT to grant interest on refund of TDS, Revenue
preferred an appeal to the Tribunal.

Held :

The Tribunal found
the issue under consideration to be covered against the revenue by various
decisions including the decision of ITAT in the case of Tata Chemicals Ltd.;
16 SOT 418 and in the case of Star Cruises India Travel Services Pvt. Ltd. in
ITA No. 6498 & 6500/Mum./06 order dated 24th March, 2009 (2009 TIOL 351 ITAT
Mum). Since the facts were identical to the decisions mentioned above the
Tribunal confirmed the order passed by CIT(A) and held that the assessee is
entitled to interest on refund of amount paid pursuant to an order passed u/s.
195(2).

The appeal filed by
the department was dismissed.