Multiscreen Media Pvt. Ltd. v. ACIT
ITA No. 6602/Mum./2008
A.Y. : 1999-2000. Dated : 19-11-2010
Income-tax Act, 1961 — Section 244A — Assessee is entitled to
interest on delayed payment of interest. Whenever there is a delay in granting
refund to the assessee, the Department has to pay compensation by way of
interest for the delay in payment of amount lawfully due to the assessee, which
are withheld wrongly and contrary to law.
Facts:
The Tribunal vide its order dated 4-3-2004 decided the appeal
filed by the assessee and granted certain reliefs to the assessee. The AO on
23-4-2004 passed an order giving effect to the order of the ITAT and determined
the amount of refund due to the assessee at Rs.3,26,48,225 (this included
interest of Rs.18,22,490). A part of the refund due to the assessee was adjusted
against the demand for A.Y. 2001-02 in July 2004 and the balance amount of
Rs.1,34,70,662 was paid to the assessee in August 2004. The assessee vide letter
dated 21-9-2004 moved an application u/s.154 of the Act on the ground that
computation of interest u/s.244A was erroneous and there was a short grant of
interest to the extent of approx Rs.42 lakh. On 26-9-2006, the AO passed an order u/s.154 and determined the balance refund due
to the assessee at Rs.42,15,279 and a further sum of Rs.13,16,576 was determined
as due to the assessee on account of MAT credit brought forward from A.Y.
1998-1999. Of the total amount of Rs.55,31,855 due to the assessee Rs.1,77,531
was adjusted against demand for A.Y. 2001-02 and balance Rs.53,54,324 was
adjusted on 4-12-2006 against demand for A.Y. 2003-04.
The assessee vide letter dated 9-11-2006 requested the AO to
rectify the mistake of short grant of interest on refund and for grant of
further interest on delayed payment of interest of Rs.42,15,279 for the period
from September 2004 to December 2006. The AO vide letter dated 3-1-2007 rejected
the contention of the assessee on the ground that there is no provision in the
Act for granting interest on delayed payment of interest.
Aggrieved the assessee preferred an appeal to the CIT(A) who
held that Sandvik Asia is a case where there was an inordinate delay and the SC
had taken serious exceptions to such delay. The case of Sandvik Asia was an
exceptional case and the ratio of the said decision would apply to such
exceptional cases. He was of the opinion that the case of the assessee did not
fall in the category of the Sandvik Asia case. He dismissed the appeal filed by
the assessee.
Aggrieved the assessee preferred an appeal to the Tribunal.
Held:
The Tribunal noted the ratio of the decision of the Apex
Court in the case of Sandvik Asia (280 ITR 643) (SC) and did not find any merit
in the observations of the CIT(A) that the case of Sandvik Asia is an
exceptional case and the said decision would apply only to such exceptional
cases. It held that whenever there is a delay in granting refund to the
assessee, the Department has to pay compensation by way of interest for the
delay in payment of amount lawfully due to the assessee, which is withheld
wrongly and contrary to law. The Tribunal held that the assessee is entitled to
interest u/s.244A on delayed refund of Rs.42,15,279 for the period from
September 2004 to December 2006. It directed the AO to pay interest u/s.244A to
the assessee as per law.
The appeal filed by the assessee on this ground was allowed.
