Income-tax Act, 1961, section 244A — Interest u/s.244A(1)(b) is allowable and should be granted on refund of tax paid in pursuance of an order u/s.201 of the Act.

ITAT ‘D’ Bench, Mumbai

A.Y. : 1999-2000. Decided on : 28-1-2011

Counsel for assessee/revenue :

Jitendra Sanghavi/Dr. S. Senthil Kumar

The assessee hired M/s. Jardine Flemming as lead
managers for the GDR issue and paid commission to them as well as to their
associates without deducting tax at source u/s.195. The Assessing Officer (AO)
in an order passed u/s.201, after issuing the requisite notice and considering
the submissions made by the assessee, held that the assessee was liable to
deduct tax at source and accordingly directed the assessee to pay USD 26,76,750.
Aggrieved by the order of the AO the assessee preferred an appeal to the CIT(A)
who partly allowed the appeal. On further appeal to the Tribunal, the Tribunal
set aside the matter to the file of the AO. Consequently, the AO passed the
impugned order dated 7-3-2008 and determined a refund but did not grant interest
u/s.244A.

The CIT(A) rejected the claim by holding that the
assessee could not show that TDS was voluntarily deposited by it or under
protest u/s.195(2) and hence was not eligible for interest u/s.244A.

Aggrieved the assessee preferred an appeal to the
Tribunal.

The Tribunal held that the assessee is entitled to
interest u/s.244A. It was of the opinion that the issue stands covered in favour
of the assessee by the judgment of the Supreme Court in the case of ITO v. Delhi
Development Authority, (252 ITR 772) (SC) and also by the following orders of
the Tribunal, on which reliance was placed on behalf of the assessee :

The appeal filed by the assessee was allowed.