Madhya Pradesh High Court
Gurmit Singh Vilkhu vs The Principal Commissioner Of Income ... on 9 February, 2024
Author: Sheel Nagu
Bench: Sheel Nagu
IN THE HIGH COURT OF MADHYA PRADESH
AT JABALPUR
BEFORE
HON'BLE SHRI JUSTICE SHEEL NAGU
&
HON'BLE SHRI JUSTICE VINAY SARAF
ON THE 9th OF FEBRUARY, 2024
WRIT PETITION No. 10787 of 2022
BETWEEN:-
GURMIT SINGH VILKHU S/O LATE GIAN
SINGH, AGED ABOUT 65 YEARS, R/O 1615
VIJAY NAGAR, CHAPER, RAMPUR,
JABALPUR (M.P.) PRESENTLY RESIDING AT
C/O V.S. MEHATO, 77/451, BADANPUR,
SHAKTI NAGAR ROAD MADAN MAHAL,
JABALPUR (M.P.) (MADHYA PRADESH)
.....PETITIONER
(PETITIONER IN PERSON)
AND
1. THE PRINCIPAL COMMISSIONER OF
INCOME TAX 1 AAYAKAR BHAWAN
JABALPUR (M.P.) (MADHYA PRADESH)
2. INCOME TAX OFFICER JABALPUR
WARD 1 (1) AAYAKAR BHAWAN NAPIER
TOWN JABALPUR M.P. (MADHYA PRADESH)
.....RESPONDENTS
(BY SHRI SIDDHARTH SHARMA-ADVOCATE )
This petition coming on for admission this day, Justice Vinay Saraf
passed the following:
ORDER
By present petition preferred under Article 226 of the Constitution of
India, petitioner has prayed for following reliefs infra :
(i) That, this Hon'ble Court may kindly be pleased to direct the
Respondents to take amount of Rs. 2,81,797/- as Total refund
arises in place of Rs.2,05,030/- for calculation of New Total
Refundable Amount.
(ii) That, this Hon'ble Court may kindly be further pleased to direct
the respondents to pay allowable interest @ 18% p.a. simple
interest on Total refund arises amount of Rs.2,81,797/- from
30.03.2009 till the date of realization in the interest of justice.
(iii) That, this Hon'ble Court may kindly be pleased to direct the
respondents to adjust the Total Refundable Amount of
RS.3,13,680/- already paid to the petitioner and pay the
difference in amount of New Total Refundable Amount less Total
Refundable Amount already paid to the petitioner after new
calculation.
(iv) Any other relief/direction/order as this Hon'ble Court deems fit
and proper looking to the present facts and circumstances of the
case.
(v) Cost of the petition may also kindly be awarded in favour of the
petitioner.
Brief facts of case :
2. Present case is having chequered history and brief facts suffice to decide
present petition are that petitioner, Gurmit Singh Vilkhu was an employee of
Punjab and Sindh Bank and was placed under suspension by Bank in a
departmental enquiry on 29.02.1996 and ultimately terminated.
2.1 Order of termination was challenged by petitioner before this Court
successfully and this Court by order dated 04.07.2008 passed in M.C.C.
No.960/2007 arising out of Writ Appeal No.901/2006 set aside termination and
ordered to treat petitioner as an employee under suspension from 01.03.1996 to
16.04.2007 and to pay 'subsistence allowance' for the said period.
2.2 Bank calculated subsistence allowance amounted of Rs. 20,90,354.96 for
the aforesaid period, but while paying said subsistence amount deducted Rs.
5,25,000/- towards TDS u/s 192 of IT Act and paid balance amount of Rs.
15,09,309/- to petitioner. Deducted amount was deposited as tax with Income
Tax Department by Bank.
2.3 Petitioner preferred Contempt Petition no. 1003 / 2008 before this Court
complaining deduction of TDS by bank authorities, which was disposed off by
order dated 18.02.2010 with a liberty to petitioner to assail deduction of income
tax by way of filing Writ Petition as well as to approach Income Tax Authority
for refund of amount deducted towards income tax in accordance with law.
2.4 For claiming refund of TDS amount deducted by Bank, petitioner filed
ITR-1 on 27.10.2010 showing NIL income for assessment year 2009-2010
(financial year 2008-2009). Return filed by petitioner was processed on
31.03.2011 without allowing refund by Income Tax Officer (for short, 'ITO').
2.5 Thereafter, petitioner filed an application for rectification under Section
154 of the Income Tax Act, 1961 (for short, 'IT Act') on 29.4.2011 claiming
relief under Section 89(1) of IT Act, which was rejected by ITO on 30.8.2011.
Order passed by ITO was assailed by petitioner in appeal before Commissioner,
Income Tax (Appeals), Jabalpur which was dismissed by CIT (A) by order
dated 01.10.2012 stating that subsistence allowance is not a judgement debt but
covered under the head salary as per section 17 of the I.T. Act.
2.6 Petitioner filed revised application u/s 154 of I.T. Act on 24/02/2014 for
claiming relief u/s 89(1), but with this application refund claim form 10E &
TDS certificate were not enclosed, hence a letter was sent to petitioner by ITO
on 27/06/2014 for furnishing required documents, and later on 11.09.2014
petitioner submitted form no. 10E and when bank furnished confirmation of
TDS & year wise breakup of gross salary & TDS along with form no. 26AS,
quarterly statement of TDS & its challans on 20/11/2014, petitioner furnished
all the documents to ITO.
2.7 Assessing Officer (A.O.) passed an order on 05.12.2014 under Section
154 of IT Act and allowed relief under Section 89(1) of IT Act, which was
above Rs. 1 lac, therefore, matter was referred to Joint Commissioner of Income
Tax, (JCIT) Range-1, Jabalpur for approval along with case record. JCIT on
09.01.2015 with certain direction returned the matter back to A.O. and after
complying with the directions, matter was again referred to JCIT, who declined
to grant refund by order dated 25.05.2016 stating that in return filed by
petitioner for A.Y. 2009-2010, income was disclosed as NIL and no refund was
claimed. JCIT held that A.O. erred in allowing relief and order passed by A.O.
was not legally correct. According to JCIT when income in return filed for
A.Y.2009-2010 was disclosed as NIL, no assessment order could be passed and
no relief could be accepted on the basis of application filed by assessee later on.
2.8 JCIT also observed that assessee (petitioner) has accepted order of appeal
passed by CIT (A)-I, Jabalpur on 01.10.2012 and not challenged before any
forum and original order passed by A.O. on 30.08.2011 under Section 154 of IT
Act was also merged with appeal order and these orders have attained finality
and could not be revised by A.O. subsequently.
2.9 In furtherance of order passed by JCIT, on 09.05.2017, ITO, Ward-1(1),
Jabalpur issued a notice under Section 154/155 of IT Act informing petitioner
that order dated 05.12.2014 needs to be rectified by withdrawing relief of Rs.
2,81,797/- allowed u/s 89(1) and to revise total income from Rs. 20,87,090/- to
Rs. NIL as shown by petitioner in the original return of income.
2.10 Petitioner preferred W.P. no. 9494/2017 and challenged notice issued by
ITO dated 09.05.2017 seeking quashment of notice and compliance of order
dated 05.12.2014, whereby A.O. allowed relief u/s 89(1) to petitioner.
2.11 ITO, Ward-1(1), Jabalpur passed an order on 01.08.2017 under Section
154 of IT Act and declined to grant any refund to petitioner by holding that
order passed u/s 154 of IT Act on 05.12.2014 was not in conformity with the
provisions of section 154 and accordingly, documents obtained during
proceedings u/s 154 are against the provisions of Law and cannot be entertained,
thus, refund cannot be granted to assessee (petitioner). This order was also
assailed by petitioner in W.P. no. 9494/2017.
2.12 After hearing the parties at length, this Court allowed W.P. No.
9494/2017 by order dated 14.2.2019 and held that petitioner is entitled for relief
u/s 89(1) of IT Act and quashed notice dated 09.05.2017 as well as subsequent
order dated 01.08.2017 and ordered to refund due amount to petitioner within
two months with allowable interest. The relevant paragraphs of the order are
extracted hereinbelow:
"32. In such circumstances, we are of the considered opinion that the
proceedings sought to be initiated by the respondents against the petitioner
vide the impugned order dated 9.5.2017 and decided against him by order
dated 1.8.2017 are totally misplaced and misconceived and perverse, more so
as they have been passed totally ignoring the final and binding orders
passed by the Income Tax Officer dated 30.08.2011 and the CITA 1.10.2012
which had become final.
33. We are also of the opinion that the very initiation of the impugned Section
154 proceedings was misconceived and uncalled for as there was no mistake in
the previous -orders requiring rectification in view of the admitted and
undisputed fact that the petitioner is entitled to claim benefit under Section
89(1) of the Act, and that his claim thereunder is allowable.
34. In the circumstances the petition filed by the petitioner is allowed, the
impugned show cause notice dated 9.5.2017 and the subsequent order dated
1.8.2017 are quashed and it is directed that the petitioner is entitled to and
shall be paid his dues mentioned in order dated 5,12.2014 by the Income Tax
Department within two months with allowable interest."
2.13 In compliance of order passed in W.P. No. 9494/2017 on 14.02.2019 letter
No. ITO/WD.1(1)/JBP/GSV/2019-20 dated 23.5.2019 (Annexure P-1) and
calculation sheet were issued by respondent no. 2, whereby after considering the
provisions of Section 244 of IT Act, amount of Rs. 2,05,030/- was found
refundable after adjusting claim of relief under Section 89 (1) of IT Act along
with interest of Rs. 108650 calculated @ 0.5% per month. It is not in dispute
that said amount of Rs. 3,13,680/- was paid to petitioner on 29.04.2019 by direct
credit in his saving bank account. Being dissatisfied with aforesaid calculation,
petitioner has preferred present petition.
3. With the consent of parties, matter is heard finally.
Petitioner's submissions:
4. Petitioner Shri Gurmit Singh Vilkhu submits that this Court by order
dated 14.02.2019 quashed show cause notice dated 09.05.2017 and subsequent
order dated 01.08.2017 with a direction to refund amount as mentioned in order
dated 05.12.2014 passed by ITO, whereby petitioner was found entitled to claim
benefit under Section 89(1) of IT Act, therefore, principal refundable amount
should be equallent to the amount of relief Rs. 2,81,797/- instead of Rs.
205030/- calculated by ITO. He further submits that relief under Section 89 (1)
of IT Act was calculated and comes to Rs. 2,81,797/- which is not in dispute as
calculation sheet attached with impugned communication also reflects same
amount towards relief granted under Section 89(1). He further submits that W.P.
No. 9494/2017 was allowed and it was directed to pay amount along with
interest therefore, principal amount cannot be treated as refund, it is judgment
debt and therefore he is entitled for simple interest @ 18% p.a., however, the
ITO has allowed interest @ 0.5% per month only. Petitioner prays for issuance
of appropriate directions to respondents to pay Rs. 2,81,797/- along with interest
@ 18 % p.a. as claimed after adjusting amount already paid.
Respondent's submissions :
5. Shri Siddharth Sharma, learned counsel appearing on behalf of IT
department submits that petitioner preferred present petition without
understanding calculations and under belief that relief under Section 89(1) has
not been granted to him. However, the same was extended to petitioner and after
adjusting amount of Rs. 2,81,797/-, net payable amount was calculated as Rs.
2,05,030/- and petitioner was found eligible for interest @ 0.5% per month
according to Section 244A(1) of IT Act. He further submits that IT department
has already paid refundable amount along with interest and therefore, no order
or direction can be issued to respondents for payment of any further amount to
petitioner. He prays for dismissal of petition.
Consideration & Conclusion :
First question emerge in present matter is "whether amount of relief
granted under Section 89 of I.T. Act itself can be equated to refund
amount?"
6. After amendment in 2002 there is no sub section in section 89 of IT Act
and section 89 (1) mentioned in all above referred documents and orders will be
construed as section 89. Provision of Section 89 of IT Act are extracted
hereunder :
"89. Relief when salary, etc., is paid in arrears or in advance.--Where an
assessee is in receipt of a sum in the nature of salary, being paid in arrears or
in advance or is in receipt, in any one financial year, of salary for more than
twelve months or a payment which under the provisions of clause (3) of Section
17 is a profit in lieu of salary, or is in receipt of a sum in the nature of family
pension as defined in the Explanation to clause (ii-a) of Section 57, being paid
in arrears, due to which his total income is assessed at a rate higher than that
at which it would otherwise have been assessed, the Assessing Officer shall, on
an application made to him in this behalf, grant such relief as may be
prescribed:
Provided that no such relief shall be granted in respect of any amount
received or receivable by an assessee on his voluntary retirement or
termination of his service, in accordance with any scheme or schemes of
voluntary retirement or in the case of a public sector company referred to in
sub-clause (i) of clause (10-C) of Section 10, a scheme of voluntary separation,
if an exemption in respect of any amount received or receivable on such
voluntary retirement or termination of his service or voluntary separation has
been claimed by the assessee under clause (10-C) of Section 10 in respect of
such, or any other, assessment year."
6.1 Apex Court in the matter of K.C. Joshi v. Union of India, (1985) 3 SCC
153 after considering provisions of section 89 of IT Act held as under :
"17. Now that the amount is being paid in one lump sum, it is likely that the
employer may take recourse to Section 192 of the Income Tax Act, 1961 which
provides that any person responsible for paying any income chargeable under
the head "salaries" shall, at the time of payment, deduct income tax on the
amount payable at the average rate of income tax computed on the basis of the
rates in force for the financial year in which the payment is made, on the
estimated income of the assessee under this head for that financial year. If
therefore the employer proceeds to deduct the income tax as provided by
Section 192, we would like to make it abundantly clear that each appellant
would be entitled to the relief under Section 89 of the Income Tax Act which
provides that where, by reason of any portion of assessee's salary being paid in
arrears or in advance or by reason of his having received in any one financial
year salary for more than 12 months or a payment which under the provisions
of clause (3) of Section 17 is a profit in lieu of salary, his income is assessed at
a rate higher than that it would otherwise have been assessed, the Income Tax
Officer shall on an application made to him in this behalf grant such relief as
may be prescribed. The prescribed relief is set out in Rule 21-A of the Income
Tax Rules. The appellant is entitled to relief under Section 89 because
compensation herein awarded includes salary which has been in arrear for 18
years as also the compensation in lieu of reinstatement and the relief should be
given as provided by Section 89 of the Income Tax Act read with Rule 21-A of
the Income Tax Rules. The appellant indisputably is entitled to the same. If any
application is necessary to be made, the appellant may submit the same to the
competent authority and the Commission shall assist the appellant for
obtaining the relief."
6.2 Section 192 of the I.T. Act provides that any person responsible for
paying any income chargeable under the head salary shall at the time of
payment deduct income-tax on the amount payable at the average rate of income
tax computed on the basis of rates in force for the financial year in which the
payment is made. However, if the pay and allowance paid to the assessee
pertains to the period for more than 12 months, relief u/s 89 is allowable and the
assessee can claim relief or rebate in calculation of tax. Amount of relief or
rebate will be adjusted in the amount of tax payable and the due amount of tax
will be paid by the assessee or if the tax already paid was more than the amount
of tax comes after adjustment of relief, the same will be refunded to the assessee.
6.3 An assessee is entitle for claim of relief under Section 89 which provides
that if assessee has received any amount in nature of salary and same was paid
in arrears or in advance or is in receipt of anyone financial year of salary more
than 12 months, the assessee may claim relief to avoid payment of income tax to
be assessed at a rate higher than that at which it would otherwise have been
assessed. Meaning thereby, if assessee has received any sum in the nature of
salary which was not for the assessment year, he may claim relief for not adding
said amount for the purpose of assessment of income tax payable on the amount
of salary received for the relevant financial year and be spread over in all
relevant assessment years for the purpose of calculation of Income Tax. The
relief under Section 89 is to be considered at the time of calculating payable
amount of tax. There is no such provision in IT Act to refund the amount of
relief granted under Section 89 as it is. There may be situation wherein even
after adjusting / grant of relief under Section 89 of IT Act, assessee may be
liable to pay tax. Amount of relief is adjustable or deductable from the amount
of tax. Relief under Section 89 is a relief or rebate not a refund. First question is
answered accordingly.
7. Coming to the facts of the case, order dated 14.02.2019 passed in W.P.
No. 9494/2017 was not assailed by any party before Apex Court and, therefore,
same has attained finality by which it was decided that order passed by ITO on
05.12.2014 was wrongly reconsidered under Section 154 of IT Act and
proceedings initiated on the basis of show cause notice dated 09.05.2017 were
held misplaced, misconceived and perverse and resultantly, show cause notice
dated 09.05.2017 and order dated 01.08.2017 were set aside.
7.1 By order dated 05.12.2014 passed under Section 154 of IT Act, ITO
assessed gross receipts received by assessee (petitioner) for financial year 2008-
2009 (A.Y. 2009-2010) to Rs. 20,90,355/- and after allowing deduction under
Section 80C of Rs. 3266/-, the total income was assessed to Rs. 20,87,089/- and
ITO ordered to calculate relief under Section 89(1) on Rs. 20,87,089/-. ITO
allowed claim of relief under Section 89(1) on the ground that amount received
by assessee was paid to him as subsistence allowance/salary for the period from
1996-1997 to 2007-2008 and therefore assessee was entitled for claim of relief
under Section 89.
7.2 For the purpose of examining calculation sheets enclosed by ITO along
with letter dated 23.05.2019 (Annexure P-1), this Court by order dated
29.08.2022 directed Registrar General to obtain opinion of an expert in the field
of tax/accountancy available in the High Court and submit report within thirty
days. In compliance of order dated 29.08.2022, Chartered Accountant attached
to High Court has submitted a report dated 14.09.2022 along with annexures
appended thereto and same was provided to parties. Petitioner submitted
reply/comments to Chartered Accountant's report and made a request to obtain
complete report on following two issues:
"(A) Provision regarding grant of relief u/s 89(1) of the Income Tax Act, 1961
(B) Petitioner's claim that the principal amount ought to be 2,81,797/- instead
of Rs. 2,05,030/- apart from interest."
Thereafter directions were issued to obtain further report from Chartered
Accountant and further report was submitted by Chartered Accountant.
7.3 Petitioner submits that IT Department has not allowed refund according
to Section 89 of IT Act as ordered by this Court on 14.02.2019 in W.P. No.
9494/2017. Order passed under Section 154 of IT Act on 05.12.2019 (Annexure
P-6) reflects that relief under Section 89 was to be calculated on amount of Rs.
20,87,089/-. Petitioner has claimed amount of relief to Rs. 2,81,797/- under
Section 89 and it appears that for the purpose of calculation of refundable
amount in impugned communication (Annexure P-1) and the calculation sheet
attached to the communication, relief amount u/s 89 was considered as Rs.
2,81,797/- equallent to the amount claimed by petitioner. The same amount was
calculated by Chartered Accountant of this Court, however, petitioner is
claiming amount of relief as refundable amount, whereas relief amount and
refundable amount are two different figures. Total amount received by
petitioner during the assessment year was Rs. 20,90,355/- out of which
deduction was allowed under Section 80 C to the tune of Rs. 3266/ and after
deducting the said amount aggregate income comes to Rs. 20,87,090/-.
7.4 When tax was calculated on aggregate income of Rs. 20,87,090/-, gross
tax comes to Rs. 5,31,127/-, surcharge was payable @ 10% of amount of gross
tax, which was calculated to Rs. 53,113/- and education cess @ 3% on total of
gross tax and surcharge was payable to the tune of Rs. 17527/-. After adding
surcharge and education cess total payable income tax was Rs. 6,01,767/-
(5,31,127 +53,113 +17,527 = 6,01,767). By allowing relief under section 89 of
IT Act, the income received by petitioner was spread over from assessment year
1996-97 to 2008-09 and therefore the liability of tax was reduced and relief
under Section 89 was granted to the tune of amount of Rs. 2,81,797/- and net
payable tax was calculated to Rs. 3,19,970/- (6,01,767 - 2,81,797 = 3,19,970/-).
TDS of Rs. 5,25,000/- was deducted by Bank and deposited with IT Department
therefore, there was an excess payment of tax on behalf of petitioner to Rs.
2,05,030/- (5,25,000 - 3,19,970 = 2,05,030/-) and said amount was refundable.
7.5 The refundable amount was calculated after considering relief of Rs.
2,81,797/- as claimed by petitioner therefore, no irregularity and illegality was
committed by respondent in calculating amount of refund. Chartered
Accountant attached to this Court also verified refund of Rs. 2,05,030/-.
7.6 In conspectus of above calculation, it appears that relief under Section 89
of IT Act was duly extended to petitioner as claimed by him in petition and
therefore, there was no mistake on the part of respondent in calculating
refundable amount to the tune of Rs. 2,05,030/-.
Second question is "whether petitioner is entitled for interest @ 18%
p.a. despite statutory stipulation for payment of interest in Section 244(1)(b)
of IT Act ?"
8. Respondent paid interest @ 0.5% per month. This Court by order dated
14.02.2019 passed in W.P. No. 9494/2017 ordered to refund amount payable to
petitioner with allowable interest. No rate of interest was fixed by this Court at
the time of passing order. Allowable interest may be considered as interest
payable under IT Act. Section 244 A(1) of IT Act provides rate of interest
payable on refundable amount. According to Section 244A, interest is payable
at the rate of one-half percent for every month which is equivalent to 6% per
anum. Provision of Section 244A(1) of IT Act are extracted hereunder :
"244-A. Interest on refunds.--(1) Where refund of any amount becomes due to
the assessee under this Act, he shall, subject to the provisions of this section, be
entitled to receive, in addition to the said amount, simple interest thereon
calculated in the following manner, namely:
(a) where the refund is out of any tax collected at source under Section 206-C
or paid by way of advance tax or treated as paid under Section 199, during the
financial year immediately preceding the assessment year, such interest shall
be calculated at the rate of one-half per cent for every month or part of a month
comprised in the period,--
(i) from the 1st day of April of the assessment year to the date on which the
refund is granted, if the return of income has been furnished on or
before the due date specified under sub-section (1) of Section 139; or
(ii) from the date of furnishing of return of income to the date on which the
refund is granted, in a case not covered under sub-clause (i):
Provided that where refund arises as a result of an order passed by
the Assessing Officer in consequence of an application made by the
assessee under sub-section (20) of Section 155, such interest shall be
calculated at the rate of one-half per cent. for every month or part of a
month comprised in the period from the date of such application to the
date on which the refund is granted;
(aa) where the refund is out of any tax paid under Section 140-A, such interest
shall be calculated at the rate of one-half per cent for every month or part
of a month comprised in the period, from the date of furnishing of return of
income or payment of tax, whichever is later, to the date on which the
refund is granted:
Provided that no interest under clause (a) or clause (aa) shall be
payable, if the amount of refund is less than ten per cent of the tax as
determined under sub-section (1) of Section 143 or on regular assessment;
(b) in any other case, such interest shall be calculated at the rate of one-half
per cent for every month or part of a month comprised in the period or
periods from the date or, as the case may be, dates of payment of tax or
penalty to the date on which the refund is granted.
Explanation.--For the purposes of this clause, "date of payment of tax or
penalty" means the date on and from which the amount of tax or penalty
specified in the notice of demand issued under Section 156 is paid in excess of
such demand."
8.1 Apex Court in the matter of Union of India v. Tata Chemicals
Ltd. (2014) 6 SCC 335 after considering the object for enactment of Section
244-A, held as under :
"30. ... Interest payment is a statutory obligation and non-discretionary in
nature to the assessee. In tune with the aforesaid general principle, Section
244-A is drafted and enacted. The language employed in Section 244-A of the
Act is clear and plain. It grants substantive right of interest and is not
procedural. The principles for grant of interest are the same as under the
provisions of Section 244 applicable to assessments before 1-4-1989, albeit
with clarity of application as contained in Section 244-A.
31. The Department has also issued circular clarifying the purpose and object
of introducing Section 244-A of the Act to replace Sections 214, 243 and 244 of
the Act. It is clarified therein, that, since there was some lacunae in the earlier
provisions with regard to non-payment of interest by the Revenue to the
assessee for the money remaining with the Government, the said section is
introduced for payment of interest by the Department for delay in grant of
refunds. A general right (sic duty) exists in the State to refund any tax collected
for its purpose, and a corresponding right exists to refund to individuals any
sum paid by them as taxes which are found to have been wrongfully exacted or
are believed to be, for any reason, inequitable. The statutory obligation to
refund carried with it the right to interest also. This is true in the case of the
assessee under the Act."
8.2 In the matter of K. Lakshmanya & Co. v. CIT, (2018) 11 SCC 620
Apex Court held that "a corresponding right exists, to refund to individuals any
sum paid by them as taxes which are found to have been wrongfully exacted or
believed to be, for any reason, inequitable. The statutory obligation to refund,
being non-discretionary, carries with it the right to interest, also making it clear
that the right to interest is parasitical. The right to claim refund is automatic
once the statutory provisions have been complied with".
8.3 Payment of interest is statutory obligation and cannot be denied. Interest
has been calculated by respondent accordance with section 244A(1)(a)(ii) of IT
Act, whereas the present case would fall outside clauses (a) and (aa) of this
provision and therefore fall within the residuary clause namely clause (b) of
section 244A(1). Petitioner has claimed interest complaining that refundable
amount was paid only after the order passed by this court, hence petitioner has
become entitled to claim interest on said amount from the date on which the
liability was determined till it is refunded. As stated above claim for interest on
the delayed amount is payable as per section 244A(1)(b) of IT Act. The rate of
interest provided under section 244A(1)(b) is one-half % per month.
8.4 Respondent has allowed interest @ 0.5% per month from 27.10.2010 to
25.04.2019 calculated upon refundable amount of Rs. 2,05,030/- to the tune of
Rs. 1,08,650/- and paid net amount of Rs. 3,13,680/-, which is according to the
provisions of Section 244A(1)(b) of IT Act. Chartered Accountant of this Court
has also submitted his report that interest is payable @ 0.5% per month and
calculated interest at the same rate. Chartered Accountant calculated total
payable amount of interest to Rs. 1,04,565/- in his both reports whereas Income
Tax Department has paid interest to the tune of Rs. 1,08,650/- which is higher
than amount calculated by Chartered Accountant and therefore, it cannot be
accepted that Income Tax Department has committed any mistake in calculation
of interest. When the rate of interest is already prescribed in the Section itself,
no direction can be issued for payment of interest at any higher rate and it
cannot be accepted that the interest was not calculated as per directions issued
by this Court in W.P.No.9494/2017 by order dated 14.02.2019.
9. Petitioner has not suggested any provision under which he is entitle to
claim interest @ 18% p.a. It was also not pointed out by petitioner that if the
amount of refund be considered as judgment debt, under which provision the
same will fetch interest @ 18% p.a. In view of above calculations, we do not
find any error, mistake, irregularity and illegality in calculation of refundable
amount and interest.
10. Accordingly, petition is dismissed. There shall be no order as to costs.
(SHEEL NAGU) (VINAY SARAF)
JUDGE JUDGE
P/-
