DUN & BRADSTREET INFORMATION SERVICES INDIA P. LTD, MUMBAI V. DDIT (IT) RG-1, MUMBAI

ITA 4341/MUM/2010

• Counselvise Citation: [2015] 140 COUNSELVISE.COM (IT) 92627 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: D
• Next Hearing Date: 17-03-2015
• Assessment Year: 2002-2003
• Appeal Filed On: 26-05-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: LOVE KUMAR
• Section: 244A; 201(1); 263; 154

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN (AM) AND AMIT SHUKLA, (JM) . . , , ./ I.T. A. NO S . 4339 TO 4344/ MUM/20 1 0 ( / ASSESSMENT YEAR S : 2000 - 01 TO 20 0 5 - 06 ) DUN AND BRADSTREET INFORMATION SERVICES INDIA PVT. LIMITED, ICC CHAMBERS, SAKI VIHAR ROAD, POWAI, MUMBAI - 400072 / VS. DY.DIRECTOR OF INCOME TAX (INTERNATIONAL TAXAT ION), RANGE - 1, MUMBAI ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN/GIR NO. : AAAC D3958P / A SSESSEES BY SHRI DIVESH CHAWLA / RE VENUE BY SHRI LOVE KUMAR / DATE OF HEARING : 1 9 .3 . 201 5 / DATE OF PRONOUNCEMENT : 29. 5. 201 5 / O R D E R PER B.R.BASKARAN (AM): THE ASSESSEE HAS FILED THESE SIX APPEALS CHALLENGING THE COMMON ORDER DATED 1 7.3.2010 PASSED BY THE LD.CIT(A) - 10, MUMBAI AND THEY RELATE TO THE ASSESSMENT YEARS 2000 - 01 TO 2005 - 06. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LD.CIT(A) IN CONFIRMING THE WITHDRAWAL OF INTEREST GRANTED TO THE ASSESSEE FOR THESE YEARS UNDER S ECTION 244A OF THE INCOME TAX ACT, 1961 (THE ACT). I.T.A. NO. 4339 / MUM/201 0 AND OTHER FIVE APPEALS 2 3. WE HEARD THE PARTIES AND PERUSED THE RECORD. THE ASSESSEE IS ENGAGED IN THE BUSINESS OF PROVIDING INTERNATIONAL & DOMESTIC BUSINESS AND FINANCIAL INFORMATION SERVICES, MARKETING INFORMATION SERVICES, RECEIVABLE MANAGEMENT SERVICES ETC. THE ASSESSEE HAD MADE CERTAIN REMITTANCE S TO NON - RESIDENTS WITHOUT DEDUCTING TAX AT SOURCE. THE AO TREATED THE ASSESSEE A S ASSESSEE IN DEFAULT AND PASSED ORDER S UNDER SECTI ON ON 195(2) R.W.S 201 OF THE ACT. THE ASSE SSEE APPEARS TO HAVE PAID DEMAND SO RAISED BY THE AO. HOWEVER, THE ASSESSEE CHALLENGED THE ORDER S OF THE AO BY FILING THE APPEALS BEFORE THE LD.CIT(A) AND ALSO BEFORE THE TRIBUNAL. THE ITAT , HOWEVER, CANCELLED THE ORDER OF THE AO AND CONSEQUENTLY, DEMAND SO RAISED CAME TO BE NI L. THE AO INITIALLY GRANTED REFUND OF THE TDS AMOUNT REMITTED BY THE ASSESSEE ALONG WITH THE INTEREST UNDER SECTION 244A OF THE ACT. HOWEVER, LATTER BY THE ORDER S PASSED UNDER SECTION 154 OF THE ACT, THE AO WITHDR E W THE INTEREST G RANTED TO THE ASSESSEE U/S 244A OF THE ACT . IN THE APPELLATE PROCEEDINGS , THE LD.CIT(A) TOOK THE VIEW THAT THE ASSESSEE HAS VOLUNTARILY DEDUCTED THE TAX AT SOURCE ON THE AMOUNT REMITTED BY IT TO NON - RESIDENTS . HENCE, BY FOLLOWING THE CBDT CIRCULAR NO.7/20 07 DATED 23.10.2007, CIRCULAR NO. 769 DATED 6.8.1998, AND C IRCULAR NO.790 DATED 20.4.2000, LD CIT(A) TOOK THE VIEW THAT THE AMOUNT VOLUNTARILY PAID BY THE ASSESSEE AS TDS REMITTANCE, I.E., WITHOUT A NOTICE OF DEMAND FROM THE AO, CANNOT BE CONSIDERED TO BE A TAX AND HENCE THE ASSESSEE WAS NOT ENTITLED TO INTEREST UNDER SECTION 244A OF THE ACT. AGGRIEVED BY TH E ORDER S OF LD CIT(A) , THE ASSESSEE HAS FILED THESE APPEALS BEFORE US. 4. THE LD. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THAT THE LD.CIT(A) WA S WRONG IN HOLDING THAT THE ASSESSEE HAD PAID T HE TAX VOLUNTARY. HE SUBMITTED THAT THE TDS AMOUNT WAS PAID BY THE ASSESSEE AS PER THE DEMAND RAISED BY THE ADIT(IT), VIDE ORDER DATED 31.1.2005. WE I.T.A. NO. 4339 / MUM/201 0 AND OTHER FIVE APPEALS 3 NOTICE THAT THE LD CIT(A) HIMSELF HAS OBSERVED THAT THE ASS ESSEE HAS PAID THE TDS AMOUNT AS PER THE ORDER DATED 31.01.2005 PASSED BY THE AO U/S 195(2) R.W.S. 201(1) OF THE ACT. 5. BE THAT AS IT MAY, THE ISSUE HAS SINCE BEEN DECI DED BY THE HONBLE SUPREME COURT IN THE CASE OF UNION OF INDIA V/S TATA CHEMICALS LTD . [2014] 363 ITR 658 (SC) IN FAVOUR OF THE ASSESSEE , WHEREIN, THE HONBLE SUPREME COURT HAS HELD THAT THE ASSESSEE IS ENTITLED TO INTEREST ON REFUND OF EXCESS DEDUCTION OR ERRONEOUS DEDUCTION OF TAX AT SOURCE UNDER SECTION 195 OF THE ACT. FOR THE SAKE OF CONVENIENCE, WE EXTRACT BELOW THE RELEVANT OBSERVATIONS MADE BY THE HONBLE SUPREME COURT IN THE ABOVE SAID CASE. 32 . THE QUESTION BEFORE US IS, WHETHER THE RESIDENT/DEDUCTOR IS ALSO ENTITLED TO INTEREST ON REFUND OF EXCESS DEDUCTION OR ERRONEOUS DEDUCT ION OF TAX AT SOURCE UNDER SECTION 195 OF THE ACT. 33. WE WOULD BEGIN OUR DISCUSSION BY REFERRING TO CIRCULAR NO. 790, DATED APRIL 20, 2000, ISSUED BY THE BOARD. OMITTING WHAT IS NOT NECESSARY, THE MATERIAL PORTION OF THE CIRCULAR IS EXTRACTED : ' . 6. REFUND TO THE PERSON MAKING PAYMENT UNDER SECTION 195 IS BEING ALLOWED AS INCOME DOES NOT ACCRUE TO THE NON - RESIDENT. THE AMOUNT PAID INTO THE GOVERNMENT ACCOUNT IN SUCH CASES, IS NO LONGER 'TAX'. IN VIEW OF THIS, NO INTEREST UNDER SECTION 244A IS ADMISSIB LE ON REFUNDS TO BE GRANTED IN ACCORDANCE WITH THIS CIRCULAR OR ON THE REFUNDS ALREADY GRANTED IN ACCORDANCE WITH CIRCULAR NO. 769.' 34. WHAT THE DEDUCTOR/RESIDENT PRIMARILY CONTEND IS THAT, WHAT HAS BEEN DEPOSITED BY HIM IS A TAX, MAY BE FOR AND ON BEHAL F OF NON - RESIDENT/FOREIGN COMPANY AND WHEN THE BENEFICIAL CIRCULAR PROVIDES FOR REFUND OF TAX TO THE DEDUCTOR UNDER CERTAIN CIRCUMSTANCES, THE REFUND OF TAX SHOULD CARRY INTEREST. 35. THE CIRCULAR ISSUED BY THE CENTRAL BOARD OF DIRECT TAXES ('THE BOARD' F OR SHORT) IS BINDING ON THE DEPARTMENT. BINDING NATURE OF I.T.A. NO. 4339 / MUM/201 0 AND OTHER FIVE APPEALS 4 THE CIRCULAR IS EXPLAINED BY THIS COURT IN THE CASE OF UCO BANK V. CIT [1999] 237 ITR 889(SC), WHEREIN THIS COURT HAS OBSERVED THAT THE CIRCULARS ISSUED BY THE BOARD IN EXERCISE OF ITS POWERS UNDER SECTION 119 OF THE ACT WOULD BE BINDING ON THE INCOME - TAX AUTHORITIES EVEN IF THEY DEVIATE FROM THE PROVISIONS OF THE ACT, SO LONG AS THEY SEEK TO MITIGATE THE RIGOUR OF A PARTICULAR SECTION FOR THE BENEFIT OF THE ASSESSEE. THEREFORE, WE CANNOT BE TAKING E XCEPTION TO THE REASONING AND CONCLUSION REACHED BY THE AUTHORITIES UNDER THE ACT. HOWEVER, THE TRIBUNAL AND THE HIGH COURT, HAVE GRANTED INTEREST ON THE AMOUNT OF TAX DEPOSITED BY THE RESIDENT/DEDUCTOR FROM THE DATE OF PAYMENT ON THE GROUND, FIRSTLY, THE R EFUND OF TAX IS DIRECTED BY THE FIRST APPELLATE AUTHORITY IN THE APPEAL FILED BY THE DEDUCTOR/RESIDENT UNDER SECTION 240 OF THE ACT AND, SECONDLY, THE REVENUE FOR HAVING RETAINED THE SUM BY WAY OF TAX HAS TO COMPENSATE THE PERSON WHO HAD DEPOSITED THE TAX 36. SECTION 240 OF THE ACT PROVIDES FOR REFUND OF ANY AMOUNT THAT BECOMES DUE TO AN ASSESSEE AS A RESULT OF AN ORDER IN APPEAL OR ANY OTHER PROCEEDINGS UNDER THE ACT. THE PHRASE 'OTHER PROCEEDINGS UNDER THE ACT' IS OF WIDE AMPLITUDE. THIS COURT HAS OBSERV ED THAT THE OTHER PROCEEDINGS UNDER THE ACT WOULD INCLUDE ORDERS PASSED UNDER SECTION 154 (RECTIFICATION PROCEEDINGS), ORDERS PASSED BY THE HIGH COURT OR THE SUPREME COURT UNDER SECTION 260 (IN REFERENCE), OR ORDER PASSED BY THE COMMISSIONER IN REVISION AP PLICATIONS UNDER SECTION 263 OR IN AN APPLICATION UNDER SECTION 273A. 37. A 'TAX REFUND' IS A REFUND OF TAXES WHEN THE TAX LIABILITY IS LESS THAN THE TAX PAID. AS PER THE OLD SECTION AN ASSESSEE WAS ENTITLED FOR PAYMENT OF INTEREST ON THE AMOUNT OF TAXES REFUNDED PURSUANT TO AN ORDER PASSED UNDER THE ACT, INCLUDING THE ORDER PASSED IN AN APPEAL. IN THE PRESENT FACT SCENARIO, THE DEDUCTOR/ASSESSEE HAD PAID TAXES PURSUANT TO A SPECIAL ORDER PASSED BY THE ASSESSING OFFICER/INCOME - TAX OFFICER. IN THE APPEAL FI LED AGAINST THE SAID ORDER THE ASSESSEE HAS SUCCEEDED AND A DIRECTION IS ISSUED BY THE APPELLATE AUTHORITY TO REFUND THE TAX PAID. THE AMOUNT PAID BY THE RESIDENT/DEDUCTOR WAS RETAINED BY THE GOVERNMENT TILL A DIRECTION WAS ISSUED BY THE APPELLATE AUTHOR ITY TO REFUND THE SAME. WHEN THE SAID AMOUNT IS REFUNDED IT SHOULD CARRY INTEREST IN THE MATTER OF COURSE. AS HELD BY THE COURTS WHILE AWARDING INTEREST, IT IS A KIND OF COMPENSATION OF USE AND RETENTION OF THE MONEY COLLECTED UNAUTHORIZEDLY BY THE DEPARTM ENT. WHEN THE COLLECTION IS ILLEGAL, THERE IS CORRESPONDING OBLIGATION ON THE REVENUE I.T.A. NO. 4339 / MUM/201 0 AND OTHER FIVE APPEALS 5 TO REFUND SUCH AMOUNT WITH INTEREST INASMUCH AS THEY HAVE RETAINED AND ENJOYED THE MONEY DEPOSITED. EVEN THE DEPARTMENT HAS UNDERSTOOD THE OBJECT BEHIND INSERTION OF SECT ION 244A, AS THAT, AN ASSESSEE IS ENTITLED TO PAYMENT OF INTEREST FOR MONEY REMAINING WITH THE GOVERNMENT WHICH WOULD BE REFUNDED. THERE IS NO REASON TO RESTRICT THE SAME TO AN ASSESSEE ONLY WITHOUT EXTENDING THE SIMILAR BENEFIT TO A RESIDENT/DEDUCTOR WHO HAS DEDUCTED TAX AT SOURCE AND DEPOSITED THE SAME BEFORE REMITTING THE AMOUNT PAYABLE TO A NON - RESIDENT/FOREIGN COMPANY. 38. PROVIDING FOR PAYMENT OF INTEREST IN CASE OF REFUND OF AMOUNTS PAID AS TAX OR DEEMED TAX OR ADVANCE TAX IS A METHOD NOW STATUTORIL Y ADOPTED BY FISCAL LEGISLATION TO ENSURE THAT THE AFORESAID AMOUNT OF TAX WHICH HAS BEEN DULY PAID IN PRESCRIBED TIME AND PROVISIONS IN THAT BEHALF FORM PART OF THE RECOVERY MACHINERY PROVIDED IN A TAXING STATUTE. REFUND DUE AND PAYABLE TO THE ASSESSEE IS DEBT OWED AND PAYABLE BY THE REVENUE. THE GOVERNMENT, THERE BEING NO EXPRESS STATUTORY PROVISION FOR PAYMENT OF INTEREST ON THE REFUND OF EXCESS AMOUNT/TAX COLLECTED BY THE REVENUE, CANNOT SHRUG OFF ITS APPARENT OBLIGATION TO REIMBURSE THE DEDUCTORS LAWFU L MONIES WITH THE ACCRUED INTEREST FOR THE PERIOD OF UNDUE RETENTION OF SUCH MONIES. THE STATE HAVING RECEIVED THE MONEY WITHOUT RIGHT, AND HAVING RETAINED AND USED IT, IS BOUND TO MAKE THE PARTY GOOD, JUST AS AN INDIVIDUAL WOULD BE UNDER LIKE CIRCUMSTANCE S. THE OBLIGATION TO REFUND MONEY RECEIVED AND RETAINED WITHOUT RIGHT IMPLIES AND CARRIES WITH IT THE RIGHT TO INTEREST. WHENEVER MONEY HAS BEEN RECEIVED BY A PARTY WHICH EX AEQUO ET BONO OUGHT TO BE REFUNDED, THE RIGHT TO INTEREST FOLLOWS, AS A MATTER OF COURSE. 39. IN THE PRESENT CASE, IT IS NOT IN DOUBT THAT THE PAYMENT OF TAX MADE BY RESIDENT/DEPOSITOR IS IN EXCESS AND THE DEPARTMENT CHOOSES TO REFUND THE EXCESS PAYMENT OF TAX TO THE DEPOSITOR. WE HAVE HELD THE INTEREST REQUIRES TO BE PAID ON SUCH REFU NDS. THE CATECHIZE IS FROM WHAT DATE INTEREST IS PAYABLE, SINCE THE PRESENT CASE DOES NOT FALL EITHER UNDER CLAUSE (A) OR CLAUSE (B) OF SECTION 244A OF THE ACT. IN THE ABSENCE OF AN EXPRESS PROVISION AS CONTAINED IN CLAUSE (A), IT CANNOT BE SAID THAT THE I NTEREST IS PAYABLE FROM THE 1ST OF APRIL OF THE ASSESSMENT YEAR. SIMULTANEOUSLY, SINCE THE SAID PAYMENT IS NOT MADE PURSUANT TO A NOTICE ISSUED UNDER SECTION 156 OF THE ACT, THE EXPLANATION TO CLAUSE (B) HAS NO APPLICATION. IN SUCH CASES, AS THE OPENING WO RDS OF CLAUSE (B) SPECIFICALLY REFERRED TO 'AS IN ANY OTHER CASE', THE INTEREST IS PAYABLE FROM THE DATE OF PAYMENT I.T.A. NO. 4339 / MUM/201 0 AND OTHER FIVE APPEALS 6 OF TAX. THE SEQUEL OF OUR DISCUSSION IS THE RESIDENT/DEDUCTOR IS EN TITLED NOT ONLY THE REFUND OF TAX DEPOSITED UNDER SECTION 195(2) OF THE A CT, BUT HAS TO BE REFUNDED WITH INTEREST FROM THE DATE OF PAYMENT OF SUCH TAX. 6 . RESPECTFULLY FOLLOWING THE DECISION OF THE HONBLE SUPREME COURT RENDERED IN THE ABOVE CITED CASE, WE HOLD THAT THE ASSESSEE IS ENTITLED FOR INTEREST UNDER SECTION 244A OF THE ACT ON THE AMOUNT OF TDS REFUNDED TO THE ASSESSEE . ACCORDINGLY, WE SET ASIDE THE COMMON ORDER OF THE LD.CIT(A) ON THIS ISSUE PASSED FOR ALL THE YEARS UNDER CONSIDERATION AND DIRECT THE AO TO GRANT INTEREST TO THE ASSESSEE U/S 244A OF THE ACT. 7 . IN THE RESULT, ALL THE SIX APPEALS F ILED BY THE ASSESSEE ARE ALLOWED. THE AB OVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 29 TH MAY , 2015 . 29TH MAY , 2015 SD SD ( / AMIT SHUKLA ) ( . . / B.R. BASKARAN) / JUDICIAL MEMBER / ACCO UNTANT MEMBER MUMBAI: 29TH MAY ,2015 . . . ./ SRL , SR. PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI