D.T. Garasia, Judicial Member - (1.) THESE two appeals by the Revenue are directed against consolidated order dt.25.3.2004 of the Commissioner of Income-tax (Anneals) for the Assessment Years 2000-01 and 2001-02.
(2.) The facts of the case are that the returns of Assessment Year 2000-01 and 2001-02 were filed declaring NIL (Loss) income. Refund of Rs. 48,55,005 and Rs. 14,05,005 were claimed respectively in the two returns. As per the intimation the refund claimed as per return was granted by the Assessing Officer after processing of returns. Alongwith the refund on TDS, interest of Rs. 56,58,092 and Rs. 1,23,961 respectively as also grant for the above two years. Alongwith the intimation, no calculation of interest was given. However, it was found by the assessee that the interest Under Section 244A was not properly calculated and the interest granted was less than what was due. Therefore, rectification application was made for granting further interest in respect of the TDS. The vide letter dt. 18.07.2002 for both the years gave a list of various TDS certificates in which the deposit of TDS to Central Govt. Account was made in the next Financial Year. According to the Assessing Officer, since the credit was not made in the relevant FY no interest in respect of those TDS amounts, was admissible. Aggrieved, the assessee Carried the matter to the CIT(A) and the CIT(A) directed the Assessing Officer to grant interest Under Section 244A w.e.f.1 st April of the Assessment Year in respect of entire TDS irrespective of date of payment to the Central Govt. Account by the tax deductor. Revenue is aggrieved and is in appeal here before the Tribunal. We have heard the rival contentions of both the parties and perused the record. We find that the learned C)T(A) has misdirected himself in interpreting the provisions of law. On a plain reading of Section 244A, we find that the said section applied to such refund, where the refund is out of any tax collected at source under Section 206C or paid by way of advance tax or treated as paid under Section 199, during the financial year immedintely preceding the assessment year. Here we are concerned with treatment of payment within the meaning of Section 199. The CIT(A) has observed that - as per Section 199, any deduction made in accordance with the provisions of TDS shall be treated as payment of tax on behalf of the deductee. We find that the learned CIT(A) has not properly read and understood the provisions of Section 199. Section 199 clarifies as to when the TDS can be treated as a payment of tax on behalf of the person from whose income the deduction was made. It clearly lays down that "Any deduction made in accordance with the provisions of... and paid to the Central Government shall be treated as a payment of tax on behalf of the person from whose income the deduction was made...". (Emphasis supplied). Therefore, not only the deduction should have been made in accordance with the various provisions relating to TDS, as enumerated in the section itself, but also the payment of such amount to the Central Government, are sine qua none, in order to treat the same as a payment of tax on behalf of the person from whose income the deduction was made. Similar is the provisions contained in Section 206C (4), which clearly stipulates that any amount collected in accordance with the provisions of this section and paid under Sub-section (3), (i.e., within seven days the amount so collected to the credit of the Central Government), shall be deemed as payment of tax on behalf of the person from whom the amount has been collected. The dispute before us, is as to the application of Section 244A relating to interest on refunds. Section 244A(a) is applicable where the refund is out of any tax collected at source under Section 206C or paid by way of advance tux or treated as paid under Section 199, during the financial year immediately preceding the assessment year. In the present case, it is not disputed by both the parties that the Assessing Officer has not granted interest Under Section 244A on the amount covered under TDS Certificates, on the finding that the said amount was not credited in the Central Government Account during the relevant Financial Years. On a conjoin reading and harmonious construction of the provisions of Sections 244A, 206C(4) and 199, we are of view that the amount of TDS, though deducted from the payment made to the assessee, but not paid to the Central Government, cannot be treated as payment of tax on behalf of the assessee and as such, in our considered opinion, the Assessing Officer was justified in not allowing interest Under Section 244A to that extent.
(3.) SO far our view that the amount of TDS, though collected from the assessee, but not paid to the Central Government, cannot be treated as payment of tax on behalf of the assessee, we derive support from the decision of Hon'ble Gauhati High Court, in the case of ACII v. Om Prakash Gattani 242 ITR 638 at page 644-645, wherein, the Hon'ble Court has observed: However, the position as indicated above would not mean that mere deduction of the tax amount at source would amount to total discharge of the tax liability so long as the amount deducted is not deposited in the coffers of the Central Government . It is for this reason Section 199 of the Income-Tax makes it clear that credit for tax deducted would be given when the amount is deducted and paid to the Central Government and certificate of deduction is produced as furnished under Section 203 of the Income-tax Act, 1961. The Hon'ble "Court referred to Sections 194B, 199, 201, 203 and 205 of the Income-tax Act, 1961, and has observed as follows: see page 643 in 242 ITR 638 ...It is evident from a perusal of the provisions of that the person responsible for making the payment to the assessee is under a statutory obligation to deduct lax at source. After deduction of the amount of tax he is required to deposit the same to the credit of the Central Government and to issue a certificate of deduction. SO far as the credit for the amount deducted is concerned it is to be given on the deposit being made to the credit of the Central Government on production of a certificate furnished under Section 203. On payment of the amount to the credit of the Central Government, it would be treated as payment of tax. ;