TDS Deposited In Wrong PAN By Employer: Gauhati HC Denies Interest U/S 244A Of IT Act, Says It Applies Only When Refund Is Delayed By Dept
The Gauhati High Court has made it clear that interest on refund under Section 244A of the Income Tax Act, 1961 applies only to those cases where refund is delayed by the Income Tax Department. Justice Devashis Baruah thus declined interest to a construction contractor, whose TDS was deposited in the wrong PAN number by the Defence Ministry's Border Roads Organisation. The bench...
The Gauhati High Court has made it clear that interest on refund under Section 244A of the Income Tax Act, 1961 applies only to those cases where refund is delayed by the Income Tax Department.
Justice Devashis Baruah thus declined interest to a construction contractor, whose TDS was deposited in the wrong PAN number by the Defence Ministry's Border Roads Organisation.
The bench also noted that even if the amount was deposited in the correct PAN number, Petitioner was not entitled to any refunds, rendering the provision inapplicable to the case.
Petitioner had received contractual amounts from BRO after deduction of tax. However, subsequently when notices were issued to the Petitioner by the Income Tax Department, it came to light that there was no deposit being made by BRO since the PAN number of the petitioner was wrongly written.
The petitioner then preferred this writ petition seeking corrective steps under Section 194C (for depositing the amount). It also sought interest in terms with Section 244A from BRO.
Revenue claimed that after discovering the error, the amount was duly deposited in favour of Petitioner's PAN number. Thus, the first prayer in the petition stood satisfied.
So far as the second prayer is concerned, the High Court noted, “there are no other materials placed before this Court to show that had these amounts which were required to be deposited by the respondent No. 2 [BRO], if were deposited, the petitioner would have been entitled to the refunds. In absence of such materials, the question of granting interest as claimed do not arise.”
It added, “Section 244 A of the Act of 1961 cannot be made applicable to the present facts as the said provision appears to duly apply in respect to cases where the Department had delayed the payment of refunds.”
Even though BRO is a statutory entity, it is separate from the Income Tax Department. Hence, the Court held, “the delay in depositing the amount by the respondent No. 2 [BRO] would be a private contractual dispute between the petitioner and the respondent No. 2.”
Accordingly, the plea was disposed of.
Appearance: Advocate TR Sarma for Petitioner; CGC UK Goswami and Standing counsel SC Keyal for Respondent
Case title: M/s Surya Construction v. Union of India and others
Case No.: WP(C)/6469/2021