M/S. K. Lakshmanya And Company v. Commissioner Of Income Tax & Anr

[2017] 12 S.C.R. 644 MIS. K. LAKSHMANYA AND COMPANY COMMISSIONER OF INCOME TAX & ANR. (Civil Appeal No.4335 of2012) NOVEMBER 01, 2017 (R. .F. NARIMAN AND SANJAY KISHAN KAUL, JJ.] Income Tax Act, 1961- ss.244(A), .240 and s.245(D){4) ---Assessment years 1993-94 and 1994-95 Interest on refund Entitlement of - High Court held that the assessee in the instant case was not entitled to interest uls.244(A) of the Act, when refui1d arose to it on account of partial waiver of interest chargeable uls. 234(A) to (C) by an order of the Settlenlent Commission - Propriety of - Held: Settlement Commission referred to the CBDT circular which enabled it to waive interest in favour of assessee - U/s. 244(A), it is enough that the refund become due under the Income-tax Act, in which case the assessee shall be entitled to receive simple interest - ExpressiOn "due" only means that a refimd becomes due if there is an order under the Act which either reduces or waives tax or interest - It is of no matter that the interest that is waived is discretionary in nature. for the moment that discretion is exercised, a concomitant right springs into being in favour of the assessee -There/are, the High Court was incorrect in its vie1v that since a discretionary power has been exercised, no concomitant right was found for refund of interest to the assessee. Allowing the appeals, the Court HELD: 1. The Settlement Commission, by its order referred to a circular of the CBDT which gave it the power to waive interest; and by the aforesaid order, interest was partially waived for the assessment years 1993-94 and. 1994-95 in favour of assessee. Under Section 244(A) of the Income Tax Act, 1961, G it is enough that the refund become due under the Income-tax Act, in which case the assessec shall, subject to the provisions of this Section, be entitled to receive simple interest. [Paras 2, 10J[646-G-H; 650-E] 2. A corresponding right exists, to refund to individuals A any sum paid by them as taxes which are found to have been wrongfully existed 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. [Para 171 (653-G-H] 3. The expression "due" only means that a refund becomes due if there is an order under the Act which either reduces or 'vaives tax or interest. It is of no matter that the interest that is c waived is discretionary in nature, for the moment that discretion is exercised, a concomitant right springs into being in favour of the assessee. The view of the C.I.T. (Appeals) and the ITAT was correct and that consequently, the High Court was incorrect in its view that since a discretionary power has been exercised, no concomitant right was found for refund of interest to the D assessee.[Para 20] [654-E] Commissioner of Income-Tax, Bhopal v. H.E.G Limited (2010) 15 SCC 349: Union of India v. Tata Chemicals Ltd. (2014) 6 SCC 335 : (2014] 3 SCR 298 - relied on. Commissioner of Income-Tax v. Needle Industries Pvt. Ltd. 233 ITR 370; Sandvik Asia Ltd. v. Commissioner of Income Tax I, Pune and Others (2006) 2 SCC 508 : [2006] 2 SCR 811; Commissioner of Income Tax, Mumbai v. Anjum MH. Ghaswala and Ors. (2002) 1 SCC 633 : [2001] 4 Suppl. SCR 303 - referred to. Case Law Reference 233 ITR 370 [2006] 2 SCR 811 (2001) 4 Suppl. SCR 303 (2010) 15 sec 349 (2014] 3 SCR 298 , SUPREME COURT REPORTS A CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4335 of2012. · From the Judgment and Order dated 09.12.2009 of the High Court of Karnataka at Bangalore in ITA No. 486 of 2004. WITH Civil Appeal Nos. 4357, 4358, 4359, 4356, 4346, 4349, 4355, 4353,4339, 4343, 4348, 4345, 43.50, 4351, 4347, 4336, 4340, 4338, 4337, 4354, 4352, 4344, 4342, 4341, 4361, 4362, 4360, 4365, 4363, 4366, 4364 of2012 644