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Judgment
Anand Byrareddy, J.—These petitions are heard and disposed of at the stage of preliminary hearing as they arise under similar facts and circumstances as in a decision of this Court rendered in the case of S. Thigarajan v. Asstt. CIT (2009) 185 Taxman 20 (Karn).
The facts briefly stated are:
The Petitioner is an individual and an employee of M/s Infosys Technologies Ltd. (hereinafter referred to as "company" for brevity). The Petitioner was granted stock options under the employees stock option scheme framed by the company. The Petitioner having exercised his option during the assessment year 1999-2000, the same was treated as a perquisite and the Dy. CIT by his order u/s 201 passed an order against the company. The tax and interest determined thereof due from the company were recovered as TDS from the employees pursuant to the order passed by the Dy. CIT. The amount demanded from the company was accordingly discharged and Form No. 16 had been issued to the Petitioner by the said company. The Petitioner has paid the following sums by way of tax deduction as per the following table:
Tax (Rs. )
Interest (Rs. )
Total (Rs. )
Asst. yr. 1998-99
1,33,620
48,393
1,82,013
Asst. yr. 1999-2000
3,77,955
49,552
4,27,507
The Petitioner filed return of income for the assessment year 1998-99 on 2nd Sept., 1998 and for the assessment year 1999-2000 on 17-6-1999. While filing the return the perquisite value of stock options as assessed by Dy. CIT was not included. The Petitioner subsequently filed first revised return including the perquisite value of stock options as assessed by the Dy. CIT (TDS) on 11-2-2002 for the assessment years 1998-99 and 1999-2000. The said revised returns were barred by time as stipulated in the Act. In the meanwhile, the company aforesaid had appealed against the order of the Dy. CIT (TDS) and the Income Tax Appellate Tribunal, Bangalore Bench, in appeal ITA Nos. 818-820/Bang/2000 by its order dated 28-6-2002 the Tribunal, allowed the appeal against the order of Dy. CIT (TDS) stating that there is no taxable perquisite arising on account of vesting of stock options. The Petitioner, therefore, became entitled to refund of tax on perquisite wrongly deducted by the company.
The Asstt. CIT-TDS while giving effect to the order of the Tribunal by an order u/s 154 for the assessment years 1998-99 and 1999 2000 vide No. Asstt. CIT (TDS)/C-16(2) 2002-03, dated 23-10-2002 has stated that the tax paid by the company to the Central Government should be treated as payment of tax on behalf of the person from whose income the deduction was made. This order was challenged by the Petitioner while also filing an application seeking condonation of delay in filing the refund application dated 28-1-2003 before the CIT. In the meanwhile, the appeal filed by the department against the order of the Tribunal was dismissed by this Court by its order dated 15-12-2006 upholding the conclusions and findings of the Tribunal, which is reported in the case of The Commissioner of Income Tax and The Deputy Commissioner of Income Tax Vs. Infosys Technologies Ltd., . This Court held that if refund applications are pending, the department was liable to settle the claim at the earliest. The department, however, preferred a further appeal to the Supreme Court against the order of this Court, which was dismissed and order of this Court was confirmed by an order dated 4-1-2008, which is reported in Commissioner of Income Tax, Bangalore Vs. Infosys Technologies Ltd., . The Petitioner filed an application for refund of the tax before the Respondents on 22-3-2007. The CIT thereupon passed an order u/s 119(2)(b) dated 10-7-2008 condoning the delay in filing the revised return and directed the assessing officer to process the return of income in accordance with law. The Respondent passed refund order giving effect to the order of the CIT, Bangalore-V, computing the refundable amount without interest thereon for the assessment years 1998-99 and 1999-2000 on 3-11-2008. It is this, which is sought to be challenged.
While elaborating on the above sequence of events, the learned Counsel for the Petitioner would submit that the impugned order insofar as it relates to refusal of grant of interest on the refund is opposed to the express provisions of Section 244A(l)(a). The learned Counsel would draw attention to the language of the section, which reads as follows:
Where the refund is out of any tax paid u/s 115WJ or collected at source u/s 206C or paid by way of advance tax or treated as paid u/s 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 from the 1st day of April of the assessment year to the date on which the refund is granted:
Provided that no interest 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 115WE or Sub-section (1) of Section 143 or on regular assessment.
The learned Counsel would submit that the refund to the Petitioner is out of tax treated as paid u/s 199 of the Act as is plain from a reading of the provisions and that the Petitioner is entitled to interest.
The case of the Petitioner is not covered by the proviso to the aforesaid clause in as much as the amount of refund is not less than 10 per cent of tax determined u/s 143(1) or on regular assessment. The counsel would submit that the Petitioners case would be covered under that portion of Section 244A(l)(b) which reads as follows:
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 the tax or penalty to the date on which the refund is granted.
In view of the fact that the proceedings resulting to refund are delayed for the reasons not attributable to the Petitioner, the question of exclusion of any period in computing the interest does not arise in terms of Section 244A(2). Therefore, it is contended that the Petitioner would be entitled to interest even in terms of Section 244A(3), which reads as follows:
Where, as a result of an order under Sub-section (3) of Section 115WE or Section 115WF or Section 115WG or Sub-section (3) of Section 143 or Section 144 or Section 147 or Section 154 or Section 155 or Section 250 or Section 254 or Section 260 or Section 262 or Section 263 or Section 264 or an order of the Settlement Commission under Sub-section (4) of Section 245D, the amount on which interest was payable under Sub-section (1) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and in a case where the interest is reduced, the assessing officer shall serve on the Assessee a notice of demand in the prescribed form specifying the amount of the excess interest paid and requiring him to pay such amount; and such notice of demand shall be deemed to be a notice u/s 156 and the provisions of this Act shall apply accordingly.
The learned Counsel would submit that in view of the order of the Tribunal having been confirmed by this Court as well as the Apex Court, the refund to the Petitioner cannot be denied. This legal position has also been acknowledged by the Asstt. CIT (TDS) in his order dated 23-10-2002. It is therefore the case of the Petitioner that the denial of said refund and interest is illegal and in the face of finality having been attained insofar as the legal position is concerned.
As held by this Court in S. Thigarajarns case (supra), the first and second revised returns along with the application to condone the delay in filing the same, were rendered infructuous, not being a perquisite attracting TDS. The department having noticed the said facts in the order impugned, took up for consideration the applications to condone the delay in filing the revised returns and termed the same as "claim for refund" whereas the question of exercise of jurisdiction u/s 119(2)(b) of the Act did not arise. Therefore, in the admitted factual matrix, it was held that the similar impugned orders are arbitrary and without jurisdiction and found that since the Respondents had the benefit of the monies belonging to the Petitioners upto the dates of refund and in the light of a catena of decisions of the Apex Court, over payment of compounded interest on refund, it was directed that the request for interest at 18 per cent per annum compounded monthly was kept open for consideration by the first Respondent to be decided within the time fixed therein and accordingly allowed the writ petitions in the aforesaid reported judgment.
Since the Petitioner herein stands on a similar footing, while keeping open the Petitioners claim for interest over refund, which shall be considered by the Respondent within a period of four weeks from the date of this order, the writ petitions are allowed. The impugned order at Annex. "A" is quashed.