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08.05.2014 - Voice of CA presents - Updates
Thursday, May 8, 2014

I.  Direct Tax Case law:

Union of India Vs. Tata Chemicals Ltd., Civil Appeal No. 6301 of 2011, Date of Order: 26.02.2014, Supreme Court of India

Whether the resident deductor is also entitled to interest u/s 244A of the Act on refund of excess deduction or erroneous deduction of TDS u/s 195 of the Act.

Held: Yes

In the present case, the AO has passed an order u/s 195(2) of the Act directing the assessee to deduct tax at a particular rate. After depositing the tax, the assessee had filed appeal against the said order. The CIT(A) had allowed the assessee’s appeal by holding that reimbursement of expenses is not a part of the income for deduction of TDS u/s 195 of the Act and accordingly, directed the refund. In observance of the same, the AO had granted the refund u/s 240 of the Act, but declined to grant interest. The AO has in opinion that the conjoint reading of Section 156 and the explanation appended to Section 244A(1)(b) of the Act would indicate that the amount refunded to the assessee cannot be equated to the refund contemplated u/s 244A(1)(b) of the Act, whereunder only the interest on refund of excess payment made u/s 156 of the Act on account of post assessment tax is contemplated and not the interest on refund of tax deposited under self assessment. However, the Tribunal has rejected the aforesaid rationale and granted the claim of the assessee. The High Court has endorsed the view of the Tribunal and dismissed the appeals filed the Revenue.

After analyzing the provisions of statute and considering the submission, the Hon’ble Supreme court has held that interest is a kind of compensation of use and retention of the money collected unauthorizedly by the Department. When the collection is illegal, there is corresponding obligation on the revenue to refund such amount with interest in as much as they have retained and enjoyed the money deposited. The object behind insertion of Section 244A has to be understood, 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 interest to an assessee only without extending the similar benefit to a deductor who has deducted TDS and deposited the same before remitting the amount payable to a non-resident. Therefore, the deductor is entitled to interest on refund of excess TDS from date of payment of tax amount.

(Please click here for judgment)


II. A Useful Article:

[ Contribution by CA Bimal Jain and contributor is available at ]

"Service Tax paid after March 1, 2013 but before enactment of VCES on May 10, 2013 – Should be considered as paid under VCES"

(Please click here)  


  III. Today's Headlines:    

  1. Circular: certification of e-form/non e-form under the Companies Act, 2013 by the Practicing Professionals  (Click for detail)
  2. India has huge potential to attract FDI from Europe  (Click for detail)
  3. Exposure Draft - Amendments to Indian Accounting Standards (Corresponding to Annual Improvements to IFRS 2011-2013 Cycle)  (Click for detail)
  4. Floating loans: RBI directs banks not to levy pre-payment fee  (Click for detail)
  5. Precautions you must take while filing I-T returns  (Click for detail)
  6. India home to 54 of world's largest, most powerful Public Cos.  (Click for detail)
  7. Are you a first-time borrower?  (Click for detail)


 Golden Rules:

  "Time decides whom we meet in life,
Our heart decides whom we want in life,
but behaviour decides that...
who will stay in our life"


  Thanks & Regards


Voice of CA 

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