LIC Housing Finance Ltd. Vs ACIT (ITAT Mumbai)
ITAT Mumbai held that right to interest on refund is statutory right hence interest on delayed refunds arising from Direct Tax Vivad Se Vishwas [DTVSV] Act, 2020 is admissible. Accordingly, the appeals are allowed.
Facts- In this case of a Public Sector undertaking of Government of India, the assessee filed VSVS application as per under Direct Tax Vivad Se Vishwas Act, 2o2o(DTVSV). Pr.CIT while accepting the application passed order determining refund of Rs 11.16 cr. Order Giving Effect(OGE) u/s 5(2) of DTVSV was passed on 18.08.2022 and tax refund of Rs 11.61 cr. was issued to the assessee on 05.01.2023 who vide an application u/s 154 of the Act claimed interest on this sum in terms of section 244A(1)(b) of the Act stating that there was delay over 90 days in issuing the refund as it was issued after more than 20 months. However, AO rejected the request on the ground that no interest was allowable on the above Scheme. CIT(A) dismissed the appeal too. Being aggrieved, the present appeal is filed.
Conclusion- Held that the spirit of the DTVSVA is to provide a comprehensive and final resolution, which should include all ancillary benefits like interest on refunds. The right to interest on a refund is a statutory right, and it generally accrues when the tax department holds onto money that is rightfully due to the assessee. As held by the hon’ble Rajasthan High Court in the case of Dwejesh Acharya, bare perusal of the Explanation to Section 7 of VSV Act, 2020 would reveal that the it pertains to payment of any amount under the Income Tax Act for the period before filing the declaration under subsection (1) of Section 4 of the VSV Act, 2020 and nothing to do with the entitlement to interest for the period after issuance of Form No.5 indicating entitlement of the petitioner to the amount of refund. The above cited decisions are significant for taxpayers who opted for DTVSVA, confirming their entitlement to interest on any delayed refunds arising from the scheme, ensuring they are fully compensated for the time value of their money.
