DELHI DEVELOPMENT AUTHORITY Vs. INCOME TAX OFFICER

JUDGEMENT

(1.) THIS petitioner under Art. 226/227 of the Constitution of India seeks direction to the respondent for payment of interest on the amount refunded to the petitioner in the background of the facts stated hereinafter. It appears that the petitioner -Delhi Development Authority (DDA), undertook construction of flats and allotted the same to the buyers, having entered into contracts with each of them consistently with the scheme governing the allotment of flats. It also appears that the DDA was liable to payment of interest to the flat buyers on the amount paid by them, if the flats were not constructed and possession made over to the allottees in accordance with the terms agreed upon between the two. The DDA had to pay interest to the flat buyers for the period of delay in construction and delivery of possession. The ITO (TDS) Ward No. 8(6) formed an opinion that there was default on the part of the DDA in not deducting tax at source which was required to be done under S. 194A of the Act. A demand of Rs. 3,95,97,194 relevant to the asst. yrs. 1988 -89, 1989 -90 and 1990 -91 was raised, vide order dt. 31st Jan., 1991 (annexure "A -1"). Notice of demand was issued followed by coercive process consequent to which recovery was made. The petitioner went in appeal. The Tribunal, vide its order dt. 24th Jan., 1995, passed in ITA No. 5762 to 5764 of 1991 held that the DDA was not obliged to deduct the tax at source and hence the amount recovered from the DDA was liable to be refunded to it. As the amount was not refunded, the petitioner filed Civil Writ Petn. No. 2996 of 1995 seeking direction to the respondent to refund the amount recovered from it along with interest. During the pendency of the writ petition, the respondent passed an order under S. 254(1) of the Act giving effect to the appellate order of the Tribunal to refund the amount of Rs. 3,95,97,194. The respondent also calculated interest under S. 244(1) of the Act at Rs. 19,79,859 making the total amount refundable Rs. 4,15,77,053. An income -tax refund order dt. 4th Sept., 1995, was drawn up and delivered to the petitioner. When the writ petition came up for hearing on 20th Nov., 1995, counsel for the respondent informed the Court that refund with interest had already been made. Counsel prosecuting the petition for the DDA was not present in the Court. The senior law officer of the DDA happened to be present. The Court directed the petition to be treated as disposed of in view of the statement made on behalf of the respondent. On 12th Aug., 1996, C.M. No. 7216 of 1996 has been filed on behalf of the petitioner submitting that the interest due and payable to the petitioner was not rightly calculated by the respondent and appropriate direction deserved to be issued to the respondent to calculated interest under S. 244 (1A) for the asst. year 1988 -89 and under S. 244A for the asst. yrs. 1989 -90 and 1990 -91. This application was preceded by demands made by the petitioner to the respondent. The prayer made by the petitioner has been opposed by the respondent. It is submitted that the principal amount together with interest due and payable as per law has already been paid to the petitioner. The claim made by the petitioner has been contested by the respondent mainly on three pleas : firstly, that S. 240 of the Act uses the words "refund of any amount", it applies only to refund of tax as the whole of Chapter XIX deals with refund of "tax" only but the amount refunded to the petitioner was not tax; secondly, Ss. 244(1A) and 244A are not attracted, as the amount involved is neither any "advance tax" nor is it tax paid by the assessee; and thirdly, even if any interest is liable to be paid, it is to be paid only to such persons from whom the amount was to be deducted by the DDA and then deposited with the Revenue and not to the DDA.

(2.) WE have heard learned counsel for the parties. We are of the opinion that the claim preferred by the petitioner finds support from the law and has to be sustained while the pleas raised on behalf of the respondent are liable to be rejected as untenable.

(3.) THE first question to be determined is whether the petitioner is an assessee and whether the amount recovered from it can be said to have been in pursuance of any order of assessment. It is not disputed that the respondent had determined the liability of the petitioner to deduct the tax at source and deposit the same with the respondent under S. 194A r/w S. 201 of the Act. Sub -s. (1) of s. 201 clearly provides that failure on the part of the person who is required to deduct and pay the tax shall be deemed to be an assessee -in -default in respect of the tax. Clause (7) of S. 2 of the Act defines an assessee to include, inter alia, such person who is deemed to be an "assessee -in - default" under any provision of the Act. The petitioner was, therefore, an assessee. The word "assessment" is not defined under the Act. Clause (8) of S. 2 states merely that assessment includes reassessment. The definition is an inclusive one only.