Merely raising the dispute before any authority cannot be a ground not to levy the interest and/or waiver of interest under section 220(2A)

 

Levy of simple interest u/s 220(2) on non-payment of the tax @ 1% p.a. is mandatory. Merely raising the dispute before any authority cannot be a ground not to levy the interest and/or waiver of interest under section 220(2A) of the act. Otherwise each and every assessee may raise a dispute and thereafter may contend that as the assessee was bona fide litigating and therefore no interest shall be leviable – The Honorable Supreme Court held above in case of M/s. Pioneer Overseas Corporation USA (India Branch) (2022) 329 CTR 686 (SC)

I wish and want, courts would take such stand in reverse scenario as well ie in case of interest on refunds to taxpayers!

TaxCorp e-Practice Mega DVD

(2022) 329 CTR 686 (SC) : (2022) 115 CCH 296 (SC) : (2022) TaxCorp

(DT) 88662 (SC)

M/S. PIONEER OVERSEAS CORPORATION USA (INDIA BRANCH) vs. COMMISSIONER OF INCOME TAX (INTERNATIONAL TAXATION)

Nov 2, 2022

SUPREME COURT OF INDIA

M.R. SHAH & M.M. SUNDRESH, JJ.

Special Leave to Appeal (C) No(s). 21488/2017 (Arising out of impugned final judgment and order dated 17-05-2017 in WPC No. 5423/2016 passed by the High Court of Delhi at New Delhi)

Counsel appeared:

Ajay Vohra, Sr. Adv. Kavita Jha, AOR, Udit Naresh, Adv., Anant Mann, Adv. for the Petitioner.: N. Venkataraman, ASG, Chinmayee Chandra, Adv., Suhashini Sen, Adv., Siddhanth Kohli, Adv., V. Chandrashekhara Bharathi, Adv., Raj Bahadur Yadav, AOR for the Respondent.

ORDER

 

We have heard Mr. Ajay Vohra, learned Senior Advocate, assisted by Ms. Kavita Jha, learned Advocate, appearing for the petitioner and Mr. N. Venkataraman, learned ASG, appearing for the Revenue.

The issue involved in the present Special Leave Petition is with respect to the waiver of interest under Section 220(2A) of the Income Tax Act, 1961 (for short “the Act”). The appropriate competent Authority rejected the application of the petitioner for waiver of interest while exercising the powers under Section 220(2A) of the Act. The same has been confirmed by the High Court.

It is the case on behalf of the petitioner that as the dispute was pending for Mutual Agreement Procedure [MAP] resolution which subsequently came to be culminated in the year 2012 and the liability to pay the tax thereafter arose and therefore the petitioner shall be entitled to the waiver of interest under Section 220(2)(A)(ii) of the Act. The aforesaid has no substance. Merely raising the dispute before any authority cannot be a ground not to levy the interest and/or waiver of interest under Section 220(2A) of the Act. Otherwise each and every assessee may raise a dispute and thereafter may contend that as

the assessee was bona fidely litigating and therefore no interest shall be leviable. It is required to be noted that under Section 220(2) of the Act, the levy of simple interest on non-payment of the tax @ 1% p.a. is, as such, mandatory.

We are in complete agreement with the view taken by the High Court. The Special Leave Petition stands dismissed.