M/S. K. LAKSHMANYA AND COMPANY versus COMMISSIONER OF INCOME TAX & ANR.

Citation: [2017] 12 S.C.R. 644 · Decided: 01-11-2017 · Supreme Court of India · Bench: R.F. NARIMAN · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
B 
[2017] 12 S.C.R. 644 
MIS. K. LAKSHMANYA AND COMPANY 
v. 
COMMISSIONER OF INCOME TAX & ANR. 
(Civil Appeal No.4335 of2012) 
NOVEMBER 01, 2017 
(R. .F. NARIMAN AND SANJAY KISHAN KAUL, JJ.] 
Income Tax Act, 1961- ss.244(A), .240 and s.245(D){4) -
Assessment years 1993-94 and 1994-95 - Interest on refund -
C 
Entitlement of - High Court held that the assessee in the instant 
case was not entitled to interest uls.244(A) of the Act, when refui1d 
arose to it on account of partial waiver of interest chargeable uls. 
234(A) to (C) by an order of the Settlenlent Commission - Propriety 
of - Held: Settlement Commission referred to the CBDT circular 
D 
E 
F 
which enabled it to waive interest in favour of assessee - U/s. 244(A), 
it is enough that the refund become due under the Income-tax Act, 
in which case the assessee shall be entitled to receive simple interest 
- ExpressiOn "due" only means that a refimd becomes due if there 
is an order under the Act which either reduces or waives tax or 
interest - It is of no matter that the interest that is waived is 
discretionary in nature. for the moment that discretion is exercised, 
a concomitant right springs into being in favour of the assessee -
There/are, the High Court was incorrect in its vie1v that since a 
discretionary power has been exercised, no concomitant right was 
found for refund of interest to the assessee. 
Allowing the appeals, the Court 
HELD: 1. The Settlement Commission, by its order 
referred to a circular of the CBDT which gave it the power to 
waive interest; and by the aforesaid order, interest was partially 
waived for the assessment years 1993-94 and. 1994-95 in favour 
of assessee. Under Section 244(A) of the Income Tax Act, 1961, 
G it is enough that the refund become due under the Income-tax 
Act, in which case the assessec shall, subject to the provisions 
of this Section, be entitled to receive simple interest. [Paras 2, 
10J[646-G-H; 650-E] 
H 
644 
MIS. K. LAKSHMANYA AND COMPANY v. COMMISSIONER 
645 
OF INCOME TAX 
2. A corresponding right exists, to refund to individuals A 
any sum paid by them as taxes which are found to have been 
wrongfully existed or believed to be, for any reason, inequitable. 
The statutory obligation to refund, being non- discretionary, 
carries with it the right to interest, also making it clear that the 
right to interest is parasitical. The 'right to claim refund is 
automatic once the. statutory provisions have been complied with. 
[Para 171 (653-G-H] 
B 
3. The expression "due" only means that a refund becomes 
due if there is an order under the Act which either reduces or 
'vaives tax or interest. It is of no matter that the interest that is 
waived is discretionary in nature, for the moment that discretion 
is exercised, a concomitant right springs into being in favour of 
the assessee. The view of the C.I.T. (Appeals) and the ITAT 
was correct and that consequently, the High Court was incorrect 
in its view that since a discretionary power has been exercised, 
c 
no concomitant right was found for refund of interest to the D 
assessee.[Para 20] [654-E] 
Commissioner of Income-Tax, Bhopal v. H.E.G Limited 
(2010) 15 SCC 349: Union of India v. Tata Chemicals 
Ltd. (2014) 6 SCC 335 : (2014] 3 SCR 298 - relied 
on. 
E 
Commissioner of Income-Tax v. Needle Industries Pvt. 
Ltd. 233 ITR 370; Sandvik Asia Ltd. v. Commissioner 
of Income Tax I, Pune and Others (2006) 2 SCC 508 : 
[2006] 2 SCR 811; Commissioner of Income Tax, 
Mumbai v. Anjum MH. Ghaswala and Ors. (2002) 1 
F 
SCC 633 : [2001] 4 Suppl. SCR 303 - referred to. 
Case Law Reference 
233 ITR 370 
referred to 
Para3 
[2006] 2 SCR 811 
referred to 
Para4 
G 
(2001) 4 Suppl. SCR 303 
referred to 
Para4 
(2010) 15 sec 349 
relied on 
Para .15 
(2014] 3 SCR 298 , 
relied on 
Para 16 
H 
646 
SUPREME COURT REPORTS 
[2017] 12 S.C.R. 
A 
CIVIL APPELLATE JURISDICTION: Civil Appeal No. 4335 
B 
of2012. 
· From the Judgment and Order dated 09.12.2009 of the High Court 
of Karnataka at Bangalore in ITA No. 486 of 2004. 
WITH 
Civil Appeal Nos. 4357, 4358, 4359, 4356, 4346, 4349, 4355, 
4353,4339, 4343, 4348, 4345, 43.50, 4351, 4347, 4336, 4340, 4338, 
4337, 4354, 4352, 4344, 4342, 4341, 4361, 4362, 4360, 4365, 4363, 
4366, 4364 of2012 
c 
Civil Appeal No. 5478 of2013. 
D· 
E 
F 
Preetesh Kapur, Mohit Chaudhary, AshokA. Kulkarni, Ms. Puja 
Shanna, Kuna! Sachdeva Balwinder Singh Suri, Ms. Garima Sharma, 
Rankit B. Raut, Mrs. Bina Gupta, Ms. Puja Sharma, Mrs. Anil Ka

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