2014 (10) TMI 262 - HC - Income Tax

Court rules on interest charges under Sections 234D and 244A(1)(b) in Income Tax Appeal

The Commissioner of Income Tax Versus M/s. Indian Oil Corporation Ltd.

The Court partially allowed the Appeal, ruling in favor of the Revenue on the issue of charging interest under Section 234D. However, the Appeal was ... Chargeability of interest u/s 234D – Held that:- Following the decision in The Commissioner of Income Tax Versus M/s. Indian Oil Corporation Ltd. [2012 (9) TMI 517 - BOMBAY HIGH COURT] - a declaratory amendment in an Explanation 2 to section 234D which specifically provides that it shall also apply to an assessment year commencing before 1/06/2003 - The only qualifying criterion is that proceedings in respect of such assessment is completed after 1/06/2003 - once the Explanation is held to be retrospective in relation to the assessment years commencing before 1/6/2003 it would not be open to restrict the operation of section 234D only with effect from 1/6/2003 - Under the Act what is brought to tax is not the income of the assessee in the assessment year but the income of the assessee in the previous year - The liability to tax arises on account of the Finance Act which fixes the rate at which the tax is to be paid - The law to be applied is as existing on the 1st day of April of the previous year – Decided in favour of revenue. Grant of interest u/s 244A(1)(b) – Held that:- Following the decision in Commissioner of Income Tax v/s Sutlaj Industries Limited [2010 (3) TMI 449 - DELHI HIGH COURT] - the assessee should be, on principle entitled to interest thereon since the self-assessment tax falls within the expression “refund of any amount” - The computation of interest on self-assessment tax has to be in terms of section 244A(1)(b), i.e., from the date of payment of such amount up to the date on which refund is actually granted – Decided against revenue. Issues:1. Interpretation of interest under Section 234D of the Income Tax Act, 1961.2. Granting of interest under Section 244A(1)(b) of the Income Tax Act, 1961.Analysis:1. The judgment dealt with the Appeal arising from an order passed by the Income Tax Appellate Tribunal concerning the Assessment Year 2002-2003. The first issue revolved around whether interest under Section 234D should be charged. The counsel for the Revenue argued that the Tribunal erred in not levying the interest. However, it was noted that a previous judgment by the Court had ruled against the Assessee on a similar matter. Consequently, the Court partially allowed the Appeal, ruling in favor of the Revenue on this issue.2. The second issue involved the grant of interest under Section 244A(1)(b) of the Income Tax Act, 1961. The Court examined the provisions of Section 244A and the Tribunal's order. The Respondent cited a judgment by the Delhi High Court, which was based on a decision by the Madras High Court. The Tribunal had relied on these views to dismiss the Revenue's Appeal. The counsel for the Revenue acknowledged that the issue was settled against them, as the statutory provision was identical at the relevant time. Therefore, the Court dismissed the Appeal on this issue, in line with the legal position established by the previous judgments.Overall, the Court partially allowed the Appeal concerning the charging of interest under Section 234D, favoring the Revenue. However, the Appeal was dismissed regarding the grant of interest under Section 244A(1)(b), as the legal position established by previous judgments was against the Revenue. The judgment provided a detailed analysis of the legal provisions and precedents, leading to a clear decision on each issue raised in the case.