2019 (4) TMI 1650 - AT - Income Tax

ITAT Mumbai Upholds Assessee's Interest on Refund of Excess Tax

The ITAT Mumbai dismissed the Revenue's appeal and upheld the CIT(A)'s order, granting the assessee interest on the refund of excess self-assessment tax ... Interest on refund so quantified u/s 244A - Assessee entitled for interest u/s 244A on the refund payable to the assessee arising out of self assessment tax paid in excess than the tax due by the assessee - HELD THAT:- Thus, as we have seen in preceding para’s of this order that the issue is highly contentious . Presently, it is not brought to our notice by both the rival parties any judgment of Hon’ble Supreme Court directly on this issue. We are bound by decision of Hon’ble Bombay High Court being jurisdictional High Court and Respectfully following the decision of Hon’ble Bombay High Court in the case of Stock Holding Corporation Limited [2014 (11) TMI 899 - BOMBAY HIGH COURT] we hold that the assessee will be entitled for interest on refund arising out of excess self assessment tax in accordance with and as provided vide clause(b) to sub-section(1) to Section 244A of the 1961 Act as it was then prevailing for the impugned assessment year. We uphold/sustain decision of learned CIT(A). Revenue fails in this appeal. Issues Involved:1. Entitlement to interest under Section 244A of the Income-tax Act, 1961 on the refund of excess self-assessment tax paid.2. Calculation of interest on the refund amount under Section 244A.Detailed Analysis:Issue 1: Entitlement to Interest under Section 244A on Refund of Excess Self-Assessment Tax PaidThe primary issue in this case is whether the assessee is entitled to interest under Section 244A of the Income-tax Act, 1961 on the refund of excess self-assessment tax paid. The assessee claimed interest on a refund of Rs. 2,80,69,376/- arising from excess self-assessment tax paid, which was denied by the Assessing Officer (AO). The Commissioner of Income Tax (Appeals) [CIT(A)] allowed the interest, and the Revenue appealed.The Income Tax Appellate Tribunal (ITAT) Mumbai examined the contentious nature of this issue, noting that various courts have interpreted it differently. The Tribunal referenced several cases, including:- Engineers India Limited v. CIT: The Hon’ble Supreme Court referred the matter to the Delhi High Court to be decided by a larger Bench due to conflicting decisions.- CIT v. Sutlej Industries Limited: The Delhi High Court ruled in favor of the taxpayer, allowing interest on the refund of self-assessment tax.- CIT v. Rajaratna Mills Limited: The Supreme Court admitted a Special Leave Petition (SLP) on the issue.- Stock Holding Corporation of India Limited v. CIT: The Bombay High Court ruled in favor of the taxpayer, holding that interest on refund is payable under Section 244A(1)(b) from the date of payment of self-assessment tax till the date of refund.The Tribunal observed that the jurisdictional High Court (Bombay High Court) had decided in favor of the taxpayer in the Stock Holding Corporation case. Therefore, the Tribunal followed this decision and upheld the CIT(A)'s order granting interest on the refund of excess self-assessment tax.Issue 2: Calculation of Interest on Refund Amount under Section 244AThe Tribunal analyzed the provisions of Section 244A as they stood for the assessment year 2010-11. Section 244A(1)(b) provides for interest on refunds in cases not covered by Section 244A(1)(a). The Tribunal noted that the self-assessment tax paid by the assessee fell under the residual clause (b), which mandates interest from the date of payment of the tax to the date of refund.The Tribunal cited the following key points:- Section 244A(1)(b): Interest is calculated at the rate of one-half percent for every month or part of a month from the date of payment of the tax to the date of refund.- Explanation to Section 244A(1)(b): Defines 'date of payment of tax' as the date on which the amount specified in the notice of demand is paid in excess of such demand.The Tribunal noted that the Bombay High Court in Stock Holding Corporation had held that interest is payable from the date of payment of self-assessment tax till the date of refund. This view was supported by other High Courts, including the Karnataka High Court in CIT v. Vijaya Bank and the Madras High Court in Rajaratna Mills Limited.Given these precedents, the Tribunal concluded that the assessee was entitled to interest on the refund of excess self-assessment tax under Section 244A(1)(b) from the date of payment to the date of refund.Conclusion:The ITAT Mumbai dismissed the Revenue's appeal and upheld the CIT(A)'s order, granting the assessee interest on the refund of excess self-assessment tax paid under Section 244A(1)(b) of the Income-tax Act, 1961. The Tribunal followed the jurisdictional High Court's decision in Stock Holding Corporation, which mandates interest from the date of payment of self-assessment tax to the date of refund.