TaxTMI 
TaxTMI 
2011 (9) TMI 244
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.... the stand of the assessee was that under Section 244A of the Act, the asssessee was entitled to receive interest for the whole of the month of payment of tax as well as the month when the same was adjusted regardless of any period or periods remaining in such months. According to the calculation of the assessee, such unpaid interest came to Rs.21,40,420/-. 4.2 Since Assessing Officer did not accept assessee's claim, the assessee carried the matter in appeal before the CIT (Appeals). Before the CIT (Appeals), the assessee pointed out that the assessee company had challenged the assessment order by preferring appeal before the CIT (Appeals) which was decided in favour of the assessee. By virtue of such decision the assessee was entitled to refund of taxes paid. 5.0 Though full details are not emerging from the record, essentially both the sides addressed us on one central controversy between the parties whether assessee would be entitled to interest for both the months i.e. the month when the tax was actually deposited and the month when such tax which was required to be refunded by virtue of appellate order was adjusted towards tax liability of other years, rega....
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....lated for every month or part of month comprised in a period, any fraction of a month shall be deemed to be a full month and the interest shall be calculated accordingly. In view of the above provisions, which are very clear, the assessee is entitled for the interest on refund, in which month the payment/adjustment is made. Taking example from chart of the assessee, in assessment year 1993-94 a refund was adjusted as on 31-03-1997, the Assessing Officer should have allowed interest for the month of March, 1997 in full in view of the Rule 119A of the I.T. Rules, 1962. Accordingly, the assessee is entitled for interest on refund for the month in which payment is made. Accordingly, we allow the claim of the assessee and this appeal of the assessee is allowed." 8.0 It is this judgment which the Revenue has challenged in the present Tax Appeal. 9.0 Considering the controversy involved, we frame following substantial questions of law for consideration. "Whether in facts and in circumstances of the case the Appellate Tribunal was right in law in reversing the orders passed by the CIT (Appeals) and thereby holding that the assessee was entitled to interest und....
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....Section 3(35) of the General Clauses Act cannot be adopted for the purpose of said provisions contained in said Act. 16.0 Counsel, however, further pointed out that in later decisions of other High Courts this view has not been followed. Reference was made to the decision of Division Bench of Madras High Court in case of Commissioner of Income Tax, Madras (Central) v. Kadri Mills (Coimbatore) Ltd. reported in [1977] 106 ITR 846 wherein the Madras High Court was pleased to take a different view than what was taken by Allahabad High Court in case of Laxmi Rattan Cotton Mills Co. Ltd. (Supra). Madras High Court did notice the decision of Allahabad High Court, however, was persuaded to take a different view. Said decision was also rendered in background of provisions contained in section 271(1)(a) of the Act. 17.0 Our attention was also drawn to decision of the Calcutta High Court in case of Commissioner of Incom-tax, West Bengal-II v. Brijlal Lohia and Mahabir Prosad Khemka reported in [1980] 124 ITR 485 wherein once again in context of section 271(1)(a) of the Act, the High Court relied upon the definition of term 'month' as provided in section 3(35) of the Genera....
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....taking note of statutory provisions as applicable during the said period. 22.0 Relevant provisions of Section 244A(1)(a) of the Act at the relevant point of time read as under: "244A. (1) [Where refund of any amount becomes due to the assessee under this Act], he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated in the following manner, namely :- (a) where the refund is out of any tax [paid under section 115WJ or] [collected at source under section 206C or] paid by way of advance tax or treated as paid under section 199, during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of [one-half per cent] for every month or part of a month comprised in the period from the 1st day of April of the assessment year to the date on which the refund is granted. Provided that no interest shall be payable if the amount of refund is less than ten per cent of the tax as determined [under [sub-section (1) of section 115WE or] sub-section (1) of section 143 or] on regular assessment;" 23.0 Section 245 of the Act pe....
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....t of the tax or penalty to the date on which the refund is granted. In the other words, interest at the prescribed rate is to be paid to the assessee on the refund of tax paid for every month or part of a month comprised in the period from the date of payment of the tax to the date on which refund is granted. 27.0 Rule 119(A) of the said Rules further clarifies that in calculating the interest payable by the Government to the assessee under any provision of the act where interest is to be calculated for every month or part of a month comprised in a period, every fraction of month shall be deemed to be full month and the interest so calculated. 28.0 By reading of Section (1) of Section 244A of the Act with Rule 119(A) of the said Rules would bring about situation when an assesseee who has paid the tax and such tax is to be refunded, the assessee is to be paid interest at the prescribed rate for every month or part of a month comprising the period from the date of payment of the tax to the date on which the refund is granted. If such period is a fraction of a month, the same shall be deemed to be a full month and the interest shall be calculated for the entire mon....
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....al Officer's Law Lexicon' by Justice C.K.Thakker term calender month is explained as under: " A period of time consisting of 30 days in April, June, September and November; of 31 days in the remainder of the months, except February, which consists of 28 days, except in leap-year, when the intercalary day is added, making 29 days. 33.0 In Judicial Dictionary by Aiyar's, the term 'calender month' is described as a legal and technical term in computation the time by calender months, the time must be reckoned by looking at calender and by not computing test. 34.0 Black' s Law Dictionary describes the term 'month' as one of the twelve periods of time in which the calender is divided, any time period approximating 30 days. 35.0 In Law. Lexicon by T.P.Mukherjee [5th Edition], it is stated "the word 'month' would in its ordinary acceptance, mean a 'calender month' and not a 'lunar month'. 36.0 What is to be ascertained in the present case is as to which definition of term 'month' shall have to be adopted for Section 244A(1) of the Act. In other words the question is, should the definition of term "month" be adopted from General Clauses Act,....
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....p; 39.0 As already noted earlier, various decisions cited before us adopting the definition of term month contained in section 3(35) of the Act were rendered in the background of penal provisions contained in Section 271(1)(a) of the Act. The said provision prescribes penalty for non-filing or late filing of returns and the penalty is to be calculated on every month of such default. Under this background various Courts were of the opinion that the term 'month' must be understood as defined under Section 3(35) of the General Clauses Act. The Courts were of the opinion that there is nothing repugnant in Section 271(1)(a) of the Act so as to reject the applicability thereof. In the present case, however, we find that there are inbuilt indications why the term month must not be understood as British calender month. Any other interpretation as already observed would lead to anomalous situation. 40.0 Before closing we may also notice the decision of the Bombay High Court in the case of Income-tax Commissioner-LTU vs. ASIAN PAINTS Ltd. reported in [2011] 12 taxmann.com 484 (Bom.) which was arising in the background of controversy whether the tax calculated by an authorized ag....