TaxTMI 
TaxTMI 
2014 (7) TMI 913
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.... aggregate amounting to Rs. 63,87,214/- comprising of the following: (a) Advance Tax : Rs. 55,95,000/- (b) Tax deducted at source : Rs. 1,934/- (c) Self Assessment Tax (paid on 30th July, 1986) : Rs. 7,90,280/- 3. On 31st July, 1986, the Petitioner filed its return of income for Assessment Year 1986-87 declaring its total income at Rs. 1,27,74,430/-. By an order dated 28th March 1989 passed under Section 143(3) of the Act, the Assessing Officer assessed the Petitioner to an income of Rs. 1,60,00,970/-. The tax payable was determined at Rs. 80,70,506/-. The Assessment Order dated 28th March 1989 after giving credit for taxes paid demanded the balance tax along with interest of Rs. 24,90,126/- from the Petitioner. 4. The order of assessment dated 28th March 1989 was subject to challenge in appeal by the Petitioner and by way of a revision by the Revenue. These challenges culminated in two orders both dated 11th August 1997 of the Income Tax Appellate Tribunal (the Tribunal), disposing of the grievances of the Revenue and the Petitioner. 5. Consequent to the orders dated 11th August 1997 of the Tribunal, the Assessing Officer by two orders dated 30th March 1998 gave ....
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.... aforesaid to the date on which the refund is granted. (1A) Where the whole or any part of the refund referred to in subsection (1) is due to the assessee, as a result of any amount having been paid by him after the 31st day of March, 1975, in pursuance of any order of assessment or penalty and such amount or any part thereof having been found in appeal or other proceeding under this Act to be in excess of the amount which such assessee is liable to pay as tax or penalty, as the case may be, under this Act, the Central Government shall pay to such assessee simple interest at the rate specified in subsection (1) on the amount so found to be in excess from the date on which such amount was paid to the date on which the refund is granted : Provided that where the amount so found to be in excess was paid in installments, such interest shall be payable on the amount of each such installment or any part of such installment, which was in excess, from the date on which such installment was paid to the date on which the refund is granted : Provided further that no interest under this subsection shall be payable for a period of one month from the date of the passing of the order in ....
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....1. Thus, uniformity of interpretation would commend following the above decisions. (iii) The Petitioner is entitled to interest on refund of the tax paid on self assessment tax from the date of payment till the date of refund in terms of Section 244(1A) of the Act. This is so as interest is payable on the refund due in pursuance of the order passed in appeal or other proceedings under Section 240 of the Act. As this payment of tax in respect of which interest is sought, is the tax paid after 31st March 1975 in pursuance of the order of assessment; and (iv) In any view of the matter, interest is compensatory in nature. The Petitioner is entitled to be compensated by payment of interest by the Revenue for the period of time the excess amount was retained by the Revenue till the same was refunded. In support, reliance was placed upon the decisions of the Apex Court in the matter of Sandvik Asia Ltd. v/s. CIT & Others 280 ITR 63 and Union of India v/s. TATA Chemicals Ltd., 363 ITR 658. 11. As against the above, Mr. Suresh Kumar, learned Counsel for the Revenue in support of the impugned order dated 28th May 2004 submits as under: (i) Section 244 (1A) of the Act would hav....
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....he Act was passed on 11th August 1997 and the refund was granted on 30th March 1998. Therefore, interest, if any, payable on the amount attributable to Self Assessment Tax would be for the period 1st December 1997 to 30th March 1998. In view of the above, it is submitted that the Petition should be dismissed. 12. We have considered the rival submissions. The scheme of the Act for payment of taxes is that all taxes have to be normally paid during the financial year relevant to the assessment year. These taxes are either in the form of credit attributable to the assessee on the TDS or in the form of Advance Tax as provided in the Act. However, where there has been short payment of tax payable for any reason i.e. incorrect estimate of income and/or large business income during the end of year, the said shortfall in payment of Advance Tax is payable as Self Assessment Tax under Section 140A of the Act. This Self Assessment Tax had to be paid by the assessee before filing its Return of Income under Sections 139 or 148 of the Act and the evidence of such payment has to accompany the Return of Income. Post 1st April 1989, such Self Assessment Tax has to be paid along with the interest ....
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....ot payable as the same is attributable to Self Assessment Tax of Rs. 7,90,280/-.In Revision, the Commissioner of Income Tax by the impugned order dated 28th May 2004 upheld the order of the Assessing Officer dated 19th March 2001. 14. The Petitioner's contention is that the entire issue of payment of interest on refund of Self Assessment Tax stands covered by the decision of the Apex Court in Modi Industries Ltd. (supra). In the facts of Modi Industries (supra), the Petitioner sought refund of interest paid on the amount attributable to Advance Tax paid for the period from the date of the assessment order passed in its case. This demand for interest was under Section 244 (1A) of the Act. The Court held that the amount of Advance Tax on the passing of the Assessment order looses its character as Advance Tax and becomes Income Tax paid. It was also observed that any amount still standing to the credit of the assessee is to be refunded along with interest from the 1st day of April next following the Financial Year in which it is payable upto the date of Assessment order under Section 214 of the Act. The Petitioner therein sought interest post the order of assessment on the refu....
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....of this section, the amount of Advance payment of tax and the amount of tax deducted at source must be treated as payment of income tax pursuant to an order of assessment on and from the date when these amounts were set off against the tax demand raised in the assessment order, in other words the date of the assessment order. (iii) .... .... ...." The above rationale in respect of interest on Advance Tax would in our view equally apply to Self Assessment Tax. This is for the reason that like payment of Advance Tax, the Self Assessment Tax under Section 140A of the Act would be treated as pursuant to the order of Assessment i.e. when the amounts already paid were set off against the demand raised in Assessment order. We are fortified in our above understanding by the decisions of Punjab & Haryana High Court in Hansa Agencies (I) Ltd., (supra), Madras High Court in SIV Industries Ltd. (supra), Delhi High Court in Jyotsna Holdings (P) Ltd., (supra), Gujarat High Court in Gujarat State Warehousing Corpn.,(supra) and Karnataka High Court in NGEF Limited (supra). 15. Mr. Suresh Kumar, learned Counsel appearing for the Revenue urged that the decision of the Apex Court in Modi Ind....
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....d negate the interpretation put by the Apex Court in 'Modi Industries Ltd. (supra)' to the words 'in pursuance of the order of assessment'. If the Petitioner's contention is accepted then the payment has been made to the Revenue by the Petitioner not in pursuance of any order of assessment but prior thereto and therefore, Section 244(1A) of the Act will not be applicable. One more reason why the payment of interest on the amount of the refund attributable to the Self Assessment Tax is not payable from the date it was tendered is for the reason that the Self Assessment Tax under Section 140A of the Act is paid by the Assessee because there is shortfall in payment of Advance Tax. Section 140A of the Act does not provide for payment of interest from date of payment till the date of passing of the Assessment order. Contrast this with Advance Tax where the Act has specifically provided under Section 214 that the interest is payable on the Advance Tax paid from the 1st April of the Assessment year upto the date of the assessment order. No such provision has been made in respect of Self Assessment Tax paid by the assessee. Therefore, the statute itself does not provide....
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.... Section 244(1A) of the Act. 19. It was contended by the Revenue that in any event in terms of the second proviso to Section 244 (1A) of the Act, no interest is payable till after the expiry of the month from the date of passing the order in appeal. This interpretation by the Revenue does violence to the language of the second proviso which only states that no interest will be payable for a period of one month from the date of passing of the order in appeal. It does not state that no interest will be payable till after one month of the order in appeal. The second proviso to Section 244 (1A) of the Act only excludes a period of one month for payment of interest. In fact, on almost identical facts, the Pubjab & Haryana High Court in Hansa Agencies (P) Ltd. (supra) while following the decision of the Supreme Court in Modi Industries Ltd. (supra) has held that the assessee is entitled to interest under Section 244 (1A) of the Act on the Self Assessment Tax paid by him from the date when the original assessment order was made with the rider in terms of second proviso to Section 244 A of the Act, a period of one month from the date of passing the order in appeal will not carry any int....
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.... the Act No.4 of 1998 (w.e.f. 01.04.1989) has inserted Section 244A to the Act which provides for interest on refunds under various contingencies. We clarify that it is only that interest provided for under the statute which may be claimed by an assessee from the Revenue and no other interest on such statutory interest." (emphasis supplied) On the basis of the above, it is submitted by Mr. Suresh Kumar, learned Counsel appearing for the Revenue that the Supreme court has observed that in Sandvik Asia (supra), interest has been paid as compensation. This was done by the Supreme Court in exercise of its powers under Article 142 of the Constitution i.e. to do complete justice between parties. In fact, in Gujarat Fluoro Chemicals (supra), the Larger Bench of the Apex Court has observed that in Sandvik Asia (supra), no interest on interest was paid but compensation for delayed payment of interest was paid. This according to Mr. Suresh Kumar could only be done by the Apex Court in exercise of its powers under Article 142 of the Constitution. 22. In response, Ms. Vissanji, learned Counsel appearing for the Petitioner in support, stated that interest on interest could be granted a....
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....isdiction to direct the statutory authorities to grant interest as permissible under the statute and accordingly enforce the statutory rights of the petitioner but not what is outside the statute. The petitioner's claim for compensation is undisputedly outside the statutory provisions. 24. Our attention was next drawn to CIT v/s. H.E.G. Ltd. 324 ITR 331 wherein the Apex Court was dealing with Section 244A of the Act which is currently in force and was not in the statute book during the period with which we are concerned. In that case, the assessee had claimed interest of Rs. 45.73 lakhs for 57 months i.e. between April 1, 1993 to 31st December 1997. The Madhya Pradesh High Court granted benefit of interest. Revenue went up in Appeal on the ground that the assessee has been allowed interest on interest. This the Apex Court said was not factually correct. The Supreme Court held that on the nonpayment of the amount of refund of Rs. 45.73 lakhs interest becomes payable on the aforesaid principal amount of Rs. 45.73 lakhs till such time as it is not paid. This decision also does not assist the Petitioner as interest was paid only on the delay in refunding the principal amount of ....
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....ent of interest on interest retained by the Revenue for over sixteen years. In support, reliance was placed upon the following three decisions: (a) ABL International Ltd. & Another v/s. Export Credit Guarantee Corporation Ltd. 2004 (3) SCC 553; (b) Shree Baidyanath Ayurved Bhavan (P) Ltd. v/s. State of Bihar 1996 (6) SCC 553; and (c) Shri Justice S. K. Ray v/s. State of Orissa & Others 2003 (4) SCC 21. We are afraid that none of the above decisions seem to support the petitioner's submissions and is of no avail to the petitioner. Even if the principle of moulding of relief is to be applied by the High Court in exercise of its jurisdiction under Article 226 of the Constitution, the same can be done only within the statutory framework and not otherwise. Therefore, the petitioner's submission that the reliefs be moulded to award compensation cannot be countenanced. 28. It is true that the Revenue by not paying over the interest due to the Petitioner, may have deprived the Petitioner of its money for sixteen long years. However, on the other hand, it is the Revenue's contention that on interpretation of Section 244 (1A) of the Act, they were of the view that ....