TaxTMI 
TaxTMI 
2015 (1) TMI 790
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....he matter and decide the appeal on merits after hearing the party before us. 3. The assessment year (A.Y.) under reference is 2005-06. As indicated earlier, the only issue arising in this appeal is the validity or otherwise in law of the direction by the first appellate authority to the assessing authority to allow the assessee interest on the self assessment tax component of the principal refund amount of Rs. 174.83 lacs, as determined upon assessment u/s. 143(3) of the Act for the relevant year vide order dated 29.12.2008. The primary facts are not in dispute, with the relevant grounds as agitated by the Revenue being reproduced below so as to project the issue arising for adjudication: '1. The Learned CIT(A) has erred on facts and in law in holding that the assessee is eligible for interest on refund as per clause (b) of Sub-section (1) of section 244A of the Income Tax Act, 1961 without properly appreciating the factual and legal matrix of the case as clearly brought out by the Assessing Officer. 2. The Learned CIT(A) has erred on facts and in law in holding that the assessee is entitled for interest u/s 244A(1)(b) of the Income Tax Act, 1961 on refund out of excess Self Ass....
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....d issued under section 156 is paid in excess of such demand. (2) ......... (3) .......... (4) .......... 3.2 There can be no doubt that the refund of the self-assessment tax, being neither advance tax nor a tax credit for which is allowed u/s. 199, falls under clause (b) of subsection (1) of section 244A. Both the commencement and the terminus dates comprising the period for which the refund is to be granted, stand specified. While the termini date in all cases is the date of grant of the refund, the commencement date, fixed u/s. 244A(1)(a) for prepaid taxes at April 1 of the assessment year, is the date/s of payment of tax (or penalty), which stands further defined per Explanation to the provision, for tax paid otherwise than by way of prepaid tax. The only issue, therefore, would be the date from which the interest is to be granted. The ld. Departmental Representative (DR), on being so communicated by the Bench during hearing, would concede thereto, adverting albeit our attention to Explanation to the relevant provision - also referred to in its grounds of appeal by the Revenue - for the purpose. Interest would, he argued, even as explicitly clarified per the provision itself....
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....f interest on account of self-assessment tax would stand to be covered by clause (b) of section 244A(1), while clause (a) of the provision would govern the interest on refund of prepaid tax, and qua which the date of grant of interest would run from the first day of assessment year. The entire tax on the income for the year, and per prepaid taxes itself, having fallen due for payment as at the close of the year, the law, per s. 244A(1)(a), postulates an adjustment of the entire prepaid tax thereagainst, so that the excess becomes refundable to the assessee with effect from the first day of the assessment year. Interest on refund of self-assessment tax falls u/s. 244A(1)(b), to be allowed in terms of the said provision, read with Explanation thereto, defining the term 'date of payment of tax or penalty', using the word 'means', so that it is prima facie restrictive and exhaustive of the meaning to be assigned to the said words. An Explanation, it is well settled, is at times appended to a section to explain the meaning of the words contained therein (S. Sundaram Pillai vs. Pattabhiraman [1985] 1 SCC 591, pp. 611, 613; Deepak Chandra Ruludas vs. Chandan Kumar Sarkar [2003] 7 SCC 66, ....
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....ursuant to an appellate order, the reduced demand vide the appeal effect giving order is of a later date while the excess payment stands made earlier, i.e., on an anterior date. The payment of the amount being refunded is thus always prior to the subsequent determination of and, thus, of it being found in excess. That in fact is the reason or the raison de'tre for the payment of interest in the first place. The amount paid in excess of the demand, though determined subsequent to the payment, being so in the very nature and chronology of events, would thus only be with reference to the date on which the payment is actually made. The date of payment of the excess is not to be confused with the date on which it is so found, i.e., to be in excess; the payment of interest being even otherwise compensatory in character. The Explanation, it may be appreciated, is worded in the manner it is, as it is intended to cover all or every situation inasmuch as the procedure of assessment contemplates raising of demand in every case. We have, it would be apparent, accorded a meaning to the Explanation to s. 244A(1)(b) which harmonizes with the language employed in the section. The different meaning....