TaxTMI 
TaxTMI 
2014 (8) TMI 971
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....essment as prepaid tax for the purpose ? (2) Whether, on the facts and in the circumstances of the case, the hon'ble Income-tax Appellate Tribunal is correct in law in holding that the Explanation below clause (b) of sub-section (1) of section 244A is merely to stipulate the period for which the interest is to be granted ? (3) Whether, on the facts and in the circumstances of the case, for the purpose of the Explanation below clause (b) of sub-section (1) of section 244A, the date of payment of tax can be understood to mean date of payment of self-assessment tax ? (4) Whether, on the facts and in the circumstances of the case, the inference drawn by the hon'ble Income-tax Appellate Tribunal from the Explanation below clause (b) of sub-section (1) of section 244A is correct ?" 2. A few facts relevant for the decision of the controversy involved as narrated in the appeal may be noticed. The assessee-company was allowed interest under section 244A of the Act at Rs. 7,02,044 while giving effe....
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....supra), contended that the assessee was entitled for interest under section 244A(1)(b) of the Act on tax deducted at source, advance tax as well as self-assessment tax. The Tribunal had rightly held that the assessee was eligible for interest under section 244A(1)(b) of the Act on the refund. 6. The primary question that arises for adjudication in the present appeal is whether the assessee is entitled to interest under section 244A(1)(b) of the Act on the amount of refund which was deposited by it by way of self- assessment tax under section 140A of the Act. 7. Chapter XIX of the Act deals with "refunds' and contains various provisions relating to refund of the amount paid by an assessee and payment of interest thereon. Section 244A(1) and (2), which finds place in this Chapter and which governs the award of interest on refund, at the relevant time, reads as under : "244A. Interest on refunds.-(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, simpl....
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....s to be excluded from the period for which the interest is payable. In other words, if the assessee is responsible for the delay in the finalisation of the proceedings on the basis of which he becomes entitled to refund, then the period of delay is to be excluded from the total period for which interest becomes payable. However, there is nothing in the plain language of sub-section (1) and (2) of section 244A from which it can be inferred that the asses see can be deprived of the interest in respect of the period during which his application for refund remains pending before the competent authority." 9. The issue whether refund of self-assessment tax on account of excess amount of tax paid by the assessee would entitle an assessee to claim interest thereon at the time of refund was considered by the Delhi High Court in Sutlej Industries Ltd.'s case (supra). Following the judgment of the Madras High Court in Cholamandalam Investment and Finance Co. Ltd.'s case (supra), it was observed as under (page 337 of 325 ITR) : "In the case of CIT v. Cholamandalam Investment and Finance Co. Ltd. [2007] 294 ITR 438....
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....77 of 2008 filed by the Revenue against the decision in Chola mandalam Investment and Finance Co. Ltd. [2007] 294 ITR 438 (Mad), vide order dated December 3, 2009. The Supreme Court has also, recently, in the case of CIT v. H.E.G. Ltd. reported in [2010] 324 ITR 331 (SC), vide its order dated December 3, 2009, held that the expression 'refund of any amount' would include interest under section 244A (on refund of tax deducted at source) to which the assessee was lawfully entitled but had been wrongly withheld by the Department." 10. It was further held that the amount of tax due on the returned income is to be paid by way of tax deducted at source (section 199), advance tax (section 209) or by way of self-assessment tax (section 140A). In the event of refund, the assessee is entitled to payment of interest on the excess amount of tax paid. It was noticed as under (page 338 of 325 ITR) : "12. The tax due on the returned income has to be paid by way of tax deducted at source (section 199), advance tax (section 209) or by way of self-assessment tax (section 140A). In addition, where the assessm....
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....riginal character and becomes tax paid in pursuance of the liability. Once that is so, it cannot be held that the assessee is only entitled to interest under section 244A(1)(b) on tax deducted at source or advance tax and not on self-assessment tax paid under section 140A of the Act which was found to be paid in excess. The assessee shall be entitled to interest under section 244A(1)(b) of the Act on the refund of self-assessment tax as well. 12. The Tribunal, while adjudicating the issue, had noticed as under : "6. We have considered the rival submissions carefully on this issue. Section 244A deals with the grant of interest on refund of any amount of tax which becomes due to the assessee in terms of the pro visions of Act. Clauses (a) and (b) of sub-section (1) of section 244A deal with two different situations. Clause (a) deals with refund of taxes which have been 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 of the Act. Clause (b) deals with refund of taxes in any other case. Clearly, in so....
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....sp; 7. Moreover, the rationale of the provisions of section 244A has been a subject matter of review by the hon'ble jurisdictional High Court of Punjab and Haryana in the case of National Horticulture Board (supra). It has been opined that the rationale underlying the provision was to compensate the assessee for deprivation of his property right which was by virtue of an unlawful collection of tax. In fact, tested on such anvil, interest under section 244A on refund of tax paid as self-assessment tax cannot be considered as outside the purview of section 244A of the Act. The significance of the Explanation below clause (b) is merely to stipulate the period for which the interest has to be granted. For the purpose of clause (b), the interest is payable for the period starting from the date of the payment of tax ending up to the date on which such refund is granted. Therefore, in principle, we uphold the stand of the assessee that it was eligible for interest under section 244A(1)(b) on the refund accruing to it as a result of the order of the giving appeal effect on December 12, 2001. However, while computin....