2015 (2) TMI 1129

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....allow interest under Section 244-A of Act, 1961 on refund resulted out of Self Assessment Tax Paid? (ii) Whether on the facts and in the circumstances of the case, the Tribunal was justified in upholding the order or Commissioner of Income Tax (Appeal) in directing to allow interest under Section 244-A of Act, 1961 after considering para 11.4 (b) of CBDT circular No. 549 dated 31-10-1989 which provides payment of interest from date of payment of tax of penalty i.e. regular tax and non payment made under Section 140-A of the Act, 1961?" 3. Sri Shambhoo Chopra, Advocate, appearing for Department submitted that the tax paid under Section 140A will not attract Section 244A at all and, therefore, the interest allowed by CIT (A) is clearly illegal. 4. The submission is thoroughly misconceived and glaring misreading of the provisions. Section 244A (1) (a) and (b) of Act, 1961 reads 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....

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....y tax credit claimed to be set off in accordance with the provisions of section 115JAA or section 115JD, the assessee shall be liable to pay such tax together with interest payable under any provision of this Act for any delay in furnishing the return or any default or delay in payment of advance tax, before furnishing the return and the return shall be accompanied by proof of payment of such tax and interest. Explanation.-Where the amount paid by the assessee under this sub-section falls short of the aggregate of the tax and interest as aforesaid, the amount so paid shall first be adjusted towards the interest payable as aforesaid and the balance, if any,shall be adjusted towards the tax payable. (1A) For the purposes of sub-section (1), interest payable,- (i) under section 234A shall be computed on the amount of the tax on the total income as declared in the return as reduced by the amount of,- (a) advance tax, if any, paid; (b) any tax deducted or collected at source; (c) any relief of tax or deduction of tax claimed under section 90 or section 91 on account of tax paid in a country outside India; (d) any relief of tax claimed under section 90A on account....

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....on to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year." 7. Section 140A though titled as "self assessment" but talks of the tax payable on the basis of any return required to be furnished under Section 115WD or Section 115WH or Section 139 or Section 142 or Section 148 or Section 153A or Section 158 BC. It says that the Assessee shall be liable to pay such tax together with interest payable under any provision of this Act for any delay in furnishing the return. This makes it clear that there is no difference between the tax paid under Section 115WJ which deals with "advance tax in respect to fringe benefits" or the "tax calculated at source" under Section 206C or any tax paid by way of advance tax or any tax treated as paid under Section 199 which deals with "credit for tax deducted", which are provided under Section 244A (1)(a). With respect to the matters governed by Section 244A(1)(a), the proviso deny interest on refund, if the amount of refund is less than ten per cent of tax determined under Section (1) of Section 143 or on regular assessment. However, in res....

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....er Section 156 of Act, 1961. In case of shortfall in payment of tax vis-a-vis the tax finally due on the assessed income, the Assessee is liable to pay interest under Section 234B of Act, 1961. In the same way where amount of tax paid by Assessee is found higher and an amount is found refundable to Assessee, a similar obligation has been fastened upon Revenue. Where the prepaid tax are in excess of assessed tax, Assessee is entitled for refund of excess tax along with the interest. 12. Then comes the question as to from which date interest is payable. On this question also, we find that matter has been examined by Karnataka High Court in Commissioner of Income Tax Vs. Vijaya Bank (supra) and Bombay High Court in Stock Holding Corporation of India Limited (supra). The contention of Revenue that the interest should be paid from the date of notice under Section 156 in terms of Explanation in Section 244A(1)(b) was rejected by observing that Explanation would have effect only where payment of tax has been made pursuant to notice under Section 156 but where payment has been made prior to filing of return of income in accordance with Section 144A, it has been said that the Revenue wou....

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....t/foreign company. Providing for payment of interest in case of refund of amounts paid as tax or deemed tax or advance tax is a method now statutorily adopted by fiscal legislation to ensure that the aforesaid amount of tax which has been duly paid in prescribed time and provisions in that behalf form part of the recovery machinery provided in a taxing Statute. Refund due and payable to the assessee is debt-owed and payable by the Revenue. The Government, there being no express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, cannot shrug off its apparent obligation to reimburse the deductors lawful monies with the accrued interest for the period of undue retention of such monies. The State having received the money without right, and having retained and used it, is bound to make the party good, just as an individual would be under like circumstances. The obligation to refund money received and retained without right implies and carries with it the right to interest. Whenever money has been received by a party which ex aequo et bono ought to be refunded, the right to interest follows, as a matter of course. In the presen....