TaxTMI 
TaxTMI 
2019 (4) TMI 1650
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....read as under:- "1) "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in directing the Assessing Officer to grant interest u/s.244A , without appreciating the fact that the same is beyond the preview of the provisions enshrined in the Income-tax Act." 2) "On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that the assessee is eligible to receive interest u/s.244A relying on the submissions made by the appellant without calculating the interest, if any , payable as per the provisions of the Income-tax Act" The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored. The appellant craves leave to amend or alter any ground and/or add new grounds which may be necessary." 3. A question which has arisen in this appeal for our adjudication is as to whether the assessee based on the facts and circumstances of the case is entitled for interest u/s 244A of the Income-tax Act,1961 ( hereinafter called "the Act") on the refund payable to the assessee arising out of self assessment tax paid in excess than the tax due by....
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....ly Hon'ble Delhi High Court decided this issue in favour of Revenue in the case of CIT v. Engineers India Limited(supra) after duly considering the decision of Hon'ble Bombay High Court in the case of Stock Holding Corporation Limited(supra) and took a view in favour of Revenue by holding that Hon'ble Bombay High Court did not notice the clarification given by Hon'ble Apex Court in the case of CIT v. Gujarat Flouro Chemicals 2013 (296) ELT 433(SC): (2013) 358 ITR 291(SC). 3.2 The brief facts of the case are that the assessee has filed its return of income with Revenue on 24.09.2010 , declaring total income of Rs. 102,50,48,112/- . The return of income was processed by Revenue on 05.03.2012 u/s. 143(1) of the Act determining refund due to assessee of Rs. 1,09,84,740/-. The case was selected for framing scrutiny assessment u/s 143(3) read with Section 143(2) of the 1961 Act. The assessee revised its return of income declaring total income of Rs. 102,56,82,471/-. The AO framed assessment u/s 143(3) vide order dated 30.03.2013 assessing total income at Rs. 109,31,57,263/- under normal provisions of the 1961 Act while book profit was computed u/s 115JB at Rs. 130,76,03,940/- . The in....
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....y, interest is payable to the assessee on amount refunded. Payment of such refund is governed by section 244A of the Act. For this purpose, the cases where refund becomes due have been divided into two categories: Category 1: These are cases where the refund is out of any tax paid u/s 115WJ or collected at source u/s 206C or paid by way of advance tax or treated as being u/s 199, during the financial year. They are covered by clause (a) of sec. 244A. Category 2: These are cases which do not fall under category 1. They are covered by (b) which is the residual clause. 5.2 In cases under category 1, interest u/s 244A is payable if and only if it is not covered by the proviso to clause (a) of sec. 244A. In category 2 cases, however, interest is payable in all cases. The present case is not covered by clause (a) because aggregate of payments made through the modes of payments mentioned in that clause was less than the tax liabilities determined. Therefore, it is covered by clause (b) which is the residual clause. 5.4 In cases covered by clause (b) interest is payable for each month or part of the month comprised in the period or periods from ....
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....while framing scrutiny assessment and learned CIT(A) was pleased to grant relief to the assessee vide appellate order dated 28.02.2015 in Appeal No. CIT(A)-50/IT-631/2013-14 . The AO was pleased to pass an order dated 29.06.2015 giving effect to the appellate order dated 28.02.2015 passed by learned CIT(A), wherein the income determined by the AO was Rs. 1,01,85,84,082/- after taking into effect relief granted by learned CIT(A). The assessee was granted further refund of Rs. 1,70,84,640/- vide order dated 29.06.2015. Thus, the total refund which stood granted to the assessee was Rs. 2,80,69,376/- ( Rs. 1,09,84,740/- vide order u/s 143(1) and Rs. 1,70,84,640/- vide order dated 29.06.2015) . No interest u/s. 244A of the Act was allowed to the assessee by the AO while granting aforesaid refunds aggregating to Rs. 2,80,69,376/- to the assessee. The details of the total taxes payable by the assessee, the taxes paid by the assessee and refund due to the assessee are as under: TDS (A) 9,29,646 Advance tax (B) 28,85,00,000 Self Assessment Tax (C) 6,38,21,500 Taxes Paid (Gross) (D) = (A)+(B)+(C) 35,32,51,146 Gross demand as per order dated 29. 06. 2015....
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....e, "date of payment of tax or penalty" means the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand. (2) If the proceedings resulting in the refund are delayed for reasons attributable to the assessee, whether wholly or in part, the period of the delay so attributable to him shall be excluded from the period for which interest is payable, and where any question arises as to the period to be excluded, it shall be decided by the Chief Commissioner or Commissioner whose decision thereon shall be final. (3) Where, as a result of an order under [sub-section (3) of section 115WE or section 115WF or section 115WG or] [sub-section (3) of section 143 or section 144 or] section 147 or section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount on which interest was payable under sub-section (1) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and in a case where the interest is re....
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....under sub-section (1) of section 143 or on regular assessment;] (b) in any other case, 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 or periods from the date or, as the case may be, dates of payment of the tax or penalty to the date on which the refund is granted. Explanation.-For the purposes of this clause, "date of payment of tax or penalty" means the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand. [ (1A) In a case where a refund arises as a result of giving effect to an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264, wholly or partly, otherwise than by making a fresh assessment or reassessment, the assessee shall be entitled to receive, in addition to the interest payable under sub-section (1), an additional interest on such amount of refund calculated at the rate of three per cent per annum, for the period beginning from the date following the date of expiry of the time allowed under sub-section (5) of section 153 to the da....
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....due shall be governed by clause (b) to sub-section (1) to Section 244A of the 1961 Act and shall be payable from the date of payment of self assessment tax till the date of grant of refund. The Hon'ble Delhi High Court relied upon decision of Hon'ble Madras High Court in the case of CIT v. Cholamandalam Investment & Finance Company Limited reported in (2007) 294 ITR 438(Mad.) , judgment dated 06.06.2007 to decide the issue in favour of tax-payer, wherein Hon'ble Delhi High Court held as under: "This appeal was admitted on the following substantial question of law: "Whether section 244(1)(b ) read with Explanation thereto excludes payment of interest on refund of self-Assessment Tax ?" 2. Since it is a pure question of law, the learned counsel for the parties advanced arguments finally. They wanted sometime to file the written synopsis of their submissions as well, for which one week time was granted. 3. For answering the aforesaid question following brief facts are adumbrated : (a)The respondent-assessee had for the assessment year 1998-99, in addition to TDS and advance tax, also paid self-assessment tax under section 140A of the Income....
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.... that in respect of any amount refunded on a provisional assessment under section 141A, no interest shall be paid for any period after the date of such provisional assessment. (1A) Where as a result of an order under section 147 or section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount on which interest was payable under sub-section (1) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and in a case where the interest is reduced, the Assessing Officer shall serve on the assessee, a notice of demand in the prescribed form specifying the amount of the excess interest payable and requiring him to pay such amount; and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly. (2) On any portion of such amount which is refunded under this Chapter, interest shall be payable only up to the date on which the refund was made. ** ....
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....il of the relevant assessment year to the date of the first assessment order. The amount on which the interest is to be paid is the amount of advance tax paid in excess of the tax payable by the assessee as calculated in the regular assessment (the first assessment order). The amount on which interest was payable did not vary due to the reduction or enhancement of tax as a result of any subsequent proceeding. But with effect from April 1, 1985 while the period for which interest was payable remained constant, the amount on which the interest was payable, varied with the variation in the quantum of refund as a result of any subsequent orders. (ii) If any tax is paid pursuant to an assessment order after March 31, 1975 (which will include tax deducted at source and advance tax to the extent the same has been retained and treated by the Income-tax Officer as payment of tax in discharge of the assessee's tax liability in the assessment order), becomes refundable wholly or in part as a result of any appellate or other order passed, the Central Government will have to pay the assessee interest on the refundable amount under section 244(1A). For the purpose of this section, t....
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....n 244A in lieu of sections 214, 243 and 244.-Under the provisions of section 214, interest was payable to the assessee on any excess advance tax paid by him in a financial year from the 1st day of April next following the said financial year to the date of regular assessment. In case the refund was not granted within three months from the end of the month in which the regular assessment was completed, section 243 provided for further payment of interest. Under section 244, interest was payable to the assessee for delay in payment of refund as a result of an order passed in appeal, etc., from the date following after the expiry of three months from the end of the month in which such order was passed to the date on which refund was granted. The rate of interest under all the three sections was 15 per cent per annum. 11.3 These provisions, apart from being complicated, left certain gaps for which interest was not paid by the Department to the assessee for money remaining with the Government. To remove this inequity, as also to simplify the provisions in this regard, the Amending Act, 1987, has inserted a new section 244A in the Income-tax Act, applicable from the assessment y....
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....n regular assessment with regard to the refund of advance tax paid under section 115WJ in respect of fringe benefits; (ii) tax collected at source under section 206C; and (iii) advance tax or any tax treated as paid under section 199. But, with respect to other tax as per section 244A(1)(b), the interest shall be payable even if the amount is less than 10 per cent of the tax as determined under section 143(1) or on the regular assessment, because there is no proviso to section 244A(1)(b) as provided under section 244A(1)(a)." The Madras High Court further observed:- "It is also trite law that wherever the assessee is entitled to refund, there is a statutory liability on the Revenue to pay the interest on such refund on general principles to pay the interest on sums wrongfully retained (reference Sandvik Asia Ltd.)." 10. The Supreme Court dismissed the Special Leave Petition (SLP) No. 16877/2008 filed by the Revenue against the decision in Cholamandalam Investment & Finance Co. Ltd.'s case (supra ), vide order dated 3-12-2009. The Supreme Court has also, recently, in the case of CIT v. H.E.G. Ltd. [Civil Appeal No. 8176/2009, Civil Appeal No. 8177 and ....
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....he Act. Conversely, where the revenue makes a high-pitched assessment which is subsequently reduced/modified in appeal, any payment of taxes made, which are subsequently refunded as a consequence of relief obtained in appeals, etc., are monies legitimately belonging to the taxpayers and wrongly withheld by the Government. This is based on the principle that if the revenue had, in the first instance, made correct assessment of the tax liability of the assessee, the assessee would not have been deprived by the use of money. In such a situation, where pre-paid taxes are in excess of the assessed tax, the assessee is entitled to refund of such tax along with interest thereon. 13. Where an assessee out of abundant caution pays self-assessment whilst staking a claim in the return, which claim is accepted, resulting in refund of self-assessment tax, the assessee should be equally entitled to interest thereon. 14. Section 244A was inserted in the statute as a measure of rationalization to ensure that the assessee is duly compensated by the Government, by way of payment of interest for monies legitimately belonging to the assessee and wrongfully retained by the Government,....
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.... 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; (b) in any other case, 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 or periods from the date or, as the case may be, dates of payment of the tax or penalty to the date on which the refund is granted. Explanation.-For the purposes of this clause, 'date of payment of tax or penalty' means the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand." The aforesaid provision makes it clear, where any amount becomes due to the assessee under the Act by way of refund, the assessee ....
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....t is not to be calculated from the First of April of the assessment year as provided in clause (a). It is in this background, we have to see if any tax is paid which does not fall under these categories, from what date the interest is payable on such excess payment of tax. 10. The learned counsel for the revenue submitted that if the case does not fall under any of these clauses, then there is no liability to pay tax at all. If at all tax is to be paid, it is from the date of the determination of the tax liability, i.e., the passing of the assessment order, on which date, the tax paid is adjusted towards the tax liability. This problem did confront the Department. Therefore, they have issued a Circular No. 549, dated 31-10-1989. After referring to the salient features of the said section in detail at Paragraph 11.3, it is stated as under : "These provisions, apart from being complicated, left certain gaps for which interest was not paid by the Department to the assessee for money remaining with the Government. To remove this inequity, as also to simplify the provisions in this regard, the Amending Act, 1987, has inserted a new section 244A in the Income-tax Act, a....
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....aving regard to the scheme of section 244A, and the circular issued by the Board which shows how the Department has understood the section coupled with the fact that the principle underlying the said section is that, any excess payment of tax paid by the assessee is not only to be refunded but it has to be refunded with interest, if the case of the assessee does not fall under clause (a ) or the Explanation to clause (b), the excess tax paid shall be refunded with interest from the date of payment of such tax. 13. In the instant case, it is not in dispute that the assessee has paid a sum of Rs. 15.5 crores on 29-6-2002, even before the date of filing of the returns. It is that amount which is ordered to be refunded as excess payment. Though the occasion to order for refund arose after the assessment order in which the payment of tax was adjusted towards the tax liability, the case does not fall under clause (a) or Explanation to clause (b). The said excess payment is to be refunded with interest from the date of payment of such tax, that is from 29-6-2002, till the date of refund. This is precisely what the Appellate Commissioner as well as the Tribunal has said. It is in ....
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....diately preceding the assessment year, interest shall be payable for the period starting from the 1st April of the assessment year and on the date of grant of the refund. No interest shall, however, be payable, if the amount of refund is less than 10 per cent of the tax determined on regular assessment; (b) if the refund is out of any tax, other than advance tax or tax deducted at source or penalty, interest shall be payable for the period starting from the date of payment of such tax or penalty and ending on the date of the grant of the refund. (Refer to example III in para 11.8)." (Emphasis supplied) The inferences to be drawn from the Board's circular is clear that if refund is out of any tax other than out of advance-tax or tax deducted at source, interest shall be payable from the date of payment of tax and ending on the date of the grant of refund. It is to be noted that nowhere does the CBDT even remotely suggest that interest is not payable by the Department on self-assessment tax. Moreover, the amount paid under Section 140A of the Act on self assessment is an amount payable as and by way of the tax after noticing that there is likely to be shortfall ....
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....nterest thereof. This the Supreme Court granted while making the following observations with regard to the liability to pay interest : 'A "tax refund" is a refund of taxes when the tax liability is less than the tax paid. As per the old section an assessee was entitled for payment of interest on the amount of taxes refunded pursuant to an order passed under the Act, including the order passed in an appeal. In the present fact scenario, the deductor/assessee had paid taxes pursuant to a special order passed by the assessing officer/Income Tax Officer. In the appeal filed against the said order the assessee has succeeded and a direction is issued by the appellate authority to refund the tax paid. The amount paid by the resident/ deductor was retained by the Government till a direction was issued by the appellate authority to refund the same. When the said amount is refunded it should carry interest in the matter of course. As held by the Courts while awarding interest, it is a kind of compensation of use and retention of the money collected unauthorizedly by the Department. When the collection is illegal, there is corresponding obligation on the revenue to refund such am....
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....se (b) has no application. In such cases, as the opening words of clause (b) specifically referred to "as in any other case", the interest is payable from the date of payment of tax. The sequel of our discussion is the resident/deductor is entitled not only the refund of tax deposited under Section 195(2) of the Act, but has to be refunded with interest from the date of payment of such tax.' (Emphasis supplied). From the aforesaid observations of the Apex Court in Tata Chemicals, it would be clear that the requirement to pay interest arises whenever an amount is refunded to an assessee as it is a kind of compensation for use and retention of money collected by the revenue. 10. The only distinction being made in the present facts and those of Apex Court decision in Tata Chemicals is that the amount paid as tax on self assessment was paid voluntarily in the present case while in the case of Tata Chemicals Ltd. (supra) the tax was deducted at a higher rate in view of the order passed by the authority under the Act. We are unable to appreciate this distinction. This is for the reason that when an assessee pays tax either as Advance tax or on self assessment, it is....
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.... We find support for our view from the decisions rendered by Karnataka High Court in CIT v. Vijaya Bank [2011] 338 ITR 489/201 Taxman 371/12 taxmann.com 485 and Delhi High Court in CIT v. Sutlej Industries Ltd. [2010] 325 ITR 331/190 Taxman 136 (Delhi). In both cases in identical circumstances it was held that interest is payable from the date of payment of the tax on self assessment to the date of refund of the amounts under Section 244A of the Act. 14. Accordingly, for all the aforesaid reasons, we set aside the impugned order dated 28 September 1999. We direct the Assessing Officer to compute the interest payable from the date of payment on self-assessment tax i.e. 31 August 1994 till the date of refund i.e. 24 October 1998. The revenue is directed to compute the interest due to the petitioner and pay the same within six weeks from today." 6.9 However Later, the Hon'ble Delhi High Court in the case of CIT v. Engineers India Limited reported in (2015) 373 ITR 377(Delhi) vide judgment dated 26.02.2015 took a view in favour of Revenue by not following its own decision in the case of CIT v. Sutlej Industries Limited(2010) 325 ITR 331(Delhi). The Hon'ble Delhi High Court ....
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....m the date or, as the case may be, dates of payment of the tax or penalty to the date on which the refund is granted. Explanation.- For the purposes of this clause, " date of payment of tax or penalty" means the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand. (2) If the proceedings resulting in the refund are delayed for reasons attributable to the assessee, whether wholly or in part, the period of the delay so attributable to him shall be excluded from the period for which interest is payable, and where any question arises as to the period to be excluded, it shall be decided by the Chief Commissioner or Commissioner whose decision thereon shall be final. ** ** (Emphasis Supplied) 15. In Sandvik Asia Ltd. (supra), the issue for consideration and determination by the Supreme Court was as to whether the assessee is entitled to be compensated by the Revenue for delay in payment of the amount due to the assessee. Since there was an inordinate delay in that case on the part of the Revenue in refunding the amount, the court held that the assessee w....
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....ersely, where the Revenue makes a high-pitched assessment which is subsequently reduced/modified in appeal, any payment of taxes made, which are subsequently refunded as a consequence of relief obtained in appeals etc., are monies legitimately belonging to the taxpayers and wrongly withheld by the Government. This is based on the principle that if the Revenue had, in the first instance, made correct assessment of the tax liability of the assessee, the assessee would not have been deprived by the use of money. In such a situation, where pre-paid taxes are in excess of the assessed tax, the assessee is entitled to refund of such tax along with interest thereon. Where an assessee out of abundant caution pays self-assessment whilst staking a claim in the return, which claim is accepted, resulting in refund of self-assessment tax, the assessee should be equally entitled to interest thereon. Section 244A was inserted in the statute as a measure of rationalization to ensure that the assessee is duly compensated by the Government, by way of payment of interest for monies legitimately belonging to the assessee and wrongfully retained by the Government, without any gaps. Th....
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.... 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) 20. The question before the Supreme Court in the case of Tata Chemicals Ltd. (supra) mainly was as to whether the deductor of TDS is also entitled to interest on refund of excess deduction or erroneous deduction of tax at source under Section 195 of the Income Tax Act. The observations of the Supreme Court, to the extent relevant here, may be quoted verbatim as under:- "30. The refund becomes due when tax deducted at source, advance tax paid, self-assessment tax paid and tax paid on regular assessment exceeds tax chargeable for the year as a result of an order passed in appeal or other proceedings under the Act. ... No interest is payable for the period for which the proceedings resulting in the refund are delayed for the reasons attributable to the assessee (wholly or partly). The rate of interest and entitlement to interest on excess tax are determined by the statutory provisions of the Act. Interest payment is a statutory obligation and non-discretionary in nature to the ass....
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....ore the High Court of Bombay in the case of Stock Holding Corpr. of India Ltd. (supra). The ITAT in that case had held that no interest was payable under Section 244A(1)(b) on refund of excess amount paid as tax on self-assessment under Section 140A. The assessee had filed the return for assessment year 1994-1995 declaring income of Rs. 13.12 Crores on which tax payable was computed at Rs. 6.79 Crores. Some amount had been earlier paid as advance tax and TDS credit was also claimed. To make good the shortage, the assessee paid Rs. 2.60 Crores by way of tax on self-assessment. The AO determined the income at Rs. 1.27 Crores and, thus, raised a further demand of Rs. 1.76 Crores by way of notice under Section 156. It appears that refund was due to the assessee for the assessment year 1995-1996 and the demand by notice under Section 156 for the assessment year 1994-1995 was set off against such refund for the subsequent year. The assessee, in the meanwhile, had brought a challenge to the assessment for the period 1994-1995 before CIT (Appeals) where a refund of Rs. 2 Crores was granted though interest of Rs. 18.24 Lacs from out of the amount paid as self-assessment was declined. A simi....
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....he provisions for "advance payment of tax". Section 207 declares generally the liability of the assessee to pay "in advance" the tax during the financial year in respect of the total income "which would be chargeable to tax for the assessment year immediately following". The computation of advance tax on the "current income" for such purposes is carried out in accordance with Section 209, clause (a) of sub-section (1) whereof only needs to be noted as under:- "where the calculation is made by the assessee for the purposes of payment of advance tax under sub-section (1) or sub-section (2) or sub-section (5) or sub-section (6) of section 210, he shall first estimate his current income and income-tax thereon shall be calculated at the rates in force in the financial year." (Emphasis Supplied) 26. It may be added here that clauses (b) and (c) of sub-section (1) of Section 209 pertain to cases where the calculation is made (not by the assessee but) by the AO, while clause (d) pertains to the effect of tax deductible or collectible at source, which are not relevant for present discussion. 27. For proper understanding of the method of computation of advance tax,....
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....computed on the basis of the total income declared in such return or in respect of which the regular assessment aforesaid has been made. (5) A person who is served with an order of the Assessing Officer under sub-section (3) or an amended order under sub-section (4) may, if in his estimation the advance tax payable on his current income would be less than the amount of the advance tax specified in such order or amended order, send an intimation in the prescribed form to the Assessing Officer to that effect and pay such advance tax as accords with his estimate, calculated in the manner laid down in section 209, at the appropriate percentage thereof specified in section 211, on or before the due date or each of the due dates specified in section 211 falling after the date of such 28. It is It is clear from the bare reading of the above provisions that whether for purposes of computing the advance tax liability or for that matter the calculation of self-assessment tax, the assessee is given the liberty to make the estimation "of his own accord". The Revenue expects proper declaration on the basis of which the liability would be eventually determined. After all, the n....
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.... the due date of the last instalment specified in section 211, the appropriate part or, as the case may be, the whole of such higher amount of advance tax as accords with his estimate, calculated in the manner laid down in section 209. " (Emphasis Supplied) 30. The declaration of the taxable income or tax liability in the return is subject to order of assessment required to be passed by the AO, amongst others, under Section 143. There is no finality given to the order of assessment at the hands of the AO. There are provisions for rectification, appeal, etc. There are also provisions for dealing with income that escapes assessment. When the liability is determined, whether in terms of the assessment order or in accordance with the order passed by the appellate authorities, or superior forums, if any tax, interest, penalty, fine etc. remain due to the Revenue, the AO is authorized by Section 156 to require the assessee to pay such sum by serving a notice (or revised notice) of demand. The notice of demand under Section 156, if issued before the assessment becomes final and binding, is subject to upward revision (or refund) in due course, in accordance with the assessment that comes t....
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.... of the Revenue to pay tax on refund beyond the liability created by the statutory provisions. In the case of Tata Chemicals (supra), the collection of the tax (through deductor) was found to be illegal, thus giving rise to the liability to pay interest on the refunded amount. 34. We, thus, conclude that there cannot be a general rule that whenever a refund of income tax paid in excess is to be made, the Revenue must necessarily pay interest on the refunded amount. The letter and spirit of the law on the subject is that the party which committed the error in proper calculation (or delay in proper assessment) must bear the burden. If the excess amount is paid due to erroneous assessment by the Revenue, having exacted such burden wrongfully and inequitably on the assessee and having retained the excess amount thus received, the reimbursement must be accompanied by payment of interest at the statutorily prescribed rate. Conversely, if the assessee is to blamed for the miscalculation (or for delay or, for that matter, want of claim of refund), the Revenue does not owe any interest even if the excess payment of tax is liable to be refunded. 35. Having found the positio....
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....refer the matter to Larger Bench of three judges of Hon'ble Delhi High Court by holding as under: "1. These appeals by the Assessee under Section 260A of the Income Tax Act, 1961 ('Act') are directed against the common order dated 10th March 2003 passed by the Income Tax Appellate Tribunal (ITAT') in ITA Nos. 6199 and 6200/Del/1997 for the Assessment Years ('AYs') 1994-95 and 1995-96 respectively. 2. In both the appeals, the questions of law already stand framed by the Court. As far as ITA No. 493 of 2003 is concerned, by the order dated 14th January 2004, the following question was framed: "What would be the date for reckoning the interest on refund Under Section 244A(1)(b)?" 3. As far as ITA No. 120 of 2004 for the AY 1995-96 is concerned, by the order dated 14th September 2004, the following question was framed: "For the purpose of calculating interest on refund under section 244A(1)(b) what would be the date from which the interest is to be awarded." 4. However, after hearing learned counsel for the parties, the Court is of the view that for both the AYs, the questions that arises for consideration requir....
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....n in Sutlej Industries Ltd. (supra). 8. It is urged on behalf of the Revenue that the judgment in Engineers India Ltd. (supra) being latter in point of time should be followed by this Court, particularly in view of the decision of the Supreme Court in Gujarat Fluoro Chemicals (supra) which was delivered by the larger Bench of the three learned Judges. 9. On closer examination, it transpires that the decision of this Court in Sutlej Industries Ltd. (supra) for AY 1998-99 was in also part of the batch of cases which were before the larger Bench of the Supreme Court in Gujarat Fluoro Chemicals (supra). A perusal of the order of the Supreme Court shows that it took note of the insertion of Section 244A in the Act with effect from 1st April 1989 and clarified 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". The above clarification by the larger Bench of the Supreme Court does not answer the questions that arise either in the present cases or in the earlier case involving the same Assessee for AY 1998-99, viz. Sutlej Industries Ltd. (supra) one way or the....
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....Section 244A of the Income Tax Act which is decided by the High Court vide impugned judgment against the assessee. The impugned judgment of the High Court reveals that another judgment of the Coordinate Bench of the same High Court in the case of CIT v. Sutlej Industries Ltd. [2010] 325 ITR 331/190 Taxman 136 (Delhi) was cited wherein the view taken was that in such circumstances the assessee would be entitled to interest under Section 244A of the Income Tax Act on the refund of the self-assessment tax. The High Court further did not agree with the aforesaid view and made the following observation: "35. Having found the position of law as indicated above, we express, with respect, our inability to subscribe to, or follow, the view taken by the other Division Bench of this court in the case of Commissioner of Income Tax v. Sutlej Industries Ltd." 4. It is clear from the above that in the impugned judgment, the Bench has differed with the earlier view expressed by the Coordinate Bench. In the circumstances, the appropriate course of action was to refer the matter to the larger Bench and we fail to understand why it was not done. 5. We are informed that subs....
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.... date on which the refund is granted. Explanation. - For the purposes of this clause, "date of payment of tax or penalty" means the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand." 12. A careful look at sub-section (1) of section 244A would reveal that it has three parts. The first part deals with the entitlement of a person to interest whenever he is due to get a refund from the Department. The second part relates to the method of computation of such interest. There are two methods of computation of interest, one provided in clause (a) and another provided in clause (b). In the first method of computation, the liability of the Department to pay interest, starts only from the first day of April of the assessment year, if the liability to refund arises out of section 115 WJ or 206 or 199. The liability to pay interest commences from the date of payment of tax or penalty, under clause (b), in cases not covered by clause (a). 13. There is no dispute about the fact that the case of the appellant does not fall under section 115WJ or 206 or 199. Therefore, it would,....
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....n to section 244A does not really talk about the entitlement or disentitlement. The explanation, which we have extracted above, would show that the expression "date of payment of tax or penalty" means the date on and from which the amount of taxes or penalty specified in the notice of demand issued under section 156 is paid in excess. 16. The above explanation does not give room for an interpretation that if a person has paid money otherwise than by way of demand under section 156, he is not entitled to interest on refund under section 244A. The explanation cannot, really, curtail the method of computation prescribed in clause (b) or the substantive part of section 244A. Therefore, the question of law is answered in favour of the assessee. The Tax Case Appeal is allowed. No costs. The connected miscellaneous petitions are closed." 6.13 The Revenue filed SLP with Hon'ble Supreme Court challenging relief granted by Hon'ble Madras High Court in the case of Rajratna Mills Limited(supra) and Hon'ble Supreme Court was pleased to grant special leave to appeal on 11.07.2016 reported in CIT v. Rajratna Mills Limited (2016) 72 taxmann.com 121(SC) in SLP(C) No. 12195 of 2016. It i....