TaxTMI 
TaxTMI 
2019 (6) TMI 1213
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....t-on-interest going beyond the provision of the I.T. Act. 3. Brief facts qua the issue are that the assessee filed the revised return of income on 9th March,1988 disclosing total income of Rs. 5,14,87,578/-. A fresh assessment order u/s 143(3)/264/142(2A) of the Income Tax Act 1961, was passed on 22/ 09/1992 determining total income of Rs. 52,80,30,490/-. Subsequently, an appeal effect was given to the orders of learned CIT(A) and Hon'ble ITAT and thereupon the AO passed an order u/s 254/251 ofthe Act on 24/10/1997 computing total income at loss ofRs.l,03,17,30,191/- and the tax payable was found to be Nil. The tax paid by the assessee was given credit by the AO in his order dated 24/10/1997 and ultimately net amount of Rs.l,59,94,750/- was found refundable to the assessee which was adjusted against the demand raised for the assessment year 1994-95 on 12/11/1997. 4. However, in the order passed on dated 24/10/1997, under section 254/251 of the Act, the learned AO failed to grant interest on excess Self-Assessment Tax of Rs. 27,01,593/- paid by the assessee for the subject assessment year. Aggrieved, the assessee filed Rectification Petition before the learned AO to grant inte....
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....cts and circumstances of the present case, is not a matter to be covered u/s 154 of the Act and as such the learned CIT(A) has erred in observing that the AO has not granted interest on self-assessment tax paid amounting to Rs. 27,01,593/- in the order passed u/s 154 of the Act dated 19/03/2002. Before the Hon'ble ITAT, Kolkata, the assessee again reiterated the submissions made before the learned CIT(A) justifying the reasons as to why the assessee is legally entitled to interest on excess self- assessment tax paid by it and interest on such interest. However, the Hon'ble ITAT, Kolkata did not adjudicate the present case of the assessee on merits and allowed the appeal of Revenue on technicalities of section 154 of the Act. In the order dated 20/07/2004, the Hon'ble Tribunal, Kolkata set aside the order of the learned CIT(A) and held as follows: "For the reasons given above, the order of the Id.CIT(A) directing the AO to grant interest u/s 244(1A) on self-assessment tax in the appeal arising out of the AO's order made u/s 154 of the Act is set aside and vacated, meaning thereby that the CIT(A)'s direction to grant interest under section 214(1A) on self- ass....
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....tanding refund, due to the assessee, which included interest on refund. The case of the assessee is that it is entitled to claim of interest, on the interest which is part of the outstanding refund as it also constitute "amount to be refunded" to the assessee as on 20/03/1993, on which date the demand relevant to the Assessment Year 1992-93, was set off by the ld. Assessing Officer. For this proposition, the assessee relies on the judgment of the Hon'ble Supreme Court in the case of K. Lakshmanya & Co. v. Commissioner of Income Tax [2017] 399 ITR 657 (SC) and on the decision of the co-ordinate bench of the Tribunal in the assessee's own case in DCIT vs. Ms. Peerless General Finance & Investment Co. Ltd. ITA No.50/Kol/2009, order dt. 30/05/2017. He submitted a paper book running into 54 pages as well as written submissions in support of these contentions. At Annexure-2, to the written submissions, he provided a revised computation of interest u/s 244A of the Act and refund payable to the assessee as per the ld. Assessing Officer's order. 2.1. The ld. D/R, on the other hand, relied on the order of the ld. CIT(A). He submitted that the ld. CIT(A) has relied on the decision of the Ho....
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....ed for the delay in paying to it any 'amount' due to it even if such 'amount' comprised of interest, as had been held by the Delhi and Madras High Courts and hence the impugned judgment was erroneous and ought to be reversed ? E. Whether the High Court ought to have held that sections 240 and 244 of the Act refer to 'refund of any amount', which phrase clearly includes any amount (including interest) due by the Income Tax department to the assessee, and hence the appellant was entitled to interest on the delay in the payment of amounts due from the Income-tax Department ?" 13. After setting out the relevant statutory provisions, which at that time covered Section 244 and not Section 244(A), and after referring to a number of decisions, the Court ultimately referred to Needle Industries (P.) Ltd.'s case (supra) and expressly approved the same. It concluded the aforesaid questions in favour of the assessee as follows: "In the present appeal, the respondents have argued that the compensation claimed by the appellant is for delay by the Revenue in paying of interest, and this does fall within the meaning of refund as set out in Section 237 of the Act. ....
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....n Section 244A. 31. The Department has also issued a Circular clarifying the purpose and object of introducing Section 244A of the Act to replace Sections 214, 243 and 244 of the Act. It is clarified therein, that, since there was some lacunae in the earlier provisions with regard to non-payment of interest by the Revenue to the assessee for the money remaining with the Government, the said section is introduced for payment of interest by the Department for delay in grant of refunds. A general right exists in the State to refund any tax collected for its purpose, and a corresponding right exists to refund to individuals any sum paid by them as taxes which are found to have been wrongfully exacted or are believed to be, for any reason, inequitable. The statutory obligation to refund carried with it the right to interest also. This is true in the case of assessee under the Act." 16. The above extract would clearly show that a corresponding right exists, to refund to individuals any sum paid by them as taxes which are found to have been wrongfully exasted or believed to be, for any reason, inequitable. The statutory obligation to refund, being non discretionary, carries with it th....
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.... find that the impugned dispute before us is squarely addressed by the co-ordinate bench of Mumbai Tribunal in the case of Union Bank of India vs ACIT reported in (2016) 72 taxmann.com 348 (Mumbai Trib) dated 11.8.2016 which had duly considered the aforesaid decisions and had held as under:- 3.4 We have gone through the facts of this case and submissions made by both sides, provisions of law as well as judgments placed before us. It is noted that the only issue to be decided by us is that while granting the refund in pursuance to the appeal effect order, whether the amount of refund granted earlier should be adjusted first against the interest component of the earlier refund and thereafter the balance amount should be adjusted against the principal component of tax in the refund granted earlier order OR vice-versa as has been done by the AO. It is noted that this issue is not coming for the first time before the Tribunal as the same has arisen for A.Ys. 1988-89, 2001-02 & 2005-06. Copies of the orders were placed before us and it was contended by the Ld. Counsel that the Tribunal had already decided this issue in favour of the assessee therefore, before proceeding further we find....
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....at the assessee was entitled to interest for 57 months on Rs. 45,73,528/-. The principal amount of Rs. 45,73,528 has been paid on December 31, 1997 but net of interest which, as stated above, partook of the character of "amount due" under Section 244A." 15. A reading of the aforesaid passage from the decision of the Supreme Court in HEG Limited (supra) indicates that it would be incorrect and improper to regard payment of interest when part payment is made as interest on interest. What has been elucidated and clarified by the Supreme Court is that when refund order is issued, the same should include the interest payable on the amount, which is refunded. If the refund does not include interest due and payable on the amount refunded, the Revenue would be liable to pay interest on the shortfall. This does not amount to payment of interest on interest. An example will clarify the situation and help us to understand what is due and payable under Section 244A of the Act. Suppose Revenue is liable to refund Rs. 1 lac to an assessee with effect from 1st April, 2010, the said amount is refunded along with interest due and payable under Section 244A on 31st March, 2013, then no further int....
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....hall first be adjusted towards interest payable and balance if any whatever tax payable. Now, if we go through section 244A, we find that no specific provision has been brought on the statute with respect to adjustment of refund issued earlier for computing the amount of interest payable by the revenue to the assessee on the amount of refund due to the assessee. Thus, the law is silent on this issue. Under these circumstances, fairness and justice demands that same principle should be applied while granting the refund as has been applied while collecting amount of tax. The revenue is not expected to follow double standards while dealing with the tax payers. The fundamental principle of fiscal legislation in any civilized society should be that the state should treat its citizens (i.e. tax payers in this case) with the same respect, honesty and fairness as it expects from its citizens. It is further noted by us that Hon'ble Delhi High Court has already decided this issue in clear words which has been followed by the Tribunal in assessee's own case in the earlier years. It is further noted by us that assessee is not asking for payment for interest on interest. It is simply re....
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....ayment of interest for money remaining with the Government which would be refunded. There is no reason to restrict the same to an assessee only without extending the similar benefit to a resident/deductor who has deducted tax at source and deposited the same before remitting the amount payable to a non-resident/foreign company. 38. 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 individ....
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.....4.2008 granting interest u/s 244A of the Act . The subsequent rectification proceedings and the consequent appellate orders thereon have been reversed by the Hon'ble Calcutta High Court in assessee's own case. Hence the revenue should not have any grievance in the impugned appeal before us as the ld CITA had addressed the entire issue in the same lines in which the Hon'ble High Court had addressed the issue. In our considered opinion, if at all the revenue is aggrieved against the order of the Hon'ble Calcutta High Court dated 16.1.2015 , they should have preferred Special Leave Petition before the Hon'ble Supreme Court. We feel that the revenue should not be aggrieved by preferring an appeal before us against the order of the ld CITA dated 30.9.2008. Hence the revenue appeal deserve to be dismissed on that count also. 6.3. Hence we hold that the grounds raised by the revenue vide Grounds 1 to 4 deserve to be dismissed for more than reason as stated above. 7. The next issue to be decided in this appeal is as to whether the ld CITA was justified in directing the ld AO to exclude the provision for dimunition in value of investments amounting to Rs. 29,81,59,433/- and provision f....