AI Drafter 
TaxTMI 
TaxTMI 
2020 (9) TMI 1045
X X X X Extracts X X X X
X X X X Extracts X X X X
....ty on the assessed income over the taxes paid under section 143(1) of the Act. 2.0 That the CIT(Appeals) erred on facts and in law in concluding that for giving effect to the provisions of section 244A(3), the l imitation as per the proviso to 244A(1)(a) of the Act would apply. 3.0 Without prejudice, that the CIT(A) erred on facts and in law and in the circumstances of the case in not granting interest under section 244A on the amount of refund pertaining to self assessment tax, without appreciating that the bar contained in proviso to clause (a) of section 244A(1) of the Act is not applicable to self assessment tax." 3. In ITA No. 2641/Del/2013, following grounds have been raised by the revenue: "1. On the facts and in the circumstances of the case, the ld. CIT (A) has erred in not appreciating the provisions of section 244A(b) of the Income Tax Act which calls for calculating interest for every month or part of the month comprised in the period or periods from the date or dates of payment of tax as the case may be. That is the interest is to be computed for a period of every month taking the date of payment as the starting date and if part of the mon....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ious year ended 31.03.1999, filed return of income on 28.12.1999 declaring total income of Rs. 667,34,03,410/-. • The return was revised on 30.03.2001 at total income of Rs. 667,41,40,340/-. • Assessment under section 143(3) followed by order u/s 154 of the Act, the total income of the assessee was determined at Rs. 1606.34 crores. • In pursuance to the directions of the ITAT, the Assessing Officer passed order under section 143(3) r.w.s. 254 of the Act on 23.03.2006 giving effect to the order of the ITAT, determining the income of the assessee at Rs. 1424.43 crores. • The assessee again preferred appeal against the consequential order before the CIT(A) and thereafter, before ITAT. The ITAT, vide order dated 31.10.2008, allowed substantial relief. • After giving effect to the order of the ITAT in the second round, the Assessing Officer determined the total income at Rs. 625.70 crores, on which the income tax liability was calculated at Rs. 218,99,69,889/- (excluding interest under section 234C of the Act). • As against the aforesaid tax liability of Rs. 218.99 crores, the assessee had paid taxes aggregati....
X X X X Extracts X X X X
X X X X Extracts X X X X
....CIT Vs HEG 324 ITR 331 and CIT Vs Chola Mandalam Investment and Finance Company 294 ITR 438. Relying on the various case laws, he argued that there is statutory liability on the revenue to pay the interest on general principles to pay the interest on sums wrongfully retained. 14. On the other hand, the ld. DR vehemently argued that the provisions of Section 244A(1)(a) clearly lays down an embargo on the interest payment, if the amount of refund is less than 10% of the tax as determined under sub-Section (1) of the Section 143 or on regular assessment. Hence, the assessee is not eligible for interest on the refund due in the instant case. 15. Heard the arguments of both the parties and perused the material available on record. 16. The provisions of Section 244A as applicable for the assessment year 1994-95/1999-2000 are as under: [Interest on refunds. 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 of any tax [c....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... section shall apply in respect of assessments for the assessment year commencing on the 1st day of April 1989, and subsequent assessment years.] 17. Section 244A(1)(a) deals with interest where refund is out of TDS or by way of advance tax. The proviso under sub-Section (a) has to be read with regard to sub-Section (a) and applies to sub-Section (a) only. A bare reading of sub-Section (b) do not portray any such provision/condition which is applicable to sub- Section (b). Hence, it has to be read that the provision restricts the interest on amount, if the refund is less than 10% of the tax as determined and is applicable only to the advance tax paid u/s 206 or FBT under 115WJ. 18. We find that the ld. CIT (A) treated the entire amount of Rs. 14.60 cr. falls for the purpose of Section 244A(1)(a) and treated it as prepaid taxes. This is exactly where the ld. CIT (A) considered/read the provisions wrongly. The prepaid taxes consist of TDS, advance tax. The provisions of self-assessment tax are governed by Section 140A which is not covered by the provision u/s 244A(1)(a). The opening sentence of the Section 140A reads as under: (1) Where any tax is payable on the basis ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....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 paid 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." 26. This section connotes the procedure to be followed while computing the interest in accordance with the sub-Section (1) to Section 244A. The sub-Section (3) gives equal treatment to the refund arise out of the orders namely, order u/s 115WE(3), order u/s 115WF, order u/s 115WG, order u/s 143(3), order u/s 144, order u/s 147, order u/s 155, order u/s 250, order u/s 254, order u/s 260, order u/s 262, order u/s 263, order u/s 264, order u/s 245D(4). It directs the revenue authorities to re-compute the interest payable and to notify the assessee with a demand notice in case there is any increase in the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....efund 31-10-1990 (viii) Interest payable by the Department @ 1.5% per month for 6 months (1-5-1990-31-10-1990), i .e. , @ Rs. 9% on 80,000 Rs. 7,200 30. This example illustrates payment of interest on the refund from the date of payment of tax (01.05.1990) to the date of issue of refund. There is no dispute about this example and payment of interest on the tax paid post-assessment. We also concur to the fact that the assessee is eligible for interest on the refund on payment of self-assessment tax from the date of payment to the date of granting of refund as per the provisions of Section 244A(1)(b). 31. Thus, the sequence of computation of interest would be: Eg:1 Tax determined u/s 143(3)= 100 Tax paid - 112 Step 1: Refund determined - 12 [Section 244(1)] Step 2: Refund out of advance tax payment -2[Sect ion 244(1)(a)] No interest payable as refund is less than 10% [proviso applicable] Step 3 : Refund out of self-assessment tax - 10 Interest allowed from the date of payment. Eg:2 Tax payable - 100 Tax paid - 112 (advance tax -111, self-assessment tax -1) Tax ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e present case, as stated above, there are two components of the tax paid by the assessee for which the assessee was granted refund, namely TDS of Rs. 45,73,528 and tax paid after original assessment of Rs. 1,71,00,320. The Department contends that the words "any amount" will not include the interest which accrued to the respondent for not refunding Rs. 45,73,528 for 57 months. We see no merit in this argument. The interest component will partake the character of the "amount due' under Section 244A. It becomes an integral part of Rs. 45,73,528 which is not paid for 57 months after the said amount became due and payable. As can be seen from the facts narrated above, this is the case of short payment by the Department and it is in this way that the assessee claims interest under Section 244A of the Income-tax Act. Therefore, on both the aforestated grounds, we are of the view that 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 the character of "amount due" under Section 244A" 35. Straight reading of the judgment, denotes that any "where....
X X X X Extracts X X X X
X X X X Extracts X X X X
....whether the assessee was entitled to claim interest on interest under the provisions of Section 244A of the Income Tax Act, 1961. In our view, on facts, the question framed was totally erroneous. Annexure P-1 is Income-tax Computation in Civil appeal arising from S.L.P.(C) No.18045/2009. On going through the Computation, we find that during the Assessment Year 1993-1994, the amount paid by the assessee towards TDS was Rs. 45,73,528/-. The Tax paid after Original Assessment was Rs. 1,71,00,320/-. The total of TDS amounting to Rs. 45,73,528/- plus Tax paid after Original Assessment of Rs. 1,71,00,320/- stood at Rs. 2,16,73,848/-. In other words, the total tax paid had two components, viz. , TDS + Tax paid after Original Assessment. The respondent was entitled to the refund of Rs. 2,16,73,848/- (consisting of Rs. 1,71,00,320/- and Rs. 45,73,528/- which payment was made after 57 months and which is the only item in dispute). The assessee claimed statutory interest for delayed refund of Rs. 45,73,528/- for 57 months between 1.4.1993 and 31.12.1997 in terms of Section 244A of the Income Tax Act. Therefore, this is not a case where the assessee is claiming compound inter....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e issue before us is dissimilar to the issue adjudicated by the Hon'ble Apex Court. 41. Now, the question involved in the instant case is with regard to the proviso to Section 244A(1)(a) but not with regard to payment of tax and consequent refund and interest on the tax paid u/s 195/199/206/207. No judgment or the direction nullifying the provision has been brought to our notice. Even in the case of H.E.G. Ltd. The Hon'ble Apex Court rightly observed that, if question is not properly framed then at times confusion arises resulting in wrong answers. 42. In the instant case, the question before us is whether no interest shall be payable on the amount of refund is less than 10% tax determined, if the refund is out of tax paid u/s 206/207/199. The Hon'ble Apex Court has extended the interest to TDS u/s 195 also in addition to the tax paid u/s 206/207/199. We have also gone through the judgment of Tata Chemicals Ltd. on the issue of proviso to Section 244A(1)(a). The Hon'ble Apex Court having gone through the provisions of Act has nowhere held that the proviso is unwarranted. At the cost of repetition, we hereby hold that the Courts have found no illegality on the proviso below Cl....
X X X X Extracts X X X X
X X X X Extracts X X X X
....-assessment tax paid by the assessee u/s 140A is refunded, the assessee should be entitled to interest thereon. The Hon'ble High Court held that the self-assessment tax falls within the expression "refund of any amount". The computation of simple interest on self-assessment tax has to be in terms of Section 244A(1)(b), i.e., from the date of payment of such amount up to the date on which refund is actually granted. The judgment of the Hon'ble jurisdictional High Court was shored up by the judgment of Hon'ble Madras High Court in Cholamandalam Investment and Finance Co. Ltd., the SLP against which order was dismissed by the Supreme Court. 50. Even otherwise, it is trite law that wherever the assessee is entitled to refund, there is statutory liability on the Revenue is to pay the interest on such refund on general principles to pay the interest on sums wrongful ly retained. 51. The Hon'ble Jurisdictional High Court in the case of Engineers India Ltd. 373 ITR 377, based on the judgment of the Hon'ble Apex Court in the case of Gujarat Flora Chemicals 358 ITR 291 held that the assessee is not entitled to get interest u/s 244A on the refund of self-assessment tax which was volunta....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... has held that the 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 case of Tata Chemicals Ltd., the assessee has paid taxes pursuant to the order passed by the AO. 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 un-authorizedly by the Department. When the collection is illegal, there is corresponding obligation on the revenue to refund such amount with interest in as much as they have retained and enjoyed the money deposited. Even the Department has understood the object behind insertion of Section 244A, as that, an assessee is entitled to payment of interest for money remaining with the Government which would be refunded.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....urt brought the self-assessment tax under the ambit of tax u/s 244A(1)(b). The assessee is eligible for interest on the complete amount of the refund arising out of self-assessment tax. Whatever the money received by the department in excess is ought to be refunded ex-aequo et bono. 63. Hence, keeping in view the entire facts and circumstances of the case, the provisions of the Act as at 1989, 2016, judgments of the various Hon'ble High Courts and Hon'ble Apex Court, we hold as under: • Where refund of any amount becomes due denotes refund arising out of • advance tax u/s 207 • TCS u/s 206 • TDS u/s 195 • All credits u/s 199 • Taxes paid as specified u/s 156 and • Self-assessment tax • Before 01.06.2016, no interest would be paid if the amount of refund is less than 10% of the taxes determined in case the refund is out of the taxes paid other than self-assessment tax. • Before 01.06.2016, in the case of refund arising out of self-assessment tax, interest would be calculated on the entire self-assessment tax refunded from the date of payment of S.A. tax. â....