TaxTMI 
TaxTMI 
TaxTMI 
2020 (9) TMI 1045
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....r 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 month remains at the end the same is to be taken as full month. 2. The....
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.... 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 aggregating to Rs. 233,59,49,119/- by way of advance tax, tax deducted at source (TDS) and self assessment tax, thereby resulting in income tax refund of Rs. 14,59,79,228/- out of the same. * Apart, ....
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.... 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 [collected at source under section 206C or] paid by way of advance tax or treated as paid under section 199, during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of one per cent for every month or part of a month co....
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....-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 of any return required to be furnished u/s 139 --------- 19. This clearly gives a meaning that self-assessment tax which is payable on the basis of return do not constitute part of prepaid taxes. 20. For the purpose of embargo of 10% of the tax determined in accordance with the provisions of Section 244A(1)(a), it is ....
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....nd 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 interest payable by the assessee owing to such order. This is a procedural section to give effect to the orders passed by various authorities by the revenue. By this section, the revenue is directed to re-compute the tax due consequent to the passing of any further orders which will have an effect on the tax determined u/s 143(1) in the case....
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....ment. 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 determined u/s 143(3) - 300 (demand notice issued for Rs. X) Tax paid on receipt of demand notice - X On appeal, the additions deleted. The tax paid Rs. X becomes refundable. Interest on refund is eligible from the date(s) of payment of Rs. X till the date of grant of refund. That leaves us with the action on the original refund due, then the Section 244A(1) falls in and so as clause (a) and (b) as applicable. {Tax demanded of "X" u/s 156 - Refunded along with intere....
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....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 refund of any amount becomes due" means any refund and on that refund simple interest is to be provided. The calculation of the simple interest is explained in the sub-Clause (a) in case of advance tax or tax u/s 206 and in sub-Clause (b) in any other case. The steps involved are determination of refund and then calculation of interest on such refund determined. The proviso kept back the interest in case the refund is less than 10% of the tax as determined under sub-Section (1) to Section 244A. 36. In the case of H.E.G, the revenue has not provided interest on the TDS i .e. the tax pa....
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....t 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 interest or interest on interest as is sought to be made out in the civil appeals filed by the Department. The next question which we are required to answer is What is the meaning of the words "refund of any amount becomes due to the assessee" in Section 244A? In the 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,....
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....ax 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 Clause (a) to Sub-Section (1) to Section 244A. 43. Vide the provisions to Section 244A(1)(a), the legislature clearly laid down that in case the refund arise out of the prepaid taxes such as TCS/TDS/Advance Tax is less than 10% of the tax no interest is allowable. The statute is to be read as a whole in its content. It is unambiguous, straight, effective and workable. The proviso to Clause (a) to Sub-Section (1) is constitutionally valid and intra wires. In the absence of any confusion, arbitrariness or vagueness, the provision has to be read as it is. There is no need to interpolate any word to give a different meaning. A taxing statute should be strictly construed even if the liter....
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....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 voluntarily paid u/s 140A and did not agree with the decision of the Coordinate Bench of High Court in the case of Sutlej Industries Ltd. 325 ITR 337. 52. The Hon'ble Apex Court, having gone through the different views expressed by the Hon'ble Jurisdictional High Court, referred back the matter for adjudication by larger bench. 53. The Hon'ble High Court of Kolkata in the case of Birla Corporation Ltd. held that clause (1)(b) of Section 244A is residual in nature which prescribes interest on refund from the date of payment of tax in cases which are not covered by Section 244A(1)(a). Necessarily, it will cover interest on refund of excess self-assessment tax paid by the assessee. The proviso to section....
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....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. 57. The question before the Hon'ble Apex Court is whether the resident/deductor is also entitled to interest on refund of excess deduction or erroneous deduction of tax at source under Section 195 of the Act. The Hon'ble Apex Court has ruled that the assessee is eligible to refund of excess tax deducted and also interest on such excess tax refunded. 58. The Hon'ble Apex Court held that the language of the Section is precise, clear and unambiguous. Sub-Section (1) of Section 244A speaks of interest on refund of the amounts due to an assessee under the Act. The assessee is entitled for the said amount of refund with interest thereon as calculated in accordance with clause (a) & (b) of sub-Section (1) of S....
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....16, 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. * After 01.06.2016, no interest would be paid if the amount of refund is less than 10% of the taxes determined whether it is u/s 140, u/s 156, u/s 195, u/s 199, u/s 206 and u/s 207. * Where refund of "any amount" [244A(1)] due connotes the refund of taxes paid by the assessee. * Where refund of "any amount" [244A(1)] is due, the assessee is entitled to simple interest. The simple interest would be calculated at the prescribed percentage after determining the refund due and paid along with the principle. * Even, "a single day" should be considered as a part of the month for the purpose of computation of interest. 64. Ergo, the AO is hereby directed to pay interest on the refund eligible in accordance with the proviso to Section 244A(1)(a) with regard to the advance tax paid. With regard to the self-assessment tax paid,....