TaxTMI 
TaxTMI 
2024 (10) TMI 539
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....itary grievance of the assessee in the present appeal relates to refusal of grant of interest on refund of self-assessment tax in terms of provisions of Section 244A of the Act. The orders of the Revenue Authorities reveal that the same was consistently denied, both by the Assessing Officer and the ld. CIT(A), for the reason that the refund of self-assessment tax was found to be less than 10% of the tax determined in regular assessment under Section 143(3) of the Act. Reference was made to the proviso to Section 244A(1)(aa) of the Act which reads 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 :- 45[(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-half per cent for every month or part of a month compris....
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....d by the FA 2016 w. e. f. 01/06/2016. The confusion in law regarding grant of interest on refund of SAT has been cleared unambiguously. Now, interest on refund is allowable but subject to the condition laid by the proviso that if SAT paid is less than 10% of the tax paid then no interest is payable. Hence, they do not apply in this case. Action of the AO to deny interest on excess SAT paid is upheld. Ground of appeal 3 is dismissed." 5. The facts of the case are that the Assessing Officer had passed an order u/s 154 of the Act in the case of the assessee for the impugned year on 15.03.2018 determining refund of Rs. 28,61,840/-. The assessee had filed a rectification petition claiming that the interest u/s 244A of the Act was short granted on various issues. Two of the claims of the assessee were accepted; however, claim of interest on self-assessment tax was rejected. 6. Before us, learned Counsel for the assessee filed a chronology of events in the entire case beginning from the filing of the original return/revised return filed by the assessee showing normal income of Rs. 7.74 crores and book profits of Rs. 391.41 crores on which tax payable and paid was Rs. 79.14 crores, a....
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.... 24-27 11.06:2018 Rectification application by Assessee to correct error in order of 15.03.2018 and 21.09.2017 1. Interest u/s 244A(l)(b) on refund due from Jan 17 (Assessment order) to October 17(date of part refund]; 2. Interest u/s 244A(1A) on refund from April 17 to Oct 17 3. Interest u/s 244A (1A) on balance refund from April 17 to May 18 34-35 26.06.2018 Order u/s 154 rejecting the application 1. Interest of Rs. 41,068/- cannot be granted because of proviso to Section 244A(1)(aa) 2. Interest is granted on 7 crores for the period of April 17 to Oct 17 = Rs. 24.50 lakhs 3. Interest is granted for balance amount(Rs. 28,61,845) for Nov 17 to May 18 = Rs. 1 lakhs 10.04.2023 CITT(A) dismissed the appeal 7. The issue before us is regarding grant of interest on this refund of self-assessment tax of Rs. 27.37 lakhs payable from January 2017 when the assessment order was passed to October 2017 when the refund was finally granted after giving appeal effect to the order of the ld. CIT(A). 8. The contention of the ld. Counsel for the assessee before us was that this self-assessment tax paid by the assessee had been adjusted ....
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.... Ltd. (supra). The Hon'ble High Court has held as under:- 8. "The aforesaid provision came up for interpretation and consideration in National Horticulture Board's case {supra) wherein it was held as under (page 16 of 253 ITR) : "A conjoint reading of the provisions quoted above shows that the assessee is entitled to receive interest on the amount of refund at the rates prescribed in clauses (a) and (b) of sub- section (1) of section 244A. The rationale underlying this provision is to compensate the assessee in lieu of the deprivation of his property right by virtue of unlawful collection of tax. If the proceedings resulting in the refund are delayed due to reasons attributable to the assessee, then the period of delay has to be excluded from the period for which the interest is payable. In other words, if the assessee is responsible for the delay in the finalisation of the proceedings on the basis of which he becomes entitled to refund, then the period of delay is to be excluded from the total period for which interest becomes payable. However, there is nothing in the plain language of sub-section (1) and (2) of section 244A from which it can be inferred ....
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....nt, of the tax as determined under section 143(1) or on the regular assessment, because there is no proviso to section 244A(l)(b) as provided under section 244A(l)(a).' The Madras High Court further observed (page 443 of 294 ITR) : '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).' The Supreme Court dismissed the Special Leave Petition (SLP) No. 16877 of 2008 filed by the Revenue against the decision in Cholamandalam Investment and Finance Co. Ltd. [2007] 294 ITR 438 (Mad , vide order dated December 3, 2009. The Supreme Court has also, recently, in the case of CIT v. H.E.G. Ltd. reported in [2010] 324 ITR 331 (SCI, vide its order dated December 3, 2009, held that the expression 'refund of any amount' would include interest under section 244A (on refund of tax deducted at source) to which the assessee was lawfully entitled but had been wrongly withheld by the Department." 10. It was further held that the amount of tax due on the returned....
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....e (supra). 11. It may be observed that in so far as the nature of payment of tax is concerned, the tax deducted at source, advance tax and also tax paid by way of self-assessment, after its adjustment in the tax liability of the assessee on regular assessment loses its original character and becomes tax paid in pursuance of the liability. Once that is so, it cannot be held that the assessee is only entitled to interest under section 244A(l)(b) on tax deducted at source or advance tax and not on self-assessment tax paid under section 140A of the Act which was found to be paid in excess. The assessee shall be entitled to interest under section 244A(l)(b) of the Act on the refund of self-assessment tax as well. 12. The Tribunal, while adjudicating the issue, had noticed as under: "6. We have considered the rival submissions carefully on this issue. Section 244A deals with the grant of interest on refund of any amount of tax which becomes due to the assessee in terms of the provisions of Act. Clauses (a) and (b) of sub- section (1) of section 244A deal with two different situations. Clause (a) deals with refund of taxes which have been paid under section 115W....
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....paid under section 140A is also taken as paid in pursuance of an assessment after the completion of assessment. 7. Moreover, the rationale of the provisions of section 244A has been a subject matter of review by the hon'ble jurisdictional High Court of Punjab and Haryana in the case of National Horticulture Board (supra). It has been opined that die rationale underlying the provision was to compensate the assessee for deprivation of his property right which was by virtue of an unlawful collection of tax. In fact, tested on such anvil, interest under section 244A on refund of tax paid as self-assessment tax cannot be considered as outside the purview of section 244A of the Act. The significance of the Explanation below clause (b) is merely to stipulate the period for which the interest has to be granted. For the purpose of clause (b), the interest is payable for the period starting from the date of the payment of tax ending up to the date on which such refund is granted. Therefore, in principle, we uphold the stand of the assessee that it was eligible for interest under section 244A(l)(b) on the refund accruing to it as a result of the order of giving appeal effect on D....