2000 (2) TMI 841 - HC - Income Tax

Summary

Issues:
1. Allowability of interest under section 244(1A) on self-assessment tax payments made by the assessee.

Analysis:
The main issue in this case revolved around whether interest under section 244(1A) is permissible on self-assessment tax payments made by the assessee. The Tribunal initially had to determine the eligibility of the assessee for interest under section 244(1A) based on the tax payable after various adjustments. The AO had rejected the claim for interest under section 244(1A) by the assessee. The CIT(A) also upheld the AO's decision, stating that interest under section 244(1A) is only due on payments made in pursuance of an assessment or penalty order, which self-assessment tax did not fall under. However, the Tribunal took a different stance, asserting that self-assessment tax, once paid, is adjusted against the assessed tax and thus qualifies as tax paid in accordance with the assessment order, making the assessee eligible for interest under section 244(1A).

Moreover, the Tribunal's decision was supported by the judgment in the case of Modi Industries Ltd. vs. CIT, which highlighted that interest under section 244(1A) is payable even if the tax or penalty paid by the assessee pursuant to the assessment order is reduced on appeal. The judgment emphasized that the excess realisation of advance tax, upon assessment and adjustment, becomes refundable under specific sections, and any refundable amount must be dealt with in accordance with the relevant provisions. It clarified that the refunded amount is treated as a portion of the income tax paid by the assessee, similar to tax paid pursuant to a notice of demand under section 156. Therefore, the Tribunal's direction to allow interest under section 244(1A) based on self-assessment tax payments was in line with legal principles and precedents.

In conclusion, the judgment favored the assessee, ruling in their favor against the Revenue. The decision highlighted that interest under section 244(1A) can be granted concerning self-assessment tax payments, as such payments are considered tax paid in pursuance of the assessment order, aligning with the legal provisions and interpretations provided in relevant cases and statutes.