2012 (7) TMI 730 - AT - Income Tax

Levy of interest u/s 234C - CIT(A) deleted the levy - Held that - Though the AO had concluded the assessment way back in 1999, the assessment reaches its finality consequent on the final findings recorded by the appellate authorities, there was no liability to pay tax u/s 207 for the AY under consideration and, therefore, levy of interest u/s 234C for deferment of advance-tax payable by the assessee does not arise when the income of the assessee had finally been arrived at a loss of Rs. 1.6 crores. Interest paid under section 234C is for deferment of advance tax. When advance tax paid is refunded and also interest paid under section 234B, there is no logic in making the assessee liable for interest under section 234C for deferment of payment of advance tax - CIT (A) was justified in directing the AO to refund the interest levied u/s 234C - in favour of assessee Interest under section 244A on refund of self assessment tax - Held that - If Refund of any amount becomes due to an 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 - The provisions of section 244A are very explicit and categorical that where refund of any amount, becomes due to the assessee under this Act .. . There is misconception in the interpretation of the AO that the provisions of s. 244A do not explicitly provide for payment of interest on refund of self assessment tax - that the issue has not been appropriately addressed either by the AO or the CIT (A) issue is remitted back to the file of the AO with a specific direction to look into the matter afresh - in favour of assessee for statistical purposes.

Summary

Issues:
- Interpretation of section 234C for levy of interest.
- Entitlement to interest under section 244A on refund of self-assessment tax.
- Claim for interest on delayed grant of interest on self-assessment tax.

Interpretation of Section 234C for Levy of Interest:
The case involved appeals by both the revenue and the assessee against the CIT(A)'s order related to the assessment year 1996-97. The revenue raised grounds regarding the deletion of interest under section 234C and the direction to grant interest under section 244A. The assessee, a Government of Karnataka Undertaking, had filed its return declaring income and had paid various taxes and interest. The CIT(A) directed the Assessing Officer to refund the interest paid under section 234C and granted interest under section 244A based on judicial precedents. The Tribunal upheld the CIT(A)'s decision on refunding interest under section 234C, stating that the assessee was not liable for interest when the income was determined as a loss.

Entitlement to Interest under Section 244A on Refund of Self-Assessment Tax:
The revenue contested the direction to grant interest under section 244A on self-assessment tax refund, arguing that the Act did not explicitly provide for such interest. However, the Tribunal analyzed the wording of section 244A and found that the assessee was entitled to receive interest on any refund due under the Act, without any specific distinction for self-assessment tax refunds. Citing a relevant High Court judgment, the Tribunal upheld the CIT(A)'s decision to grant interest under section 244A on self-assessment tax refund.

Claim for Interest on Delayed Grant of Interest on Self-Assessment Tax:
The assessee's appeal focused on claiming interest on delayed grant of interest on self-assessment tax. The Tribunal noted the assessee's contention regarding interest on the delayed grant of interest and a disputed refund amount. Citing relevant case laws, the Tribunal remitted the issue back to the Assessing Officer for a fresh review, emphasizing the entitlement to interest on interest based on legal precedents. The Tribunal allowed the assessee's appeal for statistical purposes.

In conclusion, the Tribunal dismissed the revenue's appeal and allowed the assessee's appeal for statistical purposes, addressing the issues of interpretation of sections 234C and 244A, as well as the claim for interest on delayed grant of interest on self-assessment tax. The judgments were based on detailed analysis of legal provisions and judicial precedents to ensure fair and just outcomes for both parties involved in the case.