2007 (2) TMI 130 - HC - Income Tax

Refund Assessee contended that they liable for interest on refund from the date following the expiry of the period of three months to the date on which refund was granted Held assessee contention was correct and allowed

Summary

Issues:
Whether tax paid under section 140A can be considered as "amount paid in pursuance of any order of assessment" for computing interest under section 244(1A) of the Income-tax Act, 1961?

Analysis:

Issue 1: Tax Treatment for Interest Calculation
The case involved a dispute regarding the treatment of tax paid under section 140A for the purpose of calculating interest on refund payable to the assessee. The Commissioner of Income-tax (Appeals) had determined that interest should be paid to the assessee from a specific period due to the delay in refund. The Commissioner also excluded the payment made under section 140A. However, the Appellate Tribunal confirmed the decision. The High Court referred to a previous decision in CIT v. Ashok Leyland Ltd. where it was held that the self-assessment tax paid by the assessee should be considered for interest calculation. The High Court applied the same reasoning and held that tax paid under section 140A should be taken into account while determining interest under section 244(1A) of the Act.

Conclusion:
The High Court concluded that the tax paid under section 140A can indeed be treated as "amount paid in pursuance of any order of assessment" for the purpose of computing interest under section 244(1A) of the Income-tax Act, 1961. Therefore, the decision of the Appellate Tribunal was upheld, and the appeal by the Revenue was dismissed.