2013 (10) TMI 1232 - HC - Income Tax

Interest on refund u/s 244A of the Income Tax Act Interest to be computed from which date i.e. from the date when self assessment tax paid or from the date of deposit in pursuance of demand u/s 156 - Held that - No differentiation can be made to the provision of section 244A(1) and explanation does not give a different meaning at all. Any amount due to the assessee under the Act mentioned in section 244(1) clearly takes in all forms of refund, either self assessed tax or tax paid as per notice under Section 156 of the Act Decided against the Revenue.

Summary

Issues:
1. Entitlement to interest on refund of self-assessed tax under Section 244A of the Income Tax Act.
2. Interpretation of Section 244A (1) (b) and its applicability to self-assessment refunds.

Analysis:

Issue 1: Entitlement to interest on refund of self-assessed tax under Section 244A of the Income Tax Act
The case involved an appeal by the revenue challenging a judgment allowing a writ petition for interest on the refund of self-assessed tax. The assessee had paid excess tax, leading to a refund claim. The dispute arose regarding the entitlement to interest on the excess tax paid. The Single Judge allowed the writ petition, directing the Assessing Officer to grant interest on the excess self-assessed tax refund from the date of assessment till the refund date at the rate specified under Section 244A (1) (b) of the Act. The court emphasized that the assessee is entitled to interest on refunds of all tax payments exceeding the actual tax due, including self-assessed tax refunds.

Issue 2: Interpretation of Section 244A (1) (b) and its applicability to self-assessment refunds
The revenue contended that Section 244A (1) (b) does not cover self-assessment refunds, as there is no provision for such refunds under normal circumstances. Referring to the explanation under Section 244A, the argument was made that interest liability only arises for tax paid after a demand under Section 156 of the Act. However, the court rejected this argument, stating that the explanation does not alter the scope of Section 244A (1) (b) and that interest is payable on any amount due to the assessee under the Act, including self-assessed tax refunds. The court held that the explanation merely specifies the date from which interest is payable, without excluding self-assessed tax refunds from its purview. Consequently, the appeal was dismissed, upholding the judgment of the Single Judge regarding the entitlement to interest on self-assessed tax refunds under Section 244A of the Income Tax Act.