2015 (6) TMI 930 - AT - Income Tax

Eligibility for interest on refund out of excess Self Assessment Tax paidas per clause (b) of Sub-section (1) of Section 244A - CIT(A) allowed claim - Held that - Issue regarding grant of interest on self assessment is no more res-integra as Hon ble Bombay High Court in the case of Stock Holding Corporation of India Ltd. vs. N.C. Tewari, the Commissioner of Income Tax, Mumbai &Others, 2014 (11) TMI 899 - BOMBAY HIGH COURT after considering various arguments of the Revenue, has held that AO has to compute the interest payable from the date of payment on self assessment tax till the date of refund. Respectfully following the same we hold that Ld. CIT(A) did not commit any error in granting the impugned interest to the assessee - Decided in favour of assessee.

Summary

Issues:
Grant of interest on self-assessment tax and refund adjustment under Section 244A(1)(b) of the Income Tax Act, 1961.

Analysis:
1. The appeals were filed by the Revenue against orders passed by Ld. CIT(A)-13 for assessment years 2008-09 and 2011-12. The main contention was the grant of interest to the assessee on self-assessment tax and refund adjustment. The AO did not provide interest initially, but Ld. CIT(A) accepted the claim of the assessee based on rectification application.

2. The Revenue argued that interest should not be granted on self-assessment tax and refund adjustment. However, the Ld. AR pointed out a judgment by the Hon'ble Bombay High Court in the case of Stock Holding Corporation of India Ltd., which held that interest is payable from the date of payment on self-assessment tax till the date of refund. The court considered the payment made under section 140A as tax under the Act.

3. The Hon'ble Bombay High Court rejected the Revenue's contentions and clarified that payment of tax on self-assessment is considered mandatory to discharge an obligation under the Act. The court also dismissed the Revenue's argument that interest should only be paid from the date of notice under section 156, emphasizing that interest is payable from the date of tax payment.

4. Citing decisions by other High Courts, the Hon'ble Bombay High Court reaffirmed that interest is payable from the date of self-assessment tax payment to the date of refund under Section 244A. Consequently, the appeals of the Revenue were dismissed as the issue was already settled by the High Court's decision.

5. After considering both parties' arguments, the Tribunal upheld the decision based on the High Court's judgment, concluding that Ld. CIT(A) did not err in granting interest to the assessee. Therefore, both appeals filed by the Revenue were dismissed.

In conclusion, the judgment clarified the entitlement of the assessee to interest on self-assessment tax payments and refund adjustments, as established by the Hon'ble Bombay High Court's decision, leading to the dismissal of the Revenue's appeals.