2016 (8) TMI 67 - AT - Income Tax

Granting of interest u/s.244A on payment of self-assessment tax - Held that - An assessee is entitled to compensation by way of interest for the delay in the payment of amounts lawfully due to the assessee which are with held wrongly and contrary to law. As decided in CIT Vs.Cholamandalam Investment & Finance Co. Ltd. 2007 (6) TMI 69 - HIGH COURT MADRAS the assessee is entitle to compensation by way of interest for delay in refund - Decided in favour of assessee.

Summary

Issues:
Granting of interest u/s.244A on payment of self-assessment tax.

Analysis:
The appeal was filed by the Revenue against the order of the Commissioner of Income-tax (Appeals)-6, Chennai, concerning the assessment year 2008-09. The grievance of the Revenue pertained to the granting of interest u/s.244A on the payment of self-assessment tax. The assessee, a Director of a company, initially filed a return of income and paid taxes. Subsequently, a revised return was filed within the allowed time, resulting in a refund. The Assessing Officer denied interest on the refund, stating it arose due to self-assessment tax payment. The Ld.CIT(A) ruled in favor of the assessee, citing a High Court case. The issue was deliberated, referencing the provisions of sections 140A and 244A of the Income Tax Act.

The judgment highlighted the importance of section 140A, which deals with self-assessment tax payment, and section 244A, which governs interest on refunds. The Court referred to specific clauses and explanations within these sections to elucidate the entitlement to interest on refunds. The Court emphasized that interest is payable on refunds arising from various tax payments, including advance tax, tax collected at source, and tax treated as paid. The provisos under section 244A delineated conditions for interest payment based on the type of tax paid. Notably, the Court referenced precedent cases, such as CIT v. Ashok Leyland Ltd. and Sandvik Asia Ltd. v. CIT, to support the statutory liability of the Revenue to pay interest on refunds.

The judgment underscored the settled legal principles that entitle an assessee to interest on delayed payments rightfully due to them. Citing previous rulings and the statutory framework of the Income Tax Act, the Court affirmed the obligation of the Government to compensate for delays in refund payments. Relying on the binding decision of the Jurisdictional High Court and the apex court, the Tribunal dismissed the Revenue's appeal, upholding the assessee's entitlement to interest on the refund. Consequently, the appeal of the Revenue was dismissed, affirming the assessee's right to interest u/s.244A on the self-assessment tax payment.

Order pronounced on 15th July 2016, at Chennai.