2017 (7) TMI 873 - SC - Income Tax

Grant of interest under Section 244A - Held that - High Court 2015 (3) TMI 110 - DELHI HIGH COURT reveals that another judgment in the case of Commissioner of Income Tax v. Sutlej Industries Ltd.(2010 (3) TMI 449 - DELHI HIGH COURT) was cited wherein the view taken was that in such circumstances the assessee would be entitled to interest under Section 244A of the Income Tax Act on the refund of the self-assessment tax. The High Court further did not agree with the aforesaid view and made the following observation 35. Having found the position of law as indicated above, we express, with respect, our inability to subscribe to, or follow, the view taken by the other Division Bench of this court in the case of Commissioner of Income Tax v. Sutlej Industries Ltd. It is clear from the above that in the impugned judgment, the Bench has differed with the earlier view expressed by the Coordinate Bench. In the circumstances, the appropriate course of action was to refer the matter to the larger Bench and we fail to understand why it was not done. We are informed that subsequently in the case of Sutlej Industries Ltd. V. Commissioner of Income Tax pending before the High Court, the High Court has referred the matter to a larger Bench. In these circumstances, we set aside the impugned judgment of the High Court and remand the appeal back to the High Court for its afresh decision

Summary

Issues Involved:
Grant of interest under Section 244A of the Income Tax Act; Differing views between High Court benches; Referral to larger Bench for decision.

Analysis:
The Supreme Court addressed the issue concerning the grant of interest under Section 244A of the Income Tax Act, which was decided against the assessee by the High Court. The High Court's judgment cited a previous decision by a Coordinate Bench in another case, where it was held that the assessee would be entitled to interest on the refund of self-assessment tax. However, the High Court in the present case disagreed with this view and expressed its inability to follow the earlier decision. The Supreme Court noted this difference in opinion and emphasized that in such situations, the appropriate action should have been to refer the matter to a larger Bench for resolution.

Subsequently, it came to light that in a related case pending before the High Court involving the same issue, the matter had been referred to a larger Bench. In light of this development, the Supreme Court set aside the impugned judgment of the High Court and remanded the appeal back for a fresh decision by a larger Bench. The Court highlighted the importance of consistency and the need to resolve conflicting views by referring matters to larger Benches when necessary to ensure uniformity and clarity in legal interpretation.

In conclusion, the Supreme Court disposed of the appeal by directing the High Court to reconsider the issue of interest under Section 244A of the Income Tax Act along with related cases by a larger Bench. This decision underscores the significance of judicial consistency and the proper procedure to address conflicting views within the legal framework.