1999 (3) TMI 104 - AT - Income Tax

Summary

Issues Involved:
The judgment involves the rejection of claim of interest u/s 244A by the Assessing Officer (A.O.) and its subsequent appeal before the ld. CIT(A) for Assessment Year (A.Y.) 1992-93.

Resolution of Issues:

1. Background and Claim of Interest u/s 244A:
The assessee filed the original return and paid self-assessment tax u/s 140A for A.Y. 1992-93. After a revised return and additional tax payment, the A.O. completed the assessment. The Tribunal's order for the earlier A.Y. allowed the carry forward of losses, resulting in a reduced total income for A.Y. 1992-93. The A.O. rectified the order and granted a refund but declined to allow interest u/s 244A on the self-assessment tax paid. The ld. CIT(A) upheld this decision, stating that self-assessment tax payments are not covered under section 244A(1). The assessee appealed this decision.

2. Arguments and Legal Precedents:
The assessee argued, citing legal precedents, that interest on excess payments, including those under section 140A, should be granted. The ld. DR supported the ld. CIT(A)'s decision, emphasizing the exclusion of self-assessment tax from section 244A(1).

3. Interpretation of Section 244A and Precedents:
The Tribunal analyzed the provisions of section 244A, effective from 1-4-1989, and the Supreme Court's interpretation of similar provisions under sections 214 and 244(1A). The Tribunal highlighted the treatment of advance tax, TDS, and self-assessment tax as income tax payments upon assessment, leading to the alteration of their character. The Tribunal discussed the principles laid down by the Supreme Court in Modi Industries Ltd. regarding the payment of interest on excess tax payments.

4. Calculation of Interest u/s 244A:
Section 244A outlines two situations for interest calculation: refund from TDS or advance tax, and refund from self-assessment tax or other taxes u/s 156. The Tribunal clarified that interest is payable from specific dates based on the nature of the tax payment. Self-assessment tax retains its character until regular assessment, after which it transforms into tax paid for interest calculation purposes.

5. Decision and Grant of Interest:
The Tribunal held that the assessee is entitled to interest u/s 244A from the date of the assessment order. Relying on legal precedents and the Supreme Court's decision, the Tribunal reversed the ld. CIT(A)'s order and directed the A.O. to grant interest on the excess payments made via self-assessment tax.

In conclusion, the Tribunal partly allowed the assessee's appeal, emphasizing the entitlement to interest u/s 244A on excess payments made through self-assessment tax.