2015 (6) TMI 569 - AT - Income Tax

Non-granting of interest under section 244A of the I.T. Act on self assessment tax paid - Held that - Hon ble Bombay High Court in the case of Stockholding Corporation of India Vs. CIT & Ors. 2014 (11) TMI 899 - BOMBAY HIGH COURT following the decision of Hon ble Karnataka High Court in the case of CIT Vs. Vijaya Bank reported in (2011 (7) TMI 582 - KARNATAKA HIGH COURT ) and CIT Vs. Sutlaj Industries (2010 (3) TMI 449 - DELHI HIGH COURT ) has held that the assessee is entitled to interest under section 244A of the I.T. Act from the date of payment of tax on self assessment to the date of refund of the amount. Respectfully following the decision of the jurisdictional High Court, we hold that the assessee is entitled to interest under section 244A of the I.T. Act on that portion of self assessment tax paid from the date of payment of such tax till the date of refund. - Decided in favour of assessee. Interest under section 234C - Advance Tax - re-calculate the interest under section 234C - Held that - The law is not at all clear regarding the chargeability of interest under section 234C of the I.T. Act in a case where the assessment is completed at a figure below the returned income. In our opinion, merely because the assessee has declared higher income due to some error or mistake, the assessee shall not be liable to pay interest under section 234C of the I.T. Act on the returned income when the assessed income falls below the returned income. In our opinion, the assessee should be liable to pay interest under section 234C of the I.T. Act in such a peculiar case only on the assessed income when the same is determined at a figure below the returned income. In this view of the matter, we set-aside the order of CIT(A) and direct the Assessing Officer to re-compute the interest under section 234C of the I.T. Act on the assessed income. Decided in favour of assessee.

Issues:
- Challenge to order of CIT(A) regarding interest under section 234C of the I.T. Act
- Challenge to order of CIT(A) regarding interest under section 244A of the I.T. Act on self-assessment tax paid

Analysis:
1. The appeal challenged the CIT(A) order regarding interest under sections 234C and 244A of the I.T. Act for A.Y. 2006-07.
2. The assessee contested the CIT(A)'s decision not to re-calculate interest under section 234C and not to grant interest under section 244A on self-assessment tax paid.
3. The Assessing Officer rejected the claim for re-computation of interest under section 234C as interest is chargeable on the income returned.
4. The CIT(A) upheld the Assessing Officer's decision, stating that interest is chargeable on the total income declared in the return of income.
5. Regarding interest under section 244A, the Assessing Officer denied it as the refund was due to self-assessment tax paid.
6. The CIT(A) agreed with the Assessing Officer, stating that interest under section 244A is not applicable if the refund arises from self-assessment tax.
7. The ITAT Pune considered the arguments and cited precedents to rule that interest under section 244A is due on self-assessment tax paid until the refund date.
8. The ITAT Pune also addressed interest under section 234C, emphasizing that interest should be computed on the assessed income if it falls below the returned income.
9. The ITAT Pune referred to the provisions of section 234C and exceptions for underestimation, concluding that interest under section 234C should apply to the assessed income when it is lower than the returned income.
10. Consequently, the ITAT Pune allowed the appeal, directing the Assessing Officer to re-calculate interest under section 234C on the assessed income.
11. The judgment was pronounced on 12th June 2015.

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