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TMI Blog2006 (7) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... sh for the assessee. The Ld. D.R. submitted that the CIT (Appeals) erred in directing the Assessing Officer to grant interest on the entire amount that became refundable to the assessee without making any distinction between the tax and interest component of the refund. It was further submitted that the Legislature has envisaged payment of interest on excess tax collected deducted at source, advance-tax payment and other payment and that payment of tax already made is a pre-requisite for granting interest on the excess payment. He further argued that in the case of Kurumber Betta Estate v. ITO [2002] 257 ITR 328 (Ker.), the Jurisdictional High Court has given a clear finding that section 244A would come into action only in the event of excess amount of tax, penalty, tax collected at source or paid as advance-tax, or treated as paid under section 199. The liability of the revenue to pay interest under section 244A is only towards the excess amount of tax or penalty, demanded or collected by it in discharge of the liability of an assessee. He further submitted that in the case ofKurumber Betta Estate, the Hon'ble High Court has held that in the tax jurisprudence, there is no concept ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Sandvik Asia Ltd., the Supreme Court has examined the provisions of sections 214, 237 and 244, but the words used in section 244A are much more wider than the words used in section 244. He, therefore, submitted that the CIT (Appeals) has rightly directed the Assessing Officer to work out the interest on the amount of the tax as well as interest and grant the same to the assessee. The ld. A.R. relied on the following precedents:- (i) Sandvik Asia Ltd. v. CIT [2006] 280 ITR 643 (SC) (ii) CIT v. Narendra Doshi [2002] 254 ITR 606 (SC) (iii) D.J. Works v. Dy. CIT [1992] 195 ITR 227 (Guj.) 5. We have heard the rival submissions of the parties. We have also carefully considered the facts relating to this issue as per material placed before us. We have also considered the written submissions filed by the Ld. D.R. as well as the Ld. A.R. In this case, it is not disputed that for all the assessment years in question, section 244A is applicable. The CBDT has explained the scope and effect of section 244A in Circular No. 549 dated 31-10-1989 as under:- "Payment of interest by the department for delay in grant of refund due to the assessee: 11.1 The old provisions regarding payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t on the statute book with effect from assessment year 1989-90 reads as under:- "244A. (1) Where refund of any amount becomes due to the assessee under this Act, he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated in the following manner, namely:- (a) where the refund is out of any tax collected at source under section 206C or paid by way of advance tax or treated as paid under section 199, during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of one and onehalf per cent for every month or part of a month comprised in the period from the 1st day of April of the assessment year to the date on which the refund is granted: Provided that no interest shall be payable if the amount of refund is less than ten per cent of the tax as determined under sub-section (1) of section 143 or on regular assessment; (b) in any other case, such interest shall be calculated at the rate of one and one-half per cent for every month or part of a month comprised in the period or periods from the date or, as the case may be, dates of payment of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt of interest on interest due to the assessee. Now, in the recent judgment in the case of Sandvik Asia Ltd. wherein assessment years 1977-78, 1978-79, 1981-82 and 1982-83 are involved, the Hon'ble Supreme Court has examined the provisions of sections 214, 237, 240, 243, 244 and relevant case law on the issue and held as under:- "In view of the express provisions of the Income- tax Act, 1961, 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 withheld wrongly and contrary to law. The Government is liable to pay interest, at the rate applicable to the excess amount refunded to the assessee, on the interest amount which becomes due under section 214(1). Section 214(1) itself recognizes in principle the liability to pay interest on the amount of tax paid in excess of the amount of assessed tax and which is retained by the Government. Interest on the excess amount is payable at the rate specified therein from the first day of the year of assessment to the date of regular assessment. Once the interest becomes due, it takes the same colour as the excess amount of tax which is refundable on regular as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t year 1978-79 the assessee was granted refund of tax on the basis of the assessment order but no interest was paid on the refund. After the Commissioner (Appeals) gave substantial relief the assessee received refund only of the excess amount paid as advance tax. But no interest was granted. For the assessment year 1981-82 the assessee was granted refund as well as interest on the amount under section 214. After the Commissioner (Appeals) granted substantial relief the assessee was allowed interest only under section 214 but no interest was granted under sections 214(1A) and 244(1A). For the assessment year 1982-83, the assessee paid further tax on assessment; but the Commissioner (Appeals) gave substantial relief and the assessee received refund of the excess tax paid but no interest was granted under section 214 or section 244. Pursuant to the order of the Supreme Court the Department granted interest up to March 27, 1998 but the Department refused interest on interest. The assessee filed writ petitions in the High Court challenging the orders; but the High Court dismissed the petitions. On appeal to the Supreme Court: Held accordingly, reversing the decision of the High Court, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s an accepted proposition in tax jurisprudence that tax laws know no equity. There cannot be a direction to the Revenue to pay interest in equity, when there is no such provision in the Income-tax Act. The decision in the case of Modi Industries Ltd. has been considered' by the Hon'ble Supreme Court in the recent decision in the case of Sandvik Asia Ltd. and has observed as under:- "The High Court in its judgment has referred to the provisions of section 244(1A) and the decision of this court in Modi Industries Ltd. v. CIT [1995] 216 ITR 759 extracted two paragraphs from this court's judgment holding that there can be no question of paying interest under both sections 214(1A) and 244(1A) of the Act simultaneously, and further that there is no right to receive interest except as provided by the statute. The decision in Modi Industries Ltd.'s case [1995] 216 ITR 759 (SC), has no bearing whatsoever on the issue in hand as the issue in that case was the correct meaning of the phrase "regular assessment" and as a consequence under which provision an assessee was entitled to interest for the period up to the date of regular assessment and thereafter. The matter of what was due to it in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en due consideration to the legal principles laid down in the precedents relied on by the ld. D.R. We find that the facts in the precedents relied on by the ld. D.R. Are distinguishable and hence as far as the facts of the present issue are concerned, the legal principles in the precedents are not applicable. As far as the precedent relied on by the ld. A.R. is concerned, we find that the facts in the said precedent are identical to the facts of the assessee's cases and hence, the said precedents is applicable to the assessee's case for the following reasons: As far as assessment year 1991-92 is concerned, the assessee challenged the order passed by the Assessing Officer under section 154 of the Act which revised refund of the assessee. The orders which can be challenged before the CIT (Appeals) have been given in section 246A of the Act which is brought on the statute book by the Finance Act (No.2) of 1998 with effect from 1-10-1998. The clause (c) of section 246A(1) provides that the assessee can challenge the order made under section 154 wherein the refund is reduced. As we have already held that interest is a part of the refund and as interest was denied to the assessee, it is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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