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TMI Blog2010 (3) TMI 449X X X X Extracts X X X X X X X X Extracts X X X X ..... S and advance tax, also paid self-assessment tax under section 140A of the Income-tax Act, 1961 (in short "the Act"). (b) On April 24, 2002 an order was framed under section 250/143(3) of the Act whereby a refund of Rs. 66,90,474, earlier paid as self-assessment tax by the assessee, was made. The respondent-assessee claimed interest on the amount refunded which was not allowed by the Assessing Officer. (c) The respondent-assessee carried the matter in appeal before the Commissioner of Income-tax (Appeals) (CIT(A)) claiming interest on the entire amount of refund including the amount paid on self-assessment. The Commissioner of Income-tax (Appeals) vide order dated July 9, 2003 found that the plea of the respondent-assessee was not tenable and consequently confirmed the order of the Assessing Officer. (d) Vide the impugned order dated October 29, 2004 the Income-tax Appellate Tribunal (in short 'the Tribunal') allowed the appeal of the assessee and set aside the order of the Commissioner of Income-tax (Appeals) relying upon the decision of the Supreme Court in the case of Modi Industries Ltd. v. CIT [1995] 216 ITR 759. The Tribunal, consequently, held that the respondent-assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ade. 244. (1) Where a refund is due to the assessee in pursuance of an order referred to in section 240 and the Assessing Officer does not grant the refund within a period of three months from the end of the month in which such order is passed, the Central Government shall pay to the assessee simple interest at fifteen per cent. per annum on the amount of refund due from the date immediately following the expiry of the period of three months aforesaid to the date on which the refund is granted. (1A) Where the whole or any part of the refund referred to in sub-section (1) is due to the assessee, as a result of any amount having been paid by him after the 31st day of March, 1975, in pursuance of any order of assessment or penalty and such amount or any part thereof having been found in appeal or other proceeding under this Act to be in excess of the amount which such assessee is liable to pay as tax or penalty, as the case may be, under this Act, the Central Government shall pay to such assessee simple interest at the rate specified in sub-section (1) on the amount so found to be in excess from the date on which such amount was paid to the date on which the refund is granted : . . ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on (1A)." 6. The provisions of section 244A read as follows : "(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 paid under section 115WJ or 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-half 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 115WE or 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-half per cent. for every month or part of a month comprised in the period or periods from the date or, as the case ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (headnote) : "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 with-held wrongly and contrary to law. The Government is liable to pay interest, at the rate applicable to the excess amount refunded to the assessee, . . ." 9. In the case of CIT v. Cholamandalam Investment and Finance Co. Ltd. [2007] 294 ITR 438 the Madras High Court dealt with the question of whether the assessee is entitled to interest under section 244A as per clause (1)(b) of that section, when the refund arises on account of payment of self-assessment tax. The Madras High Court observed as under (page 442) : "Even though the short title to section 140A reads as self-assessment, the charging phrase employed in section 140A namely 'Where any tax is payable on the basis of any return required to be furnished under section 115WD or section 115WH or section 139 or section 142 or section 148 or section 153A, as the case may be ; the assessee shall be liable to pay such tax together with interest payable under any provision of this Act for any delay in furnish ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efund is of taxes paid other than pre-paid taxes covered in clause (a), the computation of interest is for the period prescribed in clause (b), sub-section (1) of the said section. In Cholamandalam Investment and Finance Co. Ltd. [2007] 294 ITR 438 (Mad), it was held that even though the short title to section 140A reads as self-assessment, the charging phrase employed in section 140A, namely, "where any tax is payable on the basis of any return required to be furnished under section 115WD or 115WH or section 139 or section 142 or section 148 or section 153A, as the case may be, the assessee shall be liable to pay such tax together with interest payable under any provision of this Act for any delay in furnishing the return", makes it clear that there is no difference between : (i) the tax paid under section 115WJ, which deals with advance tax in respect of fringe benefits ; or (ii) the tax collected at source under section 206C ; or (iii) any tax paid by way of advance tax or any tax treated as paid under section 199, which deals with credit for tax deducted, which are provided under section 244A(1)(a). 12. The tax due on the returned income has to be paid by way of tax deducted a ..... 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