9911796707
TMI Blog2009 (7) TMI 872X X X X Extracts X X X X X X X X Extracts X X X X ..... aid by the assessee or collected from him and not on the amount due to the assessee but withheld by the Revenue, such as interest due which though included in the amount of refund under s. 240 of the Act by virtue of certain decisions referred to above - it is held that assessee was not entitled to any interest on interest as it was not a case of the refund of amount out of any tax paid by or collected from the assessee nor it has a date of payment by the assessee from which it can run. X X X X Extracts X X X X X X X X Extracts X X X X ..... o. 4 of his order which reads as under: "Order under s. 154 of the IT Act, 1961 Assessee company vide letter dt. 3rd March, 1999 has made following contentions: 1. Deduction under s. 80G for Rs. 2,50,000 was not granted in the assessment order under s. 143(3) dt. 23rd Nov., 1998 due to non-availability of exemption certificate from CIT. 2. Additional tax charged under s. 143(1A) of Rs. 23,000 may be deleted and credit along with interest under s. 244A should be granted. 3. Interest under s. 244A of the IT Act is not given on refund of Rs. 1,32,65,511 issued on 25th Sept., 1997 as per intimation under s. 143(1)(a) dt. 12th Sept., 1997. 2. On verification of the case records. it is found that the contention of the assessee company mentioned above at serial No. 1 is correct. As assessee has submitted the exemption certificate issued by CIT along with their rectification application, deduction under s. 80G for Rs. 2,50,000 is allowed to assessee. 3. Regarding second contention of the assessee, it is found that since assessee has failed to submit the exemption certificate even at the time of regular assessment under s. 143(3), the additional tax under s. 143(1A) has been correctl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 1,32,93,091 inter alia includes the payment of Rs. 75,00,000 under s. 140A. A notice under s. 154 of the IT Act was issued to the assessee mentioning above facts on 6th March, 1999 to appear on 13th March, 2000 and represent the case. However, nobody attended on appointed date. Hence, it is presumed that assessee has nothing to say regarding the above-mentioned issue. As the mistake is apparent on record, the same is rectified under s. 154 of the IT Act. Total income is recomputed as under: Income as per order under s. 154 dt. 7-6-1999 Rs. 3,19,60,400 Add: Excess depreciation claimed i.e. 25% of Rs. 1,00,000 Rs. 25,000 --------------- Revised total income Rs. 3,19,85,400 --------------- Withdraw excess interest granted under s. 244A on self-assessment payment of Rs. 75,00,000. Issue revised DN/challan/RO, as the case may be, after due verification." 4. Aggrieved with the order of the AO withdrawing the interest as aforesaid, the assessee filed an appeal before the CIT(A), but failed. The relevant part of the order of the CIT(A) confirming the AO's order as contained in para Nos. 8, 9, 10 and 11 reads as under: "8. I have carefully considered the facts of the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n for payment of interest on excess payment by way of self-assessment tax. The Authorised Representative has contended that all payments of whatsoever nature should be considered as the payments and hence interest under s. 244A should be allowed. However, this view does not find support from the provisions of the Act which provides allowing of interest only on excess payment of TDS amount, advance tax payment or payment in pursuance of a demand notice issued by the Department. The reliance on the case of D.J. Works is of no help as the issue in the said case was totally different. The Authorised Representative has also contended that once return is filed, self-assessment tax merges with the tax payments and therefore interest under s. 244A should be paid on the entire refund amount. However, this view is also not supported by any provision in the Act. The Act. has provided payment of interest only on excess payments of advance tax, TDS or payment on the basis of demand notice. I, therefore, do not agree with the contention of the Authorised Representative. 11. In view of the above discussion and also in view of the fact that interest on self-assessment tax was allowed vide order u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... medabad Special Bench "A" in the case of Punitaben Karsanbhai Patel Oral Specific Deferred Family Trust & Ors. vs. ITO (2006) 104 TTJ (Ahd)(SB) 773 : (2006) 103 ITD 175 (Ahd)(SB) and another decision of Tribunal, Ahmedabad Bench "C" in the case of Dhanvi Trading & Investment (P) Ltd. vs. AO (2000) 69 TTJ (Ahd) 757 : (2000) 72 ITD 245 (Ahd). Alternatively, it was submitted that in any case, the issue being debatable, interest once granted cannot be withdrawn in exercise of powers vested under s. 154 of the Act and reliance in this respect was placed on the decision of Hon'ble Supreme Court in the case of T.S. Balaram, ITO vs. Volkart Bros. & Ors. (1971) 82 ITR 50 (SC) and another latest decision of Hon'ble Madras High Court in the case of CIT vs. Cholamandalam Investment & Finance Co. Ltd. (2007) 211 CTR (Mad) 384 : (2007) 294 ITR 438 (Mad). According to learned counsel for the assessee, this latest decision of Madras High Court is directly on the issue because in this case, the AO had withdrawn the interest granted on refund granted out of payment under s. 140A in exercise of his powers vested under s. 154 of the Act, but the Hon'ble High Court quashed the AO's order. Finally, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . 154 of the Act either by the assessee by way of a petition or by the officer in exercising of his suo motu powers will not automatically result in correction of the alleged mistake. The officer is bound to satisfy himself that the alleged mistake falls within the ambit of an apparent mistake of facts or of law. 8. In view of above discussion, we are of the opinion that to decide the issue in hand the first question for our consideration is as to whether there was any mistake in the intimation issued under s. 143(1)(a) of the Act on 23rd Sept., 1997 on the basis of which a refund of Rs. 1,32,65,511 was determined and granted on 25th Sept., 1997, but interest under s. 244A was not granted. In other words, was non-granting of interest under s. 244A on the refund which was granted as a result of excess payment of taxes including the payment made under s. 140A of the Act a mistake apparent from the records and liable to be rectified under s. 154 of the Act and for this purpose, we have to consider the provisions of s. 244A, as they stood at the relevant time and also the decisions available upto the date of grant of refund, i.e. 25th Sept., 1997 and, therefore, we proceed to do so. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e where the interest is reduced, the AO shall serve on the assessee a notice of demand in the prescribed form specifying the amount of the excess interest paid and requiring him to pay such amount; and such notice of demand shall be deemed to be a notice under s. 156 and the provisions of this Act shall apply accordingly. (4) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989, and subsequent assessment years." (ii) So far as decisions are concerned, we are of the opinion that, at that time, following decisions/circular of the Board were available and are relevant for consideration and, therefore, are dealt herewith: (a) The decision of Hon'ble Supreme Court in the case of Modi Industries Ltd. vs. CIT. In this case, the Hon'ble apex Court, while dealing with the issue relating to payment of interest under s. 244(1A) has held as under: "(ii) If any tax paid pursuant to an assessment order after 31st March, 1975 (which will include TDS and advance tax to the extent the same has been retained and treated by the ITO as payment of tax in discharge of the assessee's tax liability in the assessment order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er annum to 1.5 per cent per month or part of a month comprised in the period of delay in the grant of refund. The Amending Act, 1987, has also amended ss. 214, 243 and 244 to provide that the provisions of these sections shall not apply to the asst. yr. 1989-90 or any subsequent assessment years. 11.4 The provisions of the new s. 244A. The provision of the new s. 244A are as under: (i) sub-s. (1) provides that where in pursuance of any other passed under this Act, refund of any amount becomes due to the assessee then, (a) if the refund is out of any advance tax paid or TDS during the financial year immediately preceding the assessment year interest shall be payable for the period starting from the 1st day of April of the assessment year and on the date of grant of the refund of interest shall, however, be payable, if the amount of refund is less than 10 per cent of the tax determined on regular assessment; (b) if the refund is out of any tax, other than advance tax or TDS or penalty, interest shall be payable for the period starting from the date of payment of such tax or penalty and ending on the date of the grant of the refund. The interest is to be calculated at 1.5 per ce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no room for interpreting the law, as it stood at that time, in any way, other than as we have opined above. 9.1 To make the things clear, we are of the opinion that non-grant of interest to the assessee while granting refund of Rs. 1,32,65,511 was a mistake apparent from the record and, therefore, our answer to question posed by us at the beginning is "Yes" i.e. there was apparent mistake in intimation under s. 143(1)(a) which resulted in non-allowances of interest under s. 244A of the Act. 10. Once we have found that non-granting of interest on refund of Rs. 1,32,65,511 granted on 25th Sept., 1997 was due to a mistake either of law or of facts, the natural corollary, which follows is that AO was duty-bound to rectify the intimation issued under s. 143(1)(a) of the Act on 23rd Sept., 1997 either of his own or on application by the assessee and to grant the interest as per law. 11. In view of above conclusion, we are of the opinion that the AO was quite justified in rectifying the mistake (under reference) by way of order under s. 154 of the Act dt. 7th June, 1999, passed on the assessee's application under s. 154 of the Act (filed on 9th March, 1999), whereby the assessee was a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e High Court when at the instance of the Revenue, the following question was referred for opinion of the Hon'ble High Court. The High Court after relying on the decision of Hon'ble Supreme Court in the case of Modi Industries Ltd. vs. CIT upheld the assessee's claim and question was answered in favour of assessee and against the Revenue. The relevant part of the order of Hon'ble High Court reads as under: "In the case reported in Modi Industries Ltd. vs. CIT (1995) 128 CTR (SC) 361 : (1995) 216 ITR 759 (SC), the Supreme Court has held that s. 214 provides for payment of interest to an assessee on the excess amount of advance tax paid. After adjustment of advance tax at the time of regular assessment, if some balance remains to the credit of the assessee, that balance is treated as excess amount of advance tax which has to be refunded with interest under s. 214. Therefore, this question is answered against the Revenue and in favour of the assessee." (b) Decision in the case of CIT vs. Cholamandalam Investment & Finance Co. Ltd. dt. 6th June, 2007. The brief facts of this case were that the AO withdrew the interest amounting to Rs. 39,38,684 granted under s. 244A of the Act by inv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terest shall be payable even if the amount is less than 10 per cent, of the tax as determined under s. 143(1) or on the regular assessment, because there is no proviso to s. 244A(1)(b) as provided under s. 244A(1)(a). 8. That apart, the law is well-settled that even for the refund of tax paid under s. 140A on self-assessment, the assessee is entitled to interest as held by this Court in CIT vs. Ashok Leyland Ltd. (2002) 254 ITR 641 (Mad). 9. It is also trite law that wherever the assessee is entitled to refund there is statutory liability on the Revenue to pay the interest on such refund on general principles to pay the interest on sums wrongfully retained. 10. We are also strengthened by the decision of the apex Court for the above view taken in Sandvik Asia Ltd. vs. CIT, wherein it is held as follows: 'In view of the express provisions of the IT 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...........' 11. Finding no substanti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR (St) 1] at p. 48 and various decisions, allowed the assessee's claim of interest under s. 244A(1)(b) of the Act on refund arising out of self-assessment tax paid under s. 140A of the Act. The relevant part as contained in para Nos. 11 to 15 reads as under: "11. We have carefully considered the rival contentions. Sec. 244A provides for payment of interest to the assessee on refunds. Clause (a) of sub-s. (1) provides for payment of interest where the refund is out of TDS or advance tax or tax treated as paid under s. 199. We are not concerned with this clause. Clause (b) provides for payment of interest 'in any other case'. The clause as well as the Explanation below the clause are reproduced below: (b) in any other case, such interest shall be calculated at the rate of one 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 tax or penalty to the date on which the refund is granted. Explanation: For the purposes of this clause, 'date of payment of tax or penalty' means the date as and from which the amount of tax or penalty specified in the notice of demand issued under s. 156 is paid in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other payments such as TDS, advance tax etc. If it is paid in excess of the demanded tax. This conclusion is supported by the observations made by the Supreme Court in the case of Modi Industries Ltd. Sec. 244(1A) which was considered by the Supreme Court provided for interest on refund of amounts paid by the assessee after 31st March, 1975 in pursuance of any order of assessment. This provision did not expressly allow interest on advance tax or TDS. Notwithstanding this the Supreme Court construed s. 244(1A) as referring not only the amount which has been paid directly pursuant to the order of assessment, but also as including the amount of TDS and advance tax, which were lying to the credit of the assessee and were ultimately adjusted and set off against the demands raised in the assessment order. The principle that is clearly discernible from these observations is that if the amounts paid by the assessee by whatever name called, have been lying with the Government, the assessee must be compensated by way of interest, if ultimately a refund of the payments is determined. This rule of equity laid down by the Supreme Court is clearly attracted to the present case a fortiori. Claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessees is that the income of the main trusts has to be assessed in the hands of the individual beneficiary trusts. It is on the basis of that proposition that the returns were filed by the beneficiary trusts. While returns were filed by the beneficiary trusts in their individual capacities, they are in fact offering income for taxation. Sec. 140A provides that when an assessee files a return of income and where tax is due as per the said return, the tax shall be paid by the assessee before filing the return of income and the proof of such payment of tax shall be accompanied along with the return of income. This is called self-assessment. When an assessee files a return with positive income and remits tax thereon under s. 140A, in fact, an assessment is being contemplated even though it is a 'self-assessment'. Later on, when it is found that the income covered by the said return is not taxable, the tax paid by the assessee in pursuance of that return has to be returned by the Revenue. Therefore, refund of tax is a must in this case. The proposition made by the CIT against the refund of tax is not proper. 33. Regarding the grant of interest also, the position is very clear. As a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the concerned authorities in compliance thereof. The beneficiary trusts having already been assessed on protective basis, rectification petition under s. 154 was filed before the AO to exclude the impugned income from the assessments of the beneficiaries. The AO, on the basis of the Kar Vivad Samadhan Scheme orders and relevant records, passed orders under s. 154 excluding the income from, the hands of the beneficiary trusts which resulted in the refund of tax along with interest. The Gujarat High Count has already in one of the group cases of the asses sees has passed an order dt. 30th July, 2001 in which the Court has held that one and the same income cannot be taxed in the hands of different assessees. In the present case, when the dispute regarding the assessment of income has already been settled under KVSS there was nothing to be assessed in the hands of the beneficiaries. As far as the above-mentioned order of the Gujarat High Courts is concerned, the Revenue has not proceeded further by way of a SLP before the Supreme Court. The Revenue had filed review petition before the High Court which was dismissed on 3rd Sept., 2003. A Larger Bench of the Gujarat High Court through ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... we find no error in the orders of the assessing authority we find that the CIT had no jurisdiction to invoke s. 263 and pass the revision orders contested herein. 40. Now we conclude here. For the reasons stated above, both on merit as well as in law, we find that the revision orders passed by the CIT in these cases are not sustainable in law. Accordingly we quash the revision orders and restore the orders of the assessing authority issuing refund with interest due thereon. 41. Certain other contentions are raised in respect of certain assessees before us. But all those contentions related to orders passed before the revision action taken by the CIT. Therefore, all those issues are to be treated as merged with the earlier orders. Therefore, we find that there is no need to discuss each such contention as the main controversy in these cases has already been decided and the matter has been held in favour of the assessees." 13. After careful consideration of the aforesaid decisions, we are of the opinion that there has been no decision detrimental to the interest of the assessee till date-what to say of the time when AO issued notice under s. 154 of the Act proposing to withdraw th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ra No. 12(ii)(b) of this order, and, therefore, for the reasons stated hereinbefore and following the aforesaid decision, we set aside the order of Revenue authorities withdrawing the interest allowed under s. 244A of the Act vide order under s. 154 of the Act dt. 7th June, 1999. 19. Additional ground: The additional ground raised by the assessee reads as under: "In law and in the facts and circumstances of the appellant's case, the learned CIT(A) has grossly erred in not directing learned AO to grant interest on interest on refund." 20. The learned counsel for the assessee submitted that the issue involved in the additional ground is a substantial question of law and, therefore, may be allowed to be raised by way of additional ground at this stage. 21. The learned Departmental Representative on the other hand, opposed the counsel's submission by submitting that the assessee having not raised this issue before any, of the Revenue authorities, cannot be allowed to raise the same for the first time before the Tribunal. 22. After careful consideration of the rival submissions. the issue involved in the additional ground and the law relating to Tribunal's power to admit additional ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . vs. Dy. CIT for asst. yr. 1995-96 in ITA Nos. 2348 and 2349/Ahd/2004, dt. 31st July, 2006, has discussed the decision of Hon'ble Supreme Court in the case of Sandvik Asia Ltd. and dismissed the assessee's claim. He, therefore, submitted that the assessee is not entitled to any interest on interest. 25. After careful consideration of the rival submissions, facts and circumstances of the case and various decisions relied upon by the parties, we are of the opinion that since the issue relating to payment of interest on interest has not been considered neither by the CIT(A) nor by the AO, it will be in the interest of justice, if the issue is restored back to the file of AO. Consequently, the issue relating to payment of interest on interest is restored back to the file of AO with the directions to decide the same afresh in accordance with law, after allowing the assessee a proper opportunity of being heard. 26. To conclude, we set aside the order of the CIT(A) dt. 8th June, 2001 upholding the order of the AO passed under s. 154 of the Act on 16th March, 2000 whereby the AO had withdrawn the interest granted to the assessee under s. 244A of the Act on the refund having become falle ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of s. 154 of the Act to withdraw the same to the extent it stood allowed on the self-assessment tax component of Rs. 75 lacs, vide order dt. 16th March, 2000. 29.5 The learned CIT(A), in appeal, confirmed the said action of the AO. He was of the view that though the AO's action in withdrawing interest does not fall within the purview of s. 154, being a debatable issue, on which clearly two views are possible, even as argued by tile assessee before him, it was so even at the time interest stood allowed to the assessee under s. 154. In other words, the interest, which stood allowed under s. 154, was clearly barred for being allowed under the said section. As such, per the subsequent partial withdrawal, i.e., on the amount of self-assessment tax, he only sought to correct himself, insofar as he had exceeded jurisdiction under s. 154, which could be applied only to rectify patent and obvious errors, both in law and on fact(s), on which there is no doubt, as in respect of the interest on the balance tax refunded in the present case. And which, having not been allowed (in the first instance), is a mistake, which could validly be rectified, so that the same could not be subject to su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssue is not debatable, so that the AO's action of allowing interest on self-assessment tax was not one on which two views are reasonably or conceivably possible and, hence, could not be 'rectified' by the AO under s. 154, is rendered superfluous, being, as would, be apparent, in clear contradiction with the said decision on which the assessee has itself placed extensive reliance. In fact, this is precisely the ground (and which stands now endorsed by the Madras High Court), on which the learned CIT(A) found the assessee's claim unacceptable. The whole premise of the decision is that the issue being debatable, the same cannot be a subject-matter of rectification proceedings. As such, whether the interest stands allowed or not in the first instance [here, as in the cited case, under s. 143(1)] is neither decisive of the matter nor relevant. However, once the same stands allowed (or not allowed), the same cannot be called into question in proceedings under s. 154, the scope of which is severely limited to rectification of patent mistakes of law or fact or both, and it is not possible to go into the true scope of the provision under s. 154. In fact, I find that my learned Brother also ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Madras High Court and, therefore, its 'rectification' was a mistake committed per the first order under s. 154, and which (mistake), stood rectified per the second order. 31.2 The relevant part of the provision in respect of self-assessment tax, s. 140A, reads as under, with the Explanation to s. 140A(1) coming into effect from 1st April, 1989, i.e., the same date as s. 244A: "140A Self-assessment.-(1) Where any tax is payable on the basis of any return required to be furnished under s. 139 or s. 142 or, as the case may be, under any provision of this Act, 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 or any default or delay in payment of advance tax before furnishing the return and the return shall be accompanied by proof of payment of such tax and interest. Explanation: Where the amount paid by the assessee under this sub-section falls short of the aggregate of the tax and interest as aforesaid, the amount so paid shall first be adjusted towards the interest payable as aforesaid and the balance, if any, shall be adjusted towards the tax payable." In this regard, I would also l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of his return of income. So, however, refund of self-assessment tax may arise, for any reason as (say) where the assessee claimed deduction (sic) its disallowance, but does not, all the same, wish to be liable for interest on the tax thereon as (say) where the assessee estimates the tax liability at a higher amount, but could not pay the same by way of advance tax due to paucity of funds for the time being, and so forth. The above delineates the basic conceptual difference that characterizes self-assessment tax from other prepaid taxes (which stands recognized both statutorily and legally) and, thus the (sic) regarded differently under the Act, even as both are only towards the tax liability for the relevant year. Also, therefore, being paid only after the close of the relevant previous year it also incidentally gives rise to the issue of date of its reckoning and which aspect cannot be overlooked or divorced from the issue of allowing interest on refund out of self-assessment tax. 32. Next, I shall discuss the first aspect of my learned Brother's order. 32.1 The apex Court in the case of Modi Industries Ltd., which was rendered in the context of s. 214 of the Act, which did no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... where any question arises as to the period to be excluded, it shall be decided by the Chief CIT or CIT whose decision thereon shall be final." 32.3 It clearly, provides for allowance of interest on tax refund on account of: (a) prepaid taxes; and (b) in any other case. While the date of reckoning the same in respect of prepaid taxes, irrespective of the actual daters) of payment of tax, is the first day of the relevant assessment year, that for cases falling under cl. (b) is the date on which the tax stands paid in excess of that demanded [Explanation to s. 140A(1)]. The interpretation of the words "date of payment" has itself been a subject-matter of debate and varying interpretations by different authorities, as would also be evident from the perusal of the cases cited by my learned Brother in his proposed order. So however, the ratio of the decision in the case of Modi Industries Ltd. is that the tax stands 'paid' on the date when the same gets adjusted against the tax demand, i.e., the date of intimation under s. 143(1)(a) in the present case, or 23rd Sept., 1997. In fact, this is the only interpretation that can be placed on the language of the s. 244A [Explanation to s. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt tax, to avail of interest by placing their surplus funds with the Revenue. 32.5 Thus, the law, to the extent that can be reasonably said to have been laid down by the apex Court and other pronouncements of binding nature, is only that once the tax paid gets adjusted against the assessee's assessed tax liability for the relevant year, the assessee would be entitled to interest on any refund that is so determined. subject of course to the specific provision (of the Act) in its regard, as for the computation of the period of 'delay'. It is so as unarguably the question of the said delay, or the period for which the interest is payable to the assessee cannot be considered as independent of the basic issue of the liability of the Revenue on account of interest to the assessee arising under the Act (in any given set of circumstances), so that it (the question of the said period) is integral thereto. In the present case the refund ought to have been granted to the assessee on the date of demand notice [intimation under s. 143(1)(a)] itself, i.e., 23rd Sept., 1997, so that the law not providing for any period subsequent to the determination of the assessed tax, or for a zero delay, for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acs w.e.f. 1st April, 1996, i.e., without making any distinction between the prepaid tax and self-assessment tax and which, if so, would clearly exhibit that the first order under s. 154 stood passed inadvertently or in a mistaken manner, i.e., insofar as the allowance of interest on self-assessment tax of Rs. 75 lacs is concerned. So however, there is some substance (in the facts of the present case) in the said argument, in as much as the interest stood also not allowed on the prepaid tax component of refund, and on the exigibility of which there is, admittedly, no doubt; the language of the Act being unambiguously clear in the matter. It is, therefore, that an exercise in ascertaining and understanding the ratio of the settled law, even as attempted by my learned Brother, with reference to the decision in the case of Modi Industries Ltd. and the Board's Circular No. 549, stands attempted by me, even though the decision in the case of Cholamandalam Investment & Finance Co. Ltd., in my view, as also afore-expressed, is squarely, on the point and decides the same, in the facts and circumstances of the present case, though, against the assessee. 32.7 It may appear that the two limb ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h law, even as both the sides have cited case law in their favour before us. In my view it is incumbent on the Tribunal, after having admitted the additional ground raised before it for the first time, on the ground of it being a legal issue (with all the relevant and pertinent facts on record and not disputed), to decide the same. The Revenue, through the learned Departmental Representative, has cited a recent decision by the Tribunal (Ahmedabad Bench 'A') in the case of Gujarat State Fertilizers & Chemicals Ltd. vs. CIT (ITA Nos. 2348 and 2349/Ahd/2004, dt. 31st July, 2006), wherein it has, after an at length consideration of the extensive case law in the matter cited before it, including that by the apex Court in the case of Sandvik Asia Ltd. vs. CIT, decided the issue under reference in favour of the Revenue, holding that no interest on interest (for the delayed refund by the Revenue of taxes, etc.) is allowable under the Act. The assessee before us has not been able to meet the same. In my view, therefore, following the decision of the Co-ordinate Bench would be the only· proper course in the matter, even as also advocated by the jurisdictional High Court [Sayaji Iron & ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... given below question is also referred to Your Honour (Hon'ble President of Tribunal) with a request that the same be referred to the Third Member for his opinion or pass such an order as Your Honour may deem fit: "whether on the facts and circumstances of the case and in law, the issue raised by the assessee by way of additional ground, should be decided on merits or be remanded to AO for consideration in accordance with law after allowing the assessee an opportunity of being heard." R.P. GARG, SENIOR VICE PRESIDENT (AS THIRD MEMBER): 25th June, 2009 On a difference of opinion between the two Members, the President, Tribunal has referred the following points for my opinion as a Third Member: "1. Whether on the facts and circumstances of the case and in law, the order of the AO passed under s. 154 of the Act on 16th March, 2000, withdrawing the interest under s. 244A of the Act, already allowed on the refund due out of payment of self-assessment (under s. 140A of the Act) of Rs. 75 lakhs, be sustained or cancelled? 2. Whether on the facts and circumstances of the case and in law, the issue raised by the assessee by way of additional ground, should be decided on merits or be r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... JM having gone through the provisions of s. 244A of the Act, the Board's circular and the decision of the Supreme Court in the case of Modi Industries Ltd. vs. CIT (1995) 128 CTR (SC) 361 : (1995) 216 ITR 759 (SC), opined that the assessee was entitled to interest under s. 244A of the Act on the entire refund irrespective of the nature of payment which had resulted in the refund and the Revenue was under obligation, as per the law as existed on the date to grant interest on such refund. In other words, he observed that the nature of payment which resulted in refund, i.e. whether the refund was out of excess payment of TDS or excess payment of advance tax or excess payment of self-assessment tax under s. 140A of the Act had nothing to do with the grant of interest under s. 244A of the Act and that since the quantum of refund was more than the tax paid under s. 140A of Rs. 75 lacs, the assessee was entitled to interest on total refund Including the refund of Rs. 75 lacs. Non-granting of interest by the Revenue, while computing the assessee's income under s. 143(1)(a) of the Act was, therefore, in his opinion a mistake of law as well as the facts and was apparent from the records, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c-June] 1996; and that it was adjusted as "self-assessment" tax in Revenue records. It was not a case of either AO or CIT(A) that it was not a self-assessment tax paid by the assessee or that the refund was out of that. The case of Revenue is that no interest on the refund of this amount out of self-assessment was allowable under s. 244A of the Act. Be that as it may, it was a payment under the Act and in our opinion, would be a case of refund which would fall in the categories of 'other case' as provided in sub-s. (1)(b) of s. 244A. 9. Sec. 244A under which the interest is to be granted reads as under: "(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: (al where the refund is out of any tax collected at source under s. 206C or paid by way of advance tax or treated as paid under s. 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 fr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e under cl. (a) only on that amount of refund which is out of the TCS under s. 206C or paid by the assessee by way of advance tax or treated as paid under s. 199 during the financial year preceding the assessment year. Apparently this clause would not cover self-assessment tax as it is neither a TCS under s. 206C nor paid by the assessee by way of advance tax nor treated as paid under s. 199. The interest under this cl. (a) is to be calculated for every month or part of the month from the 1st day of April of the assessment year to that date on which the refund is granted. Proviso, however, provides that no interest is to be paid, if the amount of refund is less than 10 per cent of the tax as determined under s. 143(1) or on regular assessment. This is when the refund is out of the TDS or TCS or treated as paid under s. 199. 12. Clause (b), sub-s. (1), s. 244A similarly provides for interest in other cases of refund to be calculated for every month or part of the month comprised in the period from the date or, as the case may be, dates of payment of the tax or penalty to the date on which the refund is granted. This would cover eases of refund out of t4e taxes paid pursuant to asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emand issued on adjustment against demand on assessment and accordingly the interest on the refund to an assessee out of self-assessment tax is to be granted under s. 244A of the Act. In the case of this assessee it was adjusted vide intimation issued under s. 143(1) of the Act issued on 23rd Sept., 1997 and therefore self-assessment tax became a tax paid pursuant to notice of demand notice on this date. 17. The aforesaid is a clear proposition of law which does admit of any debate and therefore granting of interest by first rectification order dt. 25th Sept., 1997 was not in accordance with law. The AO could not have granted any interest to the assessee on the refund of self-assessment tax paid as it was refunded on the date of intimation under s. 143(1)(a) itself and there was no delay thereafter. Consequently the second order withdrawing interest granted is valid and in accordance with law and is to be upheld. 18. The second point of difference is whether the assessee would be entitled to interest on interest on delayed refund. The facts as to the second issue of difference are that the assessee raised an additional ground claiming interest on interest. The learned JM admitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d it was even otherwise a case where the interest has been granted in a writ as compensation and not as interest on interest under the provisions of the IT Act. Certain decisions were considered in this case before the Supreme Court laying down a ratio that "the amount of refund" include refund of tax as well as interest and these were found to be discussed by the Court under the heading "Does the Act provide for payment of compensation for delayed payment of amounts due to ah assessee in a case where these amounts include interest?" as under: "24. In our view, the Act recognizes the principle that a person should only be taxed in accordance with law and hence where excess amounts of tax are collected from an assessee or any amounts are wrongfully withheld from an assessee without authority of law the Revenue must compensate the assessee. 25. At the initial stage of any proceedings under the Act any refund will depend on whether any tax has been paid by an assessee in excess of tax actually payable to him and it is for this reason that s. 237 of the Act is phrased in terms of tax paid in excess of amounts properly chargeable. It is, however, of importance to appreciate that s. 24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d does not relate to an amount payable by the Revenue by way of interest on such sums. The High Court's conclusion is based mainly on the wording of the proviso to s. 240 of the Act. As already discussed by us in para supra the proviso can have no relevance whatsoever as it was not part of the Act during the relevant period. The said proviso was inserted w.e.f. 1st April, 1989. 30. The High Court in its judgment has referred to the provisions of s. 244(1A) and the decision of this Court in Modi Industries Ltd. extracted two paras from this Court's judgment holding that there can be no question of paying interest under both ss. 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. case 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 upto the date of regular assessment and thereafter. The matter of what was due to it in terms of the decision in Modi Industries Ltd. case is over, concluded ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct from 1st April, 1989 as under: "12. We have given our anxious and thoughtful consideration on the elaborate submissions made by counsel appearing on either side. In our opinion, the High Court has failed to notice that in view of the express provisions of the Act an assessee is entitled to compensation by way of interest on the delay in the payment of amounts lawfully due to the appellant which were withheld wrongly and contrary to the law by the Department for an inordinate long period of upto 17 years. The High Court, in our opinion, has unnecessarily made the judgment a bulky one by considering various provisions of the Act and. in particular, s. 240 which was inserted by Direct Tax Laws (Amendment) Act, 1987 w.e.f. 1st April, 1989 and hence was not applicable to the present case. The High Court has not considered s. 240 as it stood then i.e., at the relevant point of time." 22. Sec. 244A grants interest only on that amount of refund that is out of the tax paid by the assessee or collected from him and not on the amount due to the assessee but withheld by the Revenue, such as interest due which though included in the amount of refund under s. 240 of the Act by virtue of cer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ary meaning thereof, as appearing in the Advanced Law Lexicon is that 'to repay; to give back; to restore; reimburse... to make return or restitution of a sum received or taken; to hand back, repay, restore'. In New Lexicon Webster's Dictionary it is 'to payback (money spent): to reimburse (some one): to make repayment', whereas in terms of the Shorter Oxford English Dictionary, it means, 'to give, restore, to make return or restitution of (sum received or taken), to hand back, retake, restore, to reimburse'. Considering these dictionary meanings of the word 'refund', it can be said that it is an act of repayment of reimbursement of what one has paid earlier. The term 'refund of any amount' in s. 240 and 244 has been held to refund of the payments by the assessee as well as any other amount due to an assessee including interest payable to an assessee under ss. 214 or 244/244(1A) on parity of reasoning it would also include interest due to an assessee under s. 244A also. But the question is granting of interest on the refund of any amount, if that was paid late. The opening words of section uses the same language as was in s. 244 effective up to 1988-89; namely 'Where refund of any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st depends upon the construction of the statute. In India Carbon Ltd. (1997) 6 SCC 479, the Supreme Court also held that interest can be levied and charged on delayed payment of tax only if the statute that levies and charges the tax makes a substantive provision in that behalf. The newly added provisions of the Act in s. 244A apparently reveal that there is a liability to pay interest on delayed payment of refund amount but they do not provide for payment of any interest on interest, even though there is delay in payment of such interest to the assessee. Until the IT Act is amended for granting such benefit, in our opinion, no relief can be granted by the Tribunal, even if the equity so demands. Further, the provisions of s. 244A were not taken into consideration and consequently the difference between the language of s. 244 and 244A was not noticed nor could be appreciated. 27. For the reasons stated above and looking to the language of s. 244A, it is held that assessee was not entitled to any interest on interest as it was not a case of the refund of amount out of any tax paid by or collected from the assessee nor it has a date of payment by the assessee from which it can run. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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