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TMI Blog2014 (11) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax by way of advance tax and credit for tax deducted at source. However as there was still a shortage of tax payable, the petitioner paid Rs. 2.60 crores on 31 August 1994 as and by way of tax on self assessment. The challan evidencing the payment of the tax on self assessment was annexed along with the Return of Income. (b) On 31 December 1996 the Assessing Officer completed the assessment for Assessment Year 199495 under Section 143(3) of the Act. The above order dated 31 December 1996 determined the petitioner's income at Rs. 15.27 crores. Consequent to the above, a notice of demand under Section 156 of the Act was issued to the petitioner raising a demand of Rs. 1.76 crores. It appears that the demand of Rs. 1.76 crores was set off against the refund due to the petitioner for Assessment Year 199596. (c) Being aggrieved, the petitioner carried the matter in appeal to Commissioner of Income Tax (Appeals) (CIT)(A). On 11 September 1997, the CIT(A) substantially allowed the petitioner's appeal. (d) Consequent to the above, by an order dated 20 October 1998, the Assessing Officer gave effect to the order dated 11 September 1997 of the CIT(A). As a result of giving effe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand. (2) .................... (3) ................... (4) ...................." 5. Mr. Jitendra Jain, learned counsel appearing for the petitioner in support submits as under : ( a) The issue of grant of interest is no longer resintegra in view of the decision of the Supreme Court in Union of India v/s Tata Chemicals [2014] 363 ITR page 658. Thus, the revenue should be directed to grant interest on the excess amount paid as tax on self assessment under Section 140A of the Act; (b) Section 244A (1) of the Act provides that refund of any amount due under the Act to the assessee would entitle the assessee to receive the same along with interest. This would govern refund granted both under clauses (a) & (b) of subsection (1) of Section 244A of the Act. Section 244A(1)(a) would govern refunds out of Advance tax and tax deducted at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d Section 244A(1)(b) of the Act would have no application. This contention is opposed to the meaning of the provision disclosed even on a bare reading. If the tax paid is not covered by clause (a) of Section 244A(1), it falls within clause (b), which is a residuary clause. Besides, this contention stands negatived by the CBDT Circular bearing No.549 dated 31 October 1989 wherein reference is made to Section 244A and para 11.4 thereof reads as under : 11.4 The provisions of the new section 244A are as under: (i) Subsection (1) provides that where in pursuance of any order 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 tax deducted at source during the financial year immediately preceding the assessment year, interest shall be payable for the period starting from the 1st April of the assessment year and on the date of grant of the refund. No 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 tax deducted at source or penalty, interest shall be payable for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore no interest can be granted on refund of such amounts which are not tax. 9. The next objection of the Revenue is that the decision of the Apex Court in Tata Chemicals (supra) is inapplicable to the present facts. The case before the Apex Court in Tata Chemicals (supra) arose as the quantum of tax deducted by it consequent to the order passed by the Assessing Officer directing it to deduct tax on amounts being remitted abroad, it was found in appeal that the payments made were in the nature of reimbursement and therefore not a part of income of the party to whom it is being remitted for the purposes of deduction of tax at source. Therefore Tata Chemicals sought refund of the amount paid in excess along with interest thereof. This the Supreme Court granted while making the following observations with regard to the liability to pay interest : "A "tax refund" is a refund of taxes when the tax liability is less than the tax paid. As per the old section an assessee was entitled for payment of interest on the amount of taxes refunded pursuant to an order passed under the Act, including the order passed in an appeal. In the present fact scenario, the deductor/assessee had paid tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... course. In the present case, it is not in doubt that the payment of tax made by resident/ depositor is in excess and the department chooses to refund the excess payment of tax to the depositor. We have held the interest requires to be paid on such refunds. The catechize is from what date interest is payable, since the present case does not fall either under clause (a) or (b) of Section 244A of the Act. In the absence of an express provision as contained in clause (a), it cannot be said that the interest is payable from the 1st of April of the assessment year. Simultaneously, since the said payment is not made pursuant to a notice issued under Section 156 of the Act, Explanation to clause (b) has no application. In such cases, as the opening words of clause (b) specifically referred to "as in any other case", the interest is payable from the date of payment of tax. The sequel of our discussion is the resident/deductor is entitled not only the refund of tax deposited under Section 195(2) of the Act, but has to be refunded with interest from the date of payment of such tax." Emphasis supplied. From the aforesaid observations of the Apex Court in Tata Chemicals, it would be clear t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me in accordance with Section 140A of the Act. Secondly, the provisions of Section 244A(1) (b) very clearly mandate that the revenue would pay interest on the amount refunded for the period commencing from the date the payment of tax is made to the revenue upto the date when refund is granted to the revenue. Thus, the submission of Mr. Pinto that the interest is payable not from the date of payment but from the date of demand notice under Section 156 of the Act cannot be accepted as otherwise the legislation would have so provided in Section 244A 1(b) of the Act, rather then having provided from the date of payment of the tax. 13. We find support for our view from the decisions rendered by Karnataka High Court in Commissioner of Income Tax v/s Vijaya Bank [2011] 338 ITR page 489 and Delhi High Court in Commissioner of Income Tax v/s Sutlej Industries Ltd. [2010] 325 ITR page 331. In both cases in identical circumstances it was held that interest is payable from the date of payment of the tax on self assessment to the date of refund of the amounts under Section 244A of the Act. 14. Accordingly, for all the aforesaid reasons, we set aside the impugned order dated 28 September 1999. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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