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TMI Blog2015 (3) TMI 110X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of deletion of the amount of Rs. 69 Lacs which had been added by the AO by invoking Section 14A read with Rule 8D of the Income Tax Rules, the appeal to that extent was not entertained as the calculation of disallowance under Section 14A was found covered by the ruling in Maxopp Investment Ltd. v. CIT, (2011) 203 Taxman 364 (Delhi). 3. By order dated 22.09.2014, the following substantial question of law was formulated:- "Whether on the facts and circumstances of case, the Income Tax Appellate Tribunal was correct in law in confirming the order of the CIT(A) that the assessee shall be entitled to interest under Section 244A of the Income Tax Act, 1961 in respect of excess self assessment tax paid?" 4. The background facts relevant for purposes of addressing the above-noted question of law only need to be captured here. 5. The assessee is a Government of India undertaking established under the Ministry of Petroleum and Natural Gases, primarily engaged in providing engineering and technical consultancy services and execution of contracts on turn-key basis, predominantly in the oil/gas/hydrocarbon sectors. It had filed a return on 13.11.2006 for assessment year 2006-2007 decla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e refund is due to the excess payment of self assessment tax, such restriction is not applicable. This view is in line with the decision of Madras High Court in case of CIT vs. Cholamandalam Investment & Finance Co. Ltd. (166 Taxman 132), and Delhi High Court. Accordingly, I hold to allow interest u/s 244A of the I.T. Act to the appellant on refund due on account of payment of excess self assessment tax." 10. The revenue took out appeal before the ITAT, inter alia, in the context of aforementioned direction concerning the admissibility of interest on the excess self-assessment tax paid. Noting the submission that, according to the intimation under Section 143(1), the assessee was eligible for refund of Rs. 7,81,23,227/-, the assessee was held to be entitled to interest as granted by CIT (Appeals) on the excess self-assessment tax paid under Section 140A in terms of Section 244A. 11. The legality of the order of ITAT to above effect is challenged by the Revenue primarily raising the following contentions: "ITAT erred in not examining the fact as to whether the assessee has raised the issue of interest on self assessment tax before the Assessing Officer or not. The order of the AO ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 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 115 WE 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 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 on and from which the amount of tax or penalty specified in the notice of demand issued under sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uoted observations of Supreme Court in the case of Sandvik Asia Limited (supra) and finding support from the view taken by Madras High Court in CIT v. Cholamandalam Investment and Finance Co. Ltd. (supra), a Division Bench of this court, inter alia, observed that - "the tax due on the returned income has to be paid by way of tax deducted at source (section 199), advance tax (section 209) or by way of self-assessment tax (section 140A). In addition, where the assessment is completed at an income higher than the returned income, the tax payable by the assessee is specified in the notice of demand issued under section 156 of the Act. Where there is a shortfall in payment of tax vis-à-vis the tax finally due on the assessed income, the assessee is liable to pay interest under section 234B of the Act. Conversely, where the Revenue makes a high-pitched assessment which is subsequently reduced/modified in appeal, any payment of taxes made, which are subsequently refunded as a consequence of relief obtained in appeals etc., are monies legitimately belonging to the taxpayers and wrongly withheld by the Government. This is based on the principle that if the Revenue had, in the first ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the statutory period. 7. As we have already noticed, in Sandvik case (supra) this Court was considering the issue whether an assessee who is made to wait for refund of interest for decades be compensated for the great prejudice caused to it due to the delay in its payment after the lapse of statutory period. In the facts of that case, this Court had come to the conclusion that there was an inordinate delay on the part of the Revenue in refunding certain amount which included the statutory interest and therefore, directed the Revenue to pay compensation for the same not an interest on interest. 8. Further it is brought to our notice that the Legislature by the Act No. 4 of 1988 (w.e.f. 1-4-1989) has inserted Section 244A to the Act which provides for interest on refunds under various contingencies. We clarify that it is only that interest provided for under the statute which may be claimed by an assessee from the Revenue and no other interest on such statutory interest." [emphasis supplied] 20. The question before the Supreme Court in the case of Union of India v. Tata Chemicals (supra) mainly was as to whether the deductor of TDS is also entitled to interest on refund of exce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Government, there-being no express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, cannot shrug off its apparent obligation to reimburse the deductors lawful monies with the accrued interest for the period of undue retention of such monies. The State having received the money without right, and having retained and used it, is bound to make the party good, just as an individual would be under like circumstances. The obligation to refund money received and retained without right implies and carries with it the right to interest. Whenever money has been received by a party which ex ae quo et bono ought to be refunded, the right to interest follows, as a matter of course." [emphasis supplied] 21. A similar issue arose before the High Court of Bombay in the case of Stock Holding Corporation of India Ltd. v. N.C. Tewari (supra). The ITAT in that case had held that no interest was payable under Section 244A(1)(b) on refund of excess amount paid as tax on self-assessment under Section 140A. The assessee had filed the return for assessment year 1994-1995 declaring income of Rs. 13.12 Crores on which tax payable was computed at Rs. 6 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is assessable under the law is required to furnish a return under Section 139 in accordance, amongst others, with the provisions of Section 140. When tax is payable on the basis, inter alia, of such return furnished under Section 139, the assessee is liable to pay such tax (together with interest for delay, if any) after taking into account the amount of tax, if any already paid, the tax deducted or collected at source and relief of tax or deduction of tax (Section 199) if any claimed, etc. Thus, at the time of furnishing the return, the assessee is required to engage in an exercise of "self-assessment" under Section 140A and pay the balance liability (if any) on such computation. 25. There are detailed provisions relating to collection and recovery of tax in Chapter XVII of the Income Tax Act which include, in part-C the provisions for "advance payment of tax". Section 207 declares generally the liability of the assessee to pay "in advance" the tax during the financial year in respect of the total income "which would be chargeable to tax for the assessment year immediately following". The computation of advance tax on the "current income" for such purposes is carried out in accor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... installments in which such tax is to be paid. (4) If, after the making of an order by the Assessing Officer under sub- section (3) and at any time before the 1st day of March, a return of income is furnished by the assessee under section 139 or in response to a notice under sub- section (1) of section 142, or a regular assessment of the assessee is made in respect of a previous year later than that referred to in sub- section (3), the Assessing Officer may make an amended order and issue to such assessee a notice of demand under section 156 requiring the assessee to pay, on or before the due date or each of the due dates specified in section 211 falling after the date of the amended order, the appropriate percentage, specified in section 211, of the advance tax computed on the basis of the total income declared in such return or in respect of which the regular assessment aforesaid has been made. (5) A person who is served with an order of the Assessing Officer under sub- section (3) or an amended order under sub- section (4) may, if in his estimation the advance tax payable on his current income would be less than the amount of the advance tax specified in such order or amended ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncedes, thereby ignoring the order of the AO as communicated in terms of Section 210(3 or (4). 29. Unlike the liability towards advance tax (Section 207), there is no specific provision in the Income Tax Act for guiding the assessee in computing his liability towards "self-assessment" (in terms of Section 140A). But since, in the scheme of things, the liability towards "advance tax" would come up ahead of the stage when the assessee is required to compute the tax payable finally with the return, described as self-assessment, it is clear that having paid the quarterly installment of advance tax and reviewed the estimate of current income at each such stage, the assessee would be equipped with better information and data required to be taken into account for calculating "current income" and, thus, in a better position to arrive at a more accurate estimate and compute the tax liability when time comes for submitting the return under Section 139 and calculating the self-assessment tax under Section 140A. 30. The declaration of the taxable income or tax liability in the return is subject to order of assessment required to be passed by the AO, amongst others, under Section 143. There i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority. To put it conversely, the clause would not apply, by virtue of the explanation, in case the excess amount (being refunded) has been paid by the assessee otherwise than in compliance with demand notice or voluntarily. This is the import and effect of the explanation if the language employed thereof is read, understood and construed in its natural and ordinary sense. Since the words used are clear, plain and unambiguous, there is no scope for beneficent construction since it would lead to re-legislation, which is impermissible. 33. The observations of the Supreme Court in Sandvik Asia Limited (supra) must be understood in the light of clarification given in the case of Commissioner of Income Tax, Gujarat v. Gujarat Fluoro Chemicals (supra). There is no liability of the Revenue to pay tax on refund beyond the liability created by the statutory provisions. In the case of Union of India v. Tata Chemicals (supra), the collection of the tax (through deductor) was found to be illegal, thus giving rise to the liability to pay interest on the refunded amount. 34. We, thus, conclude that there cannot be a general rule that whenever a refund of income tax paid in excess is to be made, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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