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TMI Blog2015 (9) TMI 608X X X X Extracts X X X X X X X X Extracts X X X X ..... is covered u/s. 244A(1)(b), which is an omnibus clause covering refund of, besides penalty, any tax, i.e., other than by way of tax collected at source, advance tax or tax deducted at source, which are covered u/s.244A(1)(a). The matter is by now well settled by series of decisions and, therefore, admits of no debate, so that where refund is out of self-assessment tax, interest u/s.244A(1)(b) would be exigible from the date of payment of tax to the date of grant of refund. Reliance stands placed before us on the decision in the case of Stockholding Corporation of India vs. CIT (in WP No. 823 of 2000 dated 17.11.2014/copy on record), wherein, it is claimed, the aspect of 'date of payment of tax', w.e.f. which date interest u/s.244A(1)(b) is to be allowed, stands clarified, in a case of refund of self-assessment tax, to be the date of actual payment, i.e., after considering Explanation thereto. 3.2 The Revenue's case, on the other hand, made with reference to the Explanation to section 244A(1)(b), is of absence of any specific provision for the grant of interest on self-assessment tax. The Explanation clearly specifies the 'date of payment of tax or penalty' in a case covered there- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat 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) True, the apex court in Union of India vs. Tata Chemicals Ltd. [2014] 363 ITR 658 (SC), relied upon in Stockholding Corporation of India (supra), clarified that the residuary clause (section 244A(1)(b)) shall cover all payments of tax, so that whenever tax is found to have been paid in excess of the amount which the assessee was obliged or otherwise required to pay under any provision of the Act, he shall be entitled to interest, being compensatory, there-under. However, the decision in Gujarat Fluoro Chemicals (supra) was also rendered in the context of s. 244A, even as the propositions of law stated in Modi Industries Ltd. (supra) would equally apply to refund of tax under the Act. As such, to the extent inconsistent, we shall be guided by the larger bench decisions by the Apex Court, which shall prevail. The settled law qua interpretation of statutes The words of a Statute must prima facie be given their ordinary meaning. When the words are clear, plain and unambiguous, then the Courts are bound to give effec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion thereon shall be final.' 4.4 Discussion Section 244A(1)(b), i.e., the provision allowing interest on refund, clearly provides for payment of interest on tax paid in excess of that specified in the notice of demand. The reason is not far to seek. Except other than by way of prepaid taxes, covered u/s. 244A(1)(a), tax, which is subsequently found to be paid in excess, and thus refundable, would stand to be paid in pursuance to a demand. It is inconceivable that the assessee shall pay tax in excess of that demanded of him, in which case in fact it could not be said to be payment of tax in the first place. Such a payment in fact makes the said Explanation a non-starter. Is the payment, one may ask, besides being made de hors any demand or obligation to pay, for the purpose of seeking its refund? The said Explanation, thus, refers to a payment, though subsequent to the raising of the demand, in terms thereof, though is subsequently found to be in excess of the actual amount of tax payable under the Act, say, under revision or appeal proceedings, i.e., as per the notice of demand as finally issued. It is to be noted that a fresh notice of demand is prepared consequent to each modi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... statutory right granted thereby; b) Interest u/s.244A is only on tax or penalty refundable, and is to be allowed there-under, i.e., in its terms; c) Section 244A, where-under interest is to be allowed by the Revenue under the Act, is a complete provision, bearing both the grant of right to interest as well as the manner of its working; d) Refund of tax or penalty under the Act is contemplated only along with upto date interest. It is not open to the Revenue to appropriate the refund granted only against principal amount (of tax or penalty), i.e., where interest is exigible thereon u/s.244A(1); Qua Section 244A e) Section 244A(1) covers various contingencies for the grant of refund of tax (or penalty), with clause (b) thereof being the residuary clause which covers all cases of refund of tax paid under any provision of the Act, other than by way of prepaid tax, i.e., paid toward tax liability during the relevant year. Cl. (b) stands caste separately only, as it transpires, for determining the period from which interest is to be granted, being April 1 of the assessment year for the prepaid taxes (covered by clause (a) thereof), while being with reference to the date of payment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le on the basis of any return required to be furnished under section 139 or section 142 or, as the case may be, section 148, after taking into account, the amount of tax, if any, paid 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.' [emphasis ours] The same, clearly, contemplates payment of tax only on the basis of the return of income. Surely, only Rs. 4.02 lacs out of a total of Rs. 265 lacs could be said to be payment u/s.140A in the instant case. Under which provision of law, we wonder, is the excess payment made? The assessee explains the same to be to avoid payment of interest u/s.234B. But, then ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of current income (section 209), which provision, as well as s. 210, stand noted in Engineers India Ltd.(supra), which could therefore be in excess, i.e., without attracting the disqualification of being advance tax. Without doubt, the Assessing Officer (A.O.) can u/s.210 call for the estimation of the assessee's income for the year, as also the tax for the immediately preceding year, and where found to be in excess of the amount payable in terms of the clear provision, claim the same to be not advance tax. In fact, section 4(2) of the Act, clearly brings the tax deducted at source or paid in advance within the purview of section 4(1). But for the said provision, the Central Act providing for the charge of income tax and, at a prescribed rate, being applicable from an assessment year, the tax charged could not be recovered during the relevant previous year. The argument shall, therefore, not hold good for prepaid taxes in general, the interest on refund of which is governed by section 244A(1)(a). The payment u/s.140A, on the other hand, stands on a different footing. The same is to be made after the close of the year, on the basis of the assessee's own return for the year, as pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g the amount payable is deemed notice of demand u/s.156, vide proviso thereto. As explained earlier, prior to the processing/assessment, the A.O. is not empowered to take cognizance of this amount, much less refund it. In fact, even if therefore regarded as payment of tax from the date of payment of sum, i.e., in excess of that payable on the basis of the return, the delay in its refund, i.e., up to the date of processing/assessment, is attributable to the assessee and, as such, no interest would stand to be allowed for the period commencing from the date of payment to the date of adjustment as income tax in respect of income for the relevant previous year. This, then, provides the second, alternate reason for allowing interest on the excess payment (of Rs. 2.61 crores) only from the date of processing of the payment of the return, and not from the date of actual payment. Further, the date of payment is to be given the meaning specified under the Act, and cannot, in view thereof, be read de hors the same, i.e., giving its plain meaning. When the statute gives a particular meaning to a particular set of words, interpretation has to be made accordingly. The apex court in West Bengal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44A is exigible on the refund of tax paid as self assessment tax, he would take us to paras 8, 9, 10 and 12. A careful reading of the same does not reveal anything inconsistent to what has been stated by us. No doubt, the Hon'ble Court relied on Tata Chemicals Ltd. (supra), wherein it stood held that whenever an amount is refunded to the assessee, the liability to interest by the Revenue arises as it is a kind of compensation for use and retention of the money collected by the Revenue (refer para 9). The same, however, with respect, cannot be regarded as the correct position in law in view of the decisions by the larger bench of the Apex Court in Modi Industries Ltd. (supra) and Gujarat Fluoro Chemicals (supra), even as noted by the Hon'ble High Court in Engineers India Ltd. (supra), before whom in fact the decision in Stockholding Corporation of India (supra) was also cited. The observations in Tata Chemicals Ltd. (supra), reproduced in Stockholding Corporation of India (supra), are to be read in the context of the facts of that case, again as noted in Engineers India Ltd. (supra), the tax being refunded in that case having been exacted by the Revenue. Further, as clarified in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Ltd. (supra), opined that the earliest point where the excess amount, paid voluntarily, de hors any provision of law, could be regarded as payment of tax is on its adjustment against the tax payable by the assessee, i.e., after the filing of the return, on its processing, mandatory w.e.f. 01.04.1989. The Revenue cannot, rather, take cognisance of this sum prior thereto; c) Para 8 - The Hon'be Court rejects the contention that tax paid cannot be disregarded merely because it is ultimately found as not payable. How could, it wonders, payment of tax be not considered as so merely because it becomes refundable later - nothing more and nothing less. The argument by the Revenue, equally applicable for advance tax and TDS, only needs to be stated to be rejected in-as-much as the subsequent refund cannot alter the character of the amount paid earlier, which can only be as per the provisions of the Act, as for example, the apex court explaining the change of character of advance tax to tax on regular assessment on being adjusted against the income tax in respect of the income for the year. In fact, this is precisely what has informed our decision in holding the excess amount as being re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the Act. It needs to be appreciated and borne in mind that what was paid in Tata Chemicals Ltd. (supra) was tax deducted at source, i.e., was, without doubt, tax and, further, only at the instance of the Revenue. In the present case, on the other hand, the excess amount stands paid admittedly without any obligation cast either by law, which clearly requires the payment to be on the basis of the return, purely on its own by the assessee. The same is, therefore, not tax, and can neither be considered as self assessment tax. The excess amount would only stand to be regarded as tax on its adjustment against the tax liability for the year on the processing of the return for that year, i.e., as per the scheme of the Act, and as further explained in Modi Industries Ltd. (supra). The Revenue is, in fact, prior thereto, an unwitting spectator, with the A.O. not empowered to grant refund thereof, which would only be subsequent to the filing of the return by the assessee, mandatorily provided by law (section 143(1)(a)). What is binding is the ratio decendi of a decision, i.e., the pronouncement of law, and which we have already delineated hereinbefore referring also to, among others, pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f law. The same can supply the termini points, which could either be actual or artificial. For prepaid taxes, it is, irrespective of the date of payment, the first day of the relevant assessment year. In all other cases, it is the date of payment of tax as provided for, i.e., the date of payment in excess of the amount thereof as specified in the notice of demand. The same is to be given a strict meaning. As such, it refers to the actual date of payment provided that what is paid is tax. As a natural corollary, it is the date on which the amount assumes the character of tax; f) Where an amount is paid with reference to or in violation of the provision, it cannot be said to be paid there-under. Section 140A requires payment of tax on the basis of the return, where-under only the assessee is to prefer his claims under the Act. The same, thus, contemplates an assessment by the assessee of its tax liability under the Act, as crystallized per the return finalized, i.e., for filing under the Act, paying the shortfall there-under, if any, along with the interest to date. How could it, even where not unambiguously worded, be otherwise, i.e., follow as it does the scheme of the Act. Any am ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rt, firstly, observes with reference to Gujarat Fluoro Chemicals (supra) that there was no liability on the Revenue to pay interest on refund beyond the liability created by the statutory provisions, noting that in Tata Chemicals Ltd. (supra) the collection of tax was subsequently found illegal (para 33). As such, there was no general rule that whenever a refund of income tax paid in excess is to be made, the Revenue must necessarily pay interest on the refund amount. It is the Revenue or the assessee, whoever is responsible for the excess payment, which must bear the interest burden or, as the case may be, loss of interest (para 34). The assessee having paid to in excess, as found per Intimation u/s. 143(1), was not entitled to interest thereon or prior thereto. We have, it may be noted, applying the decision in Modi Industries Ltd. (supra), stated that in-as-much as the credit is allowed for such payment, and only rightly so, against tax payable on the basis of the return, i.e., upon its processing u/s. 143(1), the same assumes the character of tax on such adjustment, so that interest shall arise to the assessee from that date up to the date of grant of refund. The Hon'ble jurisd ..... X X X X Extracts X X X X X X X X Extracts X X X X
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