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TMI Blog2022 (3) TMI 957X X X X Extracts X X X X X X X X Extracts X X X X ..... gular assessment u/s.143(3), thereby assigning finality to the processing of return u/s 143(1), the amount of interest on income-tax refund would have merited inclusion in the total income of the year of receipt itself. C Thus we are satisfied that the ld. CIT(A) was justified in holding that interest on income-tax refund amounting to ₹ 1.18 crore cannot be charged to tax on the processing of return u/s.143(1) during the year under consideration for the raison d etre that the regular assessment made in the year 2017 resulted into creation of demand and wiping out the refund already granted to the assessee along with recovery of interest. This ground is, therefore, not allowed. Education cess as an allowable expenditure - Revenue has set up a case that the provisions of section 40(a)(ii) have not been taken into consideration - HELD THAT:- It is seen that this issue is no more res integra in view of the judgment of Hon ble jurisdictional High Court in Sesa Goa Ltd. [ 2020 (3) TMI 347 - BOMBAY HIGH COURT] laying down that education cess is not disallowable expenditure u/s.40(a)(ii) of the Act. Similar view has earlier been taken by the Hon ble Rajasthan High Court in C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the assessee on 12.3.2014 after processing the return u/s. 143(1) of the Act. Interest component of ₹ 1.18 crore in the amount of refund was computed u/s. 244A(1)(a). The mere fact that the assessee was oblivious to or not informed about the adjustment of such refund (inclusive of interest) against the tax liability for the assessment year 2009-10 will not change the legal position qua the otherwise chargeability of interest of income-tax refund in the year of receipt as has been fairly settled by the Special Bench decision in Avada Trading Co. (P) Ltd. VS. ACIT (2006) 100 ITD 131 (Mum)(SB). Howbeit, it is significant to note that assessment for the assessment year 2012-13 was concluded u/s.143(3) of the Act in January, 2017 culminating into issuance of notice of demand for ₹ 29.53 crore. Such income-tax computation for the assessment year 2012-13 has been placed at page 120 of the paper book. It is discernible there from that the initial amount of tax and interest payable came at ₹ 26.23 crore. Thereafter, interest earlier paid u/s.244A of the Act amounting to ₹ 1,18,37,651/- was added along with interest u/s.234D at ₹ 2,00,85,405/-, thereby com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in a case where the interest is reduced, the Assessing Officer shall serve on the assessee a notice of demand . . Sub-section (3) says that where the amount of refund on which interest was computed earlier under sub-section (1), is reduced because of an assessment order, inter alia, under section 143(3), the interest allowed earlier u/s 244A(1) [i.e. at the time of processing the return u/s 143(1) etc.] shall be reduced accordingly and the AO shall serve a notice of demand to the assessee. Section 234D dealing with interest on excess refund, provides through sub-section (1) that: `Subject to the other provisions of this Act, where any refund is granted to the assessee under sub-section (1) of section 143, and- (a) no refund is due on regular assessment; or (b) the amount refunded under sub-section (1) of section 143 exceeds the amount refundable on regular assessment, the assessee shall be liable to pay simple interest at the rate of one-half per cent on the whole or the excess amount so refunded, for every month or part of a month comprised in the period from the date of grant of refund to the date of such regular assessment. When section 244A is read in conjunction with secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt u/s 143(3) of the Act in the year 2017, and later on the assessee becomes entitled to refund through some appellate proceedings and again receives interest u/s.244A, that also covers interest for the period from the A.Y. 2012-13 up to the date of grant of earlier refund on 12.3.2014, which will have to be necessarily charged to tax in the year of receipt, then the amount of interest initially received on processing of return u/s.143(1) during the year under consideration would stand charged to tax twice, which is impermissible under the law. Had it been a case of the assessee receiving refund along with interest on 12.3.2014 simpliciter not followed by any regular assessment u/s.143(3), thereby assigning finality to the processing of return u/s 143(1), the amount of interest on income-tax refund would have merited inclusion in the total income of the year of receipt itself. Considering the totality of the facts and circumstances obtaining in this case, we are satisfied that the ld. CIT(A) was justified in holding that interest on income-tax refund amounting to ₹ 1.18 crore cannot be charged to tax on the processing of return u/s.143(1) during the year under consideration f ..... X X X X Extracts X X X X X X X X Extracts X X X X
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