TMI Blog2014 (11) TMI 899X X X X Extracts X X X X X X X X Extracts X X X X ..... unt 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 – relying upon Karnataka High Court in Commissioner of Income Tax v/s Vijaya Bank [2011 (7) TMI 582 - KARNATAKA HIGH COURT] - interest is payable from the date of payment of the tax on self-assessment to the date of refund of the amounts u/s 244A – thus, the order is set aside and the AO is directed to compute the interest payable from the date of payment on self-assessment tax i.e. 31 August 1994 till the date of refund i.e. 24 October 1998 – Decided in favour of assessee. - Writ Petition No. 823 of 2000 - - - Dated:- 17-11-2014 - M. S. Sanklecha And S. C. Gupte,JJ. For the Petitioner : Mr. Jitendra Jain a/w Ms. Sanidha VedPathak, i/b. M/s. Maneksha Sethna For the Respondent : Mr. Arvind Pinto JUDGMENT (M.S. Sanklecha, J.) :- The challenge in this petition is to the order dated 28 September 1999 passed by the Commissioner of Income Tax under Section 264 of the Income Tax Act, 1961 ( the Act ). The impugned order holds that no interest is payable under Section 244A (1)(b) of the Act on the refund of exces ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e on refund on tax of ₹ 18.24 lacs (being the tax paid on self assessment for A.Y. 199495). (f) On 28 September 1999, the Commissioner of Income Tax partly allowed the petitioner's Revision Application to the extent it directed payment of interest on ₹ 1.53 crores adjusted out of refund for A.Y. 199596 to meet the tax demand for A.Y. 199495. However it rejected the petitioner's claim for interest of ₹ 9.12 lacs being the interest on refund of tax paid on self assessment of ₹ 18.24 lacs. 4. For better appreciation of the rival contentions, it is necessary to reproduce Section 244A of the Act, which reads as under : Interest on refunds. 244A(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 : (a) where the refund is out of any tax [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 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ccording to the petitioner not tax payable. This, he submits, is evident from the computation of income filed by the petitioner where they claim a refund of ₹ 47.15 lacs. Consequently, the amount paid in excess, not being tax, would entitle the petitioner only to the refund of the principal amount paid and not any interest thereon; (b) The Apex Court decision in Tata Chemicals (supra), would have no application to the present facts as the petitioners therein had deducted a larger quantum of tax then liable to be deducted in view of an order passed by the authorities under the Act. In this case, the petitioner has made the payment voluntarily and not consequent to any order passed under the Act; and (c) In the alternative and without prejudice to the aforesaid, it is submitted that, if any interest is at all to be allowed to the petitioner, the same can only be from the date on which the notice under Section 156 of the Act is issued to the petitioner. In this case, according to him, it was issued on the date of the assessment order. 7. We have considered the rival submissions. On a bare analysis of Section 244A(1) of the Act it is clear that amount paid by the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -assessment is an amount payable as and by way of the tax after noticing that there is likely to be shortfall in the taxes already paid. Thus this payment is considered to be a tax under the aforesaid provision. 8. The contention of revenue is that no interest at all is payable to the petitioner under Section 244A (1)(a) and (b) of the Act unless the amounts have been paid as tax. It would not cover cases where the payment is gratuitous as is evident from the fact that the petitioner in its computation after paying tax on self-assessment of ₹ 2.60 crores seeks a refund of ₹ 47 lacs. According to him it has to be refund of amounts paid as tax. We find that Section 244A(1) of the Act commences with the word when refund of any amount becomes due to the assessee under this Act... . Sub-clause (b) thereof commences with the words in any other case.... . The words used in Section 244A(1) of the Act are clear inasmuch as it provides that refund of any amount that become due to any assessee under the Act will entitle the assessee to interest. In any case in the present facts, the amount on which the refund is being claimed was originally paid as tax on self-assessment u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... collection is illegal, there is corresponding obligation on the revenue to refund such amount with interest in as much as they have retained and enjoyed the money deposited. Even the Department has understood the object behind insertion of Section 244A, as that, an assessee is entitled to payment of interest for money remaining with the Government which would be refunded. There is no reason to restrict the same to an assessee only without extending the similar benefit to a resident/ deductor who has deducted tax at source and deposited the same before remitting the amount payable to a non-resident/ foreign company. Providing for payment of interest in case of refund of amounts paid as tax or deemed tax or advance tax is a method now statutorily adopted by fiscal legislation to ensure that the aforesaid amount of tax which has been duly paid in prescribed time and provisions in that behalf form part of the recovery machinery provided in a taxing Statute. Refund due and payable to the assessee is debtowed and payable by the Revenue. The Government, there being no express statutory provision for payment of interest on the refund of excess amount/tax collected by the Revenue, canno ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee pays tax either as Advance tax or on self assessment, it is paid to discharge an obligation under the Act. Not complying with the obligation under the Act visits consequences to an assessee just as non compliance of orders passed by authorities under the Act would. Thus there is no voluntary payment of tax on self assessment as contended by the revenue. 11. The further submission of Mr. Pinto that in view of the Explanation to Section 244A(1)(b)of the Act the same would apply only when the amounts are paid consequent to a notice issued under Section 156 of the Act. Not otherwise. This very submission was advanced by the revenue before the Apex Court in the case of Tata Chemicals (supra). In fact, the first Appellate Authority in the case of Tata Chemicals (supra) had rejected the petitioner's claim for interest on the ground that in view of the Explanation appended to Section 244A(b) of the Act, refund of any amount under the aforesaid provision could only be in respect of refund of excess payment made under Section 156 of the Act. The aforesaid interpretation was negatived in the second appeal by the Tribunal as well as by the High Court and the Apex Court. 12. Simila ..... X X X X Extracts X X X X X X X X Extracts X X X X
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