2005 (12) TMI 452 - AT - Income Tax

Refunds - Interest u/s 244A on excess payment of self-assessment tax u/s 140A - HELD THAT - In the present case the assessee had claimed the interest on excess payment of self-assessment tax u/s 140A of the Act. In accordance with the provisions of clause ( b ) to section 244A(1) of the Act interest is payable on such payments of tax. We do not agree with the contention of the Assessing Officer with regard to the applicability of provisions of Explanation to clause ( b ) to section 244A(1) of the Act. The provisions of the statute are to be given its full effect and in the instant case once the return has been processed u/s 143(1)( a ) and refund is determined as payable to the assessee. The provisions of the Act clearly provide that in addition the interest is payable on such sums which are held and utilized by the Government over and above the tax dues of the assessee under the provisions of Income-tax Act. Accordingly in addition to the refund of the money the assessee was entitled to receive interest on the said excess amount paid by him. We find support from the decision of the Calcutta Bench in the case of Hooghly Mills Co. Ltd. v. Dy. CIT 1999 (9) TMI 116 - ITAT CALCUTTA-A . Thus we hold that the assessee is entitled to the interest under section 244A of the Act on the excess self-assessment tax paid u/s 140A of the Act by it. We accordingly confirm the order of the learned CIT(A) and reject the ground of appeal raised by the revenue. In the result the appeal of the revenue is dismissed.

Summary

Issues:
Allowability of interest under section 244A on self-assessment tax paid by the assessee.

Analysis:
The Appellate Tribunal ITAT Mumbai addressed the issue of whether interest under section 244A should be allowed on the amount of self-assessment tax paid by the assessee. The Assessing Officer had denied the interest claimed by the assessee on the self-assessment tax refund, stating that section 244A did not cover refunds arising from self-assessment tax payments. However, the CIT(A) allowed the claim, interpreting that the provisions of section 244A(1)(b) applied to all refund cases, including those from self-assessment tax payments. The Departmental Representative argued against this, citing a Supreme Court case where interest was not granted on delayed customs duty refund. The Authorized Representative highlighted the CBDT circular and Supreme Court decisions emphasizing the binding nature of circulars and the broad interpretation of interest provisions. The Tribunal examined the legislative intent behind section 244A, which aimed to simplify interest provisions for refunds and rectify past gaps in payment. The Tribunal noted that interest under section 244A is payable on various tax payments, including self-assessment tax, as clarified by the CBDT Circular. Referring to previous Tribunal decisions, the Tribunal concluded that the assessee was entitled to interest on the excess self-assessment tax paid, rejecting the revenue's appeal. The Tribunal distinguished the Supreme Court case cited by the Departmental Representative, emphasizing the specific provisions in the Income-tax Act for interest on excess amounts due to the assessee as refunds.

In conclusion, the Tribunal upheld the CIT(A)'s decision, affirming the assessee's entitlement to interest under section 244A on the excess self-assessment tax paid. The Tribunal rejected the revenue's appeal, emphasizing the specific provisions in the Income-tax Act allowing interest on refunds, including those arising from self-assessment tax payments.