TMI Blog2011 (7) TMI 582X X X X Extracts X X X X X X X X Extracts X X X X ..... of refund - Decided in favor of the assessee - IT APPEAL NO. 45 OF 2011 - - - Dated:- 27-7-2011 - N. KUMAR AND RAVI MALIMATH, JJ. ULY 27, 2011 K.V. Aravind and M.V. Seshachala for the Appellant. Vani H. for the Respondent. JUDGMENT N. Kumar, J. The appeal is admitted to consider the following substantial question of law : "When the assessee pays tax subsequent to the 1st day of April of an assessment year but before or along with the date of return, if that tax is ordered to be refunded, what is the date from which interest is payable on such refund under section 244A?" 2. The Revenue has preferred this appeal challenging the order passed by the Tribunal which has granted interest on the amount of tax refu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sment tax was paid. Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal to the Appellate Commissioner. The appeal was allowed, and the Appellate Commissioner directed payment of interest under section 244A from the date on which the self-assessment tax was paid by the assessee. Aggrieved by the said order, the revenue preferred an appeal to the Tribunal. The Tribunal, relying on the Circular No. 549, dated 31-10-1989, issued by the Board of Revenue and also relying on the judgments of the High Courts of Delhi and Madras and also the judgment of the Supreme Court, declined to entertain the appeal. The appeal came to be dismissed confirming the order passed by the Appellate Commissioner. Aggrieved by the said ord ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ely preceding the assessment year, such interest shall be calculated at the rate of one-half 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 115WE 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-half 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 re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the assessment year to the date on which the refund is paid. In other words, irrespective of the date of payment of these taxes, insofar as payment of interest is concerned, it is to be calculated from a future date namely the first day of April of the assessment year. The proviso to this provision exempts payment of interest if the amount of refund is less than 10 per cent of the tax determined under sub-section (1) of section 115WE or sub-section (1) of section 143 or on regular assessment. 9. Insofar as clause (b) is concerned, it applies to a case which is not covered under clause (a). The interest is payable from the date of payment of tax. An Explanation is added to this clause defines the meaning of the word 'date of payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... overnment. To remove this inequity, as also to simplify the provisions in this regard, the Amending Act, 1987, has inserted a new section 244A in the Income-tax Act, applicable from the assessment year 1989-90 and onwards which contains all the provisions for payment of interest by the Department for delay in the grant of refunds. The rate of interest has been increased from the earlier 15 per cent per annum to 1.5 per cent per month or part of a month comprised in the period of delay in the grant of refund. The Amending Act, 1987, has also amended section 214, 243 and 244 to provide that the provisions of these sections shall not apply to the assessment year 1989-90 or any subsequent assessment years." 11. Therefore, the object behind in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yment of tax subsequent to the First day of April of the assessment year, either before or along with filing of the return would squarely fall under clause (b) and therefore, when the said amount is ordered to be refunded the interest is to be calculated from the date of such payment of tax. Having regard to the scheme of section 244A, and the circular issued by the Board which shows how the Department has understood the section coupled with the fact that the principle underlying the said section is that, any excess payment of tax paid by the assessee is not only to be refunded but it has to be refunded with interest, if the case of the assessee does not fall under clause (a) or the Explanation to clause (b), the excess tax paid shall be re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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