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TMI Blog2012 (9) TMI 544X X X X Extracts X X X X X X X X Extracts X X X X ..... any filed an appeal before the Commissioner of Income-tax (Appeals). The Appellate Authority allowed some of the reliefs. The petitioner further filed an appeal in the Income Tax Appellate Tribunal, which was pending, when this writ petition was filed. 3. The petitioner-company preferred an application under Section 119 (2) (b) of the Act to the Central Board of Direct Taxes (CBDT), New Delhi for condonation of delay in filing the certificate under Section 72-A(2)(ii). The CBDT, by its order dated 31.3.1998, condoned the delay in filing the certificate. 4. The Commissioner of Income-tax, Central Circle-5, Kanpur passed an order on 22.7.1998, giving effect to the order of CBDT dated 31.3.1998, and made computation of income as follows:- "Consequently to give effect C.B.D.T's New Delhi order dated 31.3.98 the income of the assessee is computed as under:- Income assessed as per order dated 2.12.1996 Rs. 3, 67, 51, 518/- Loss: Unabsorbed business loss of M/s Lohia Machinery Manufacturers Ltd. as per latest order of DCIT (Spl. Range)-25 Bombay Rs. 2, 39, 52, 881/- Loss : Unabsorbed depreciation of M/s Lohia Machinery Manufacturers Ltd as per latest order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rvene on the facts. He did not agree that there was any change of opinion by the AO at the time of passing of order under Section 154 dated 12.8.1998, and that the AO's interpretation of Section 244-A (i) was not correct. The Revisional Authority did not agree that any interest was payable on refund under Section 154 dated 22.7.1998, and the notice of demand dated 12.8.1998. 9. Shri Shakeel Ahmad, appearing for the petitioner-company submits that the petitioner is entitled to interest on the refund under Section 244-A(a)(b) of the Act. The amount, on which the interest was claimed and paid, was the amount of tax, which was deposited or adjusted with the refund of the earlier assessment year. He submits that under Section 244 of the Act the interest is also included in the word 'tax' and therefore, the interest is also payable on the amount of interest. 10. Shri Shakeel Ahmad submits that the payment of interest under Section 244-A of the Act was a debatable issue and was, therefore, outside the purview of Section 154 of the Act, which admits only rectification of mistake. There was no mistake apparent on the face on record. The order dated 22.7.1998, by which the set off of the l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enalty specified in the notice of demand issued under section 156 is paid in excess of such demand. (2) If the proceedings resulting in the refund are delayed for reasons attributable to the assessee, whether wholly or in part, the period of the delay so attributable to him shall be excluded from the period for which interest is payable, and where any question arises as to the period to be excluded, it shall be decided by the Chief Commissioner or Commissioner whose decision thereon shall be final." 12. Shri Govind Krishna, appearing for the department, submits that the petitioner was liable to pay Rs. 3, 61, 46, 374/- as per ITNS-150 dated 3.3.1997, which included the interest of Rs. 1, 83, 53, 133/- under Section 220 (2) and 234-B of the Act; against this the petitioner made the payment of Rs. 1, 74, 10, 640/-, which is less than the interest payable by the petitioner. Thus it is assumed, that the entire payment made is towards the interest payable by the petitioner. As per Section 244-A, no interest is payable to the petitioner on the interest paid by it. The observation of the AO to this effect in the order dated 12.8.1998 is correct. 13. Shri Govind Krishna submits that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer, KNP/AC-CC-V-12 (PAN No.20-028-CY-5940). It is stated in paragraphs-3 and 4 of the supplementary affidavit of Shri Sudhir Singh, Deputy Manager (Taxation) of the petitioner-company, that these amounts were paid as income-tax and not towards the interest. 17. In Delhi Development Authority v. ITO [1998] 230 ITR 9 the Delhi High Court, in the fact situation in which the DDA had not deducted tax at source from payment of interest made to the buyers of flats, on a finding recorded by the Income Tax Appellate Tribunal that the DDA was not obliged to deduct tax at source and the ITO refunding the amount recovered from the DDA along with interest, allowed the interest under Section 244 (1A) for the year 1988-89 and under Section 244-A for 1989-90 and 1990-91, treating the order under which the petitioner's liability was determined and recovery was made from the petitioner as assessee as the order of assessment. It was held by the Delhi High Court, that the order, under which the liability was determined to make payment and the recovery was made from the petitioner, was an order of assessment. The petitioner was an assessee and thus the order having been set aside in Appeal, Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which becomes due to the assessee as a result of any order passed in any appeal or other proceedings under the Act and the 'amount becomes due to the assessee'. Section 244 refers to the liability fastened on the Central Government in case of failure to grant refund within the stipulated time in a case where refund is due to the assessee in pursuance of an order referred to in Section 240. A combined reading of both the provisions makes the position crystal clear that it is any amount which becomes due to the assessee and not necessarily the tax component. Undisputedly, a sum of Rs. 1, 90, 499 which qualifies for interest became payable to the assessee on the basis of an order passed under section 240 of the Act. Merely because this was inclusive of an amount which was payable under section 214 of the Act, that would not make the position any different. It is an amount which became due to the assessee on the basis of the appellate order. Therefore, the assessee was entitled to interest in terms of section 244 of the Act. A similar view has been taken by the Gujarat High Court in D.J. Works v. Deputy CIT [1992] 195 ITR 227 and Chimanlal S. Patel v. CIT [1994] 210 ITR 419 though wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f section 244 (1A) of the Act, which also uses the same phrase in the context of interest payable by the Revenue. In express terms the Court held that the expression referred not only to the tax but also to interest. The Court agreed with a similar view taken by the Kerala High Court in the case of Ambat Echukutty Menon [1988] 173 ITR 581. Both these were cases where the Court was called upon to decide whether further interest was payable by the Revenue on interest which had to be repaid to the assessee. In our opinion, the appellant is entitled to interest under section 244 and/or section 244A of the Act in accordance with the terms and provisions of the said sections." 24. The Supreme Court in Sandvik Asia Ltd. (supra) has approved the opinions of Delhi High Court in Goodyear India Ltd. (supra); D.J. Works v. Dy. CIT [1992] 64 Taxman 91 (Guj.), CIT v. Needle Industries (P.) Ltd. [2000] 111 Taxman 679 (Mad.) and CIT v. Ambat Echukutty Menon [1988] 173 ITR 581 (Ker.) in holding that for the purposes of Section 244, an assessee is entitled to further interest, on interest under Section 214 of the Act, which is withheld by the revenue. Section 240 of the Act referred to refund on a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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