TMI Blog2012 (9) TMI 544X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to interest on this amount from the date of deposits - in favour of assessee. - CIVIL MISC. WRIT PETITION TAX NO. 676 OF 2000 - - - Dated:- 6-7-2012 - SUNIL AMBWANI AND HET SINGH YADAV, JJ. Shakeel Ahmad for the Petitoiner. Govind Krishna for the Respondent. JUDGMENT 1. M/s Lohia Starlinger Limited (the petitioner) is a public limited company, incorporated under the Companies Act, 1956. On 1.3.1993 M/s Lohia Machinery Manufacturers Limited, a loss making company, amalgamated with the petitioner-company, carrying a total loss of Rs. 3,53,99,401/-. The original assessment under Section 143 (3) of the Income-tax Act, 1961 (the Act) for the assessment year 1993-94, was completed by Assistant Commissioner of Income-tax, Central Circle-5, Kanpur on a total income of Rs. 3,70,29,530/- as against the returned income at Nil. The claim of set off of loss of M/s Lohia Machinery Manufacturers Limited (the amalgamated company), was not allowed for want of requisite certificate under Section 72A (2) (ii) of the Act by the specified authority, during the pendency of the assessment. 2. The petitioner-company filed an appeal before the Commissioner of Income-tax (Appeals ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f mistakes), the Assessing Authority has withdrawn the interest allowed at Rs. 22, 57, 869/-under Section 244-A of the Act. The petitioner filed a revision against the order of the Commissioner of Income-tax (Central), Kanpur under Section 264 of the Act, which was rejected on 29.3.2000, giving rise to this writ petition. 7. The Assessing Authority, in the order dated 12.8.1998 under Section 154 of the Act, has observed that on the total payment made by the assessee-company being less than the total interest payment by the assessee, it should be assumed that the entire payment to the assessee was towards the interest payable by it. Under the provisions of Section 244 (the correct number of the Section is Section 244-A), no interest is payable on the interest paid by the assessee and therefore, since the assessee has not made any payment of either of the tax or the additional tax, no interest under Section 144 is allowable to the assessee. The interest amounting to Rs. 22,57,869/-was thus withdrawn. 8. The Revisional Authority dismissed the application under Section 264 of the Act, for withdrawal of interest of Rs. 22,57,869/-vide order dated 12.8.1998, on the ground that he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 [paid under section 115WJ or] [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 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 refund is granted. Explanation.- For the purposes of this clause, "date of payment of tax or penalty" means t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8.1998, rectifying the mistake and the interest allowed to the assessee under Section 244-A of the Act was withdrawn. 14. Shri Govind Krishna submits that the Assessing Authority made a mistake in allowing refund of interest of Rs. 22,57,869/-. He has a right given under Section 154 of the Act to correct the mistake. 15. The question that arises for consideration of the Court in this case is, whether the payment made by the petitioner of Rs. 1,74,10,640/- against the total amount of 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, was paid as tax or interest. If it was paid towards the tax, the petitioner is entitled for interest under Section 244-A of the Act on the amount of refund. If, however, the amount of deposit is treated as interest, no interest is allowed under the Act on the refund of interest. 16. Shri Shakeel Ahmad has filed a supplementary affidavit, annexing therewith the treasury challans on deposit of corporate tax on Form-0020. The company deposited Rs. 75 lacs on 31.3.1997 as income-tax; Rs. 57,15,922/- on 5.2.1997 as income tax, and thereafter Rs. 41,94,718/- on 30.3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refund of interest. 20. In Delhi Development Authority ( supra ) the refund was of tax deposited, which was to be deducted at source from payment of interest made to the buyers of flats and not interest deposited by the Delhi Development Authority. 21. In Section 244A, the words 'refund of any amount due to the assessee', under this Act are included in the section itself. In CIT v. Goodyear India Ltd [2001] 249 ITR 527/117 Taxman 501 (Delhi) it was held as under (page 532):- "Section 244 deals with interest on refund where no claim is needed. Sub-section (2), inter alia, provides that where a refund is due to the assessee, in pursuance of an order referred to in section 240' and the Assessing Officer does not grant the refund within the stipulated time, the Central Government is required to pay simple interest at the stipulated rate. Section 240 deals with refund on appeal, etc. This provision clearly lays down that where as a result of any order passed in appeal or other proceedings under this Act, refund of any amount becomes due to the assessee, the Assessing Officer shall, except as otherwise provided in this Act, refund the amount to the assessee without his ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , is phrased in terms of 'any amount' becoming due to an assessee. The Delhi High Court in Goodyear India Ltd's case [2001] 249 ITR 527 held that an assessee is entitled to further interest under section 244 of the Act on interest under section 214 of the Act which had been withheld by the Revenue. The case of the Revenue was that interest payable to an assessee under section 214 of the Act was not a refund as defined in section 237 of the Act and hence no interest could be granted to the assessee under section 244 of the Act. The court held that for this purpose section 240 of the Act was relevant which referred to refund of any amount becoming due to an assessee' and that the said phrase would include interest and hence the assessee was entitled to further interest on interest wrongfully withheld. It is also important to appreciate that the Delhi High Court also referred to the Gujarat High Court decision in D.J. Works' case [1992] 195 ITR 227 and read it as taking the same view. This supports the view of the appellant on the correct reading of the Gujarat High Court decision. As already noticed in paragraph supra, the Madras High Court in Needle Industries Private Ltd's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 201 (1A) in the third column. The department was thus not entitled to draw any inference or presumption that the amount was not deposited as tax, but as interest. The amount deposited as tax could not be treated as interest. 27. Where valuable rights of refund and interest is involved, the Income Tax Authorities are not required to draw assumption on the quantum of the amounts. In this case there is no other material placed by the respondents to justify the inference other than the quantum of the amount being less than the interest payable, to support the assumption that the deposit was of interest and not of tax. To test the assumption, if we deduct the interest of Rs.1, 83, 53, 133/- out of the total amount of Rs. 3, 61, 46, 374/- liable to be paid by the petitioner, the amount of tax comes to Rs. 1, 77, 93, 241/-, which is more than the amount deposited by the petitioner. 28. We also find that the revisional order did not give any reason other than supporting the same reasons given by the AO in the order under Section 154 of the Act and also does not refer to any reasons other than those given by the AO that since the amount deposited was less than the interest to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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