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The Rajaratna Mills Ltd. Versus The Commissioner of Income Tax, Coimbatore

2015 (12) TMI 969 - MADRAS HIGH COURT

Entitlement to interest under section 244A paid by them under section 140A - Held that:- The entitlement of a person to interest on the refund arises out of substantive part of sub-section (1) of section 244A. Clauses (a) and (b) relate only to the method of computation. The method of computation dealt with by clause (a) relates to specific cases of refund under certain provisions. Therefore, the starting point for calculation of the interest is fixed as 1st April in clause (a). Clause (b) is a .....

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of tax or penalty" means the date on and from which the amount of taxes or penalty specified in the notice of demand issued under section 156 is paid in excess.

The above explanation does not give room for an interpretation that if a person has paid money otherwise than by way of demand under section 156, he is not entitled to interest on refund under section 244A. The explanation cannot, really, curtail the method of computation prescribed in clause (b) or the substantive part of se .....

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with the above appeal on the only question of law as to whether the assessee is entitled to interest under section 244A on the amount of ₹ 20,00,000/- paid by them under section 140A. 2. Heard Mrs.Lakshmi Sriram, learned counsel for the appellant and Mr.T.R.Senthilkumar, learned Standing Counsel for the respondent. 3. The appellant/assessee filed a return of income for the assessment year 1991-92. A notice was sent on 13.11.1992 demanding tax payable in terms of section 143 (1) of the Act .....

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ellant claimed the refund of the said amount of ₹ 20,00,000/- together with interest under section 244A. The assessing officer granted refund of ₹ 20,23,272/-. 6. Similarly, the assessing officer granted relief under section 80 HHC only partially. Therefore, the non-payment of interest as well as the disallowance of a portion of the claim under section 80 HHC, became the subject matter of an appeal before the Commissioner. 7. The Commissioner of Income Tax (Appeals), by order dated 4 .....

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f the assessee as well as the Revenue. The Tribunal also allowed the cross objection of the assessee partially. 9. The Revenue has not come up with any appeal either against the order of the Tribunal allowing the assessee's appeal or against the order of the Tribunal partially allowing the cross-objection of the assessee. However, the assessee has come up with the above appeals insofar as the rejection of their claim of interest under section 244A. 10. The assessee has been compelled to file .....

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not fall under advance tax falling under Section 244A(1)(a), when the assessing officer himself treated the payment as Advance Tax in the order passed under Section 143(1)(a), 143(3) and 154? 2. Whether the Income Tax Appellate Tribunal is right in law in negativing the alternative claim for interest even if the tax paid is treated by way of self-assessment tax under Section 140A got adjusted against the assessed tax thereby pertaining the character of tax paid pursuance of assessment? 3. Wheth .....

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nsideration, revolves around the entitlement of the appellant to interest under section 244A, it would be useful to extract sub-section (1) of section 244A which reads as follows:- "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 paid under sec .....

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t 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 the dat .....

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lause (a) and another provided in clause (b). In the first method of computation, the liability of the Department to pay interest, starts only from the first day of April of the assessment year, if the liability to refund arises out of section 115 WJ or 206 or 199. The liability to pay interest commences from the date of payment of tax or penalty, under clause (b), in cases not covered by clause (a). 13. There is no dispute about the fact that the case of the appellant does not fall under sectio .....

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he material placed before us and the precedents relied upon. In this regard, we find that the learned CIT (A) had made the aforesaid decision in favour of the assessee placing reliance upon Hon'ble Jurisdictional High Court decision in CIT v. Needle Industries (P) Ltd. (111 Taxman 679). It is contention of the Revenue that the decision relied on the CIT (A) is not applicable in this case, since the question considered in that case was whether interest paid under section 139(8) & 215 whic .....

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