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TMI Blog2017 (11) TMI 589X X X X Extracts X X X X X X X X Extracts X X X X ..... waived by an order of the Settlement Commission. We are concerned in the present case with the assessment years 1993-94 and 1994-95. The assessee, being a partnership firm, filed a return for these years and once the order of assessment was completed, interest under Sections 234(A) to (C) was levied. Aggrieved by this levy of interest, the assessee filed an application before the Settlement Commission, requesting the Commission to waive the interest on the ground that it caused hardship to it. The Settlement Commission, by its order dated 22.03.2000, referred to a circular of the CBDT which gave it the power to waive such interest; and by the aforesaid order, interest was partially waived for the assessment years in question. On an application made by the assessee, the Assessing Officer, by his order dated 25.04.2000 refused to grant interest on the refund that was payable, and was not paid, within three months from the specified date. This was done on two grounds, namely, that the provisions of Section 244(A) do not provide for payment of interest on refund due on account of waiver of interest that is charged under Sections 234(A)-(C) of the Act and second, that the power assume ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd must be "due" i.e. assessee should be entitled, as a matter of law to such refund or else interest would not become payable. He also referred to Sections 245(D)(4)and(6) to buttress the aforesaid submission. According to him, the judgment in Ghaswala's case (supra) would show, paragraphs 23 and 30 in particular, that the Settlement Commission was given no power to waive interest, the idea of a Settlement Commission being that the assessee pays tax promptly and that no concession can be given by the said Commission. He referred to the reasons given by the Assessing Officer in support of his order and stated that both reasons were correct in law. He also referred to paragraph 12 of the judgment under appeal and stated that the High Court was right, in that there was no entitlement to refund in the facts of the present case. Having heard learned counsel for both sides, it is necessary for us to extract the relevant statutory provisions. Section 240 occurs in the Chapter which deals with refund, namely Chapter XIX of the Income-Tax Act, 1961. Section 240 reads as follows: "240. Refund on appeal etc.--Where, as a result of any order passed in appeal or other proceedings under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed on or before the due date specified under sub-section (1) of Section 139; or (ii) from the date of furnishing of return of income to the date on which the refund is granted, in a case not covered under sub-clause (I); (aa) where the refund is out of any tax paid under section 140A, such interest shall be calculated at the rate of one-half percent for every month or part of a month comprised in the period, from the date of furnishing of return of income or payment of tax, whichever is later, to the date on which the refund is granted. Provided that no interest under clause (a) or clause (aa) shall be payable, if the amount of refund is less than ten percent of the tax as determined under 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 purpose of this clause,"date of payment of tax or penalty" means the date on and from which the amount of tax or penalty ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion and, therefore, fall within the residuary clause, namely sub-clause (b) of Section 244(A). The Madras High Court in Needle Industries Pvt. Ltd. (supra) concerned itself with the position prior to the advent of Section 244A. It found that the expression "refund of any amount" used by Section 240 and 244 would include not only tax and penalty but interest also. It was, therefore, held that the clear intention of Parliament is that the right to interest will compensate the assessee for the excess payment during the intervening period when the assessee did not have the benefit of use of such money paid in whatsoever character. The Court held that the result would be that the asssessee would be entitled to interest on refund also. This Court in Sandvik Asia Ltd. (supra) set out several questions of law which arose on the facts of that case. We are concerned with questions C and E which read as follows: "(C). Whether on a proper interpretation of the various provisions of the Act an assessee was entitled to be compensated for the delay in paying to it any 'amount' due to it even if such 'amount' comprised of interest, as had been held by the Delhi and Madras High ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 244-A of the Income Tax Act. Therefore, on both the aforestated grounds, we are of the the view that the assessee was entitled to interest for 57 months on Rs. 45,73,5289. The principal amount of Rs. 45,73,528 has been paid on 31.12.1997 but not of interest which, as stated above, partook the character of 'amount due" under Section 244-A." In Union of India Vs. Tata Chemicals Ltd. 2014 (6) SCC 335, this Court after going into the object for the enactment of Section 244(A), held: "Interest payment is a statutory obligation and non- discretionary in nature to the assessee. In tune with the aforesaid general principle, Section 244A is drafted and enacted. The language employed in Section 244A of the Act is clear and plain. It grants substantive right of interest and is not procedural. The principles for grant of interest are the same as under the provisions of Section 244 applicable to assessments before 01.04.1989, albeit with clarity of application as contained in Section 244A. 31. The Department has also issued a Circular clarifying the purpose and object of introducing Section 244A of the Act to replace Sections 214, 243 and 244 of the Act. It is clarified therein, tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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