TMI Blog2019 (4) TMI 1650X X X X Extracts X X X X X X X X Extracts X X X X ..... m/2016 - - - Dated:- 24-4-2019 - SHRI MAHAVIR SINGH, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Revenue : Shri. D.G Pansari, DR For The Assessee : Shri. Shiv Prakash ORDER PER RAMIT KOCHAR, Accountant Member: This appeal, filed by Revenue , being ITA No. 7620/Mum/2016, is directed against appellate order dated 16.09.2016 passed by learned Commissioner of Income Tax (Appeals)-50, Mumbai (hereinafter called the CIT(A) ) in Appeal No. CIT(A)-50/IT-248/2015-16, for assessment year(AY) 2010-11, the appellate proceedings had arisen before learned CIT(A) from the order dated 29.06.2015 passed by learned Assessing Officer (hereinafter called the AO ) giving effect to the appellate order of learned CIT(A) in appeal no. CIT(A)-50/IT-631/2013-14 for AY 2010-11. 2. The grounds of appeal raised by Revenue in the memo of appeal filed with the Income-Tax Appellate Tribunal, Mumbai (hereinafter called the tribunal ) read as under:- 1) On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in dire ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. The Hon ble Delhi High Court in the later case of Sutlej Industries Limited v.CIT reported in (2016) 67 taxmann.com 76(Delhi) noted the conflicting decisions of its own court and referred the matter to Larger Bench of three judges to be constituted by Hon ble Chief Justice of Delhi High Court. Further, in the case of CIT v. Rajaratna Mills Limited reported in (2016) 241 Taxman 313(SC), the Hon ble Supreme Court has admitted Special leave Petition(SLP). The Hon ble Bombay High Court in the case of Stock Holding Corporation of India Limited v. CIT reported in (2015) 373 ITR 282(Bom.) has decided this issue in favour of the tax-payer by holding that interest on refund will be payable u/s 244A(1)(b) of the 1961 Act on refund arising out of excess self assessment tax paid u/s 140A of the 1961 Act which shall be payable from the date of payment of self assessment tax till the date of grant of refund to the taxpayer . We are bound by the decision of Hon ble jurisdictional High Court which we will Respectfully follow as we will see later in this order and relief to the assessee will be granted vide this order. Incidentally Hon ble Delhi High Court decided this issue in favour of Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee and interest u/s 244A was granted vide clause (b) to sub-section 1 to Section 244A of the 1961 Act. 4.The non granting of the interest u/s 244A of the 1961 Act on the aforesaid refund arising out of self assessment tax paid in excess of tax due was challenged by assessee before learned CIT(A). The working of the gross demand of taxes , payment of taxes by the assessee and refund due to the assessee are detailed hereunder: ( In Rs.) TDS (A) 9,29,646 Advance tax (B) 28,85,00,000 Self Assessment Tax (C) 6,38,21,500 Taxes Paid (Gross) (D) = (A)+(B)+(C) 35,32,51,146 Gross demand as per order dated 29. 06. 2015 (E) 32,51,81,770 Amo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n u/s 143(1) and (ii) interest on Rs, 1,70,84,640 for the period from date of payment of Self Assessment Tax to 29.06.2015. Thus, the Ld. CIT(A) held that clause (b) to sub-section 1 to Section 244A of the 1961 Act is applicable in the instant case and hence the assessee is entitled for interest on the refund due to assessee on excess of self assessment tax paid over the tax due from the assessee, as detailed above . 5. The Revenue being aggrieved by the appellate order dated 16.09.2016 passed by learned CIT(A) and has filed an appeal before the tribunal. It is contended by Ld. DR that interest is not allowable to the assessee u/s 244A of the 1961 Act on refund due out of self assessment tax paid by the assessee. While on the other hand the Ld. Counsel for the assessee has contended before the Bench that the assessee is entitled for interest u/s 244A on refund due to the assessee and amendment in 244A by insertion of clause (aa) to 244A(1) was by Finance Act 2016, w.e.f. 01.06.2016. 6. We have considered rival contentions and perused the material on record. We have observed that the assessee has filed its r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 35,32,51,146 Gross demand as per order dated 29. 06. 2015 (E) 32,51,81,770 Amount by which Taxes Paid (Gross) exceeds Gross demand as per order dated 29.06. 2015 (F)=(D)-(E) 2,80,69,376 Refund already granted to the appellant u/s 143(1) on (G) 1,09,84,736 Excess Tax paid net of refund already issued (F)-(G) 1,70,84,640 6.2 Thus , as can be seen from above chart that the assessee has paid an self assessment tax of ₹ 6,38,21,500/- , while the total refund due to the assessee was ₹ 2,80,69,376/- ( ₹ 1,09,84,740/- vide order u/s 143(1) and ₹ 1,70,84,640/- vide order dated 29.06.2015) and hence it could be said that the refund has fallen due to the assessee mainly on account of self assessment tax which was paid by the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (3) Where, as a result of an order under [sub-section (3) of section 115WE or section 115WF or section 115WG or] [sub-section (3) of section 143 or section 144 or] section 147 or section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount on which interest was payable under sub-section (1) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and in a case where the interest is reduced, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the amount of the excess interest paid and requiring him to pay such amount; and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly. (4) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989, and subsequent assessment years :] [Provided that in respect of assessment of fringe benefits, the provisions of this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand. [ (1A) In a case where a refund arises as a result of giving effect to an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264, wholly or partly, otherwise than by making a fresh assessment or reassessment, the assessee shall be entitled to receive, in addition to the interest payable under sub-section (1), an additional interest on such amount of refund calculated at the rate of three per cent per annum, for the period beginning from the date following the date of expiry of the time allowed under sub-section (5) of section 153 to the date on which the refund is granted. ] (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 [under sub-sections (1) or (1A)], and where any question arises as to the period to be excluded, it shall be decided by the Principal Chief Commissioner or] Chief Commissi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted 06.06.2007 to decide the issue in favour of tax-payer, wherein Hon ble Delhi High Court held as under: This appeal was admitted on the following substantial question of law: Whether section 244(1)(b ) read with Explanation thereto excludes payment of interest on refund of self-Assessment Tax ? 2. Since it is a pure question of law, the learned counsel for the parties advanced arguments finally. They wanted sometime to file the written synopsis of their submissions as well, for which one week time was granted. 3. For answering the aforesaid question following brief facts are adumbrated : (a)The respondent-assessee had for the assessment year 1998-99, in addition to TDS and advance tax, also paid self-assessment tax under section 140A of the Income-tax Act, 1961 (in short 'the Act'). (b)On 24-4-2002 an order was framed under section 250/143(3) of the Act whereby a refund of ₹ 66,90,474, earlier paid as self-assessment tax by the assessee, was made. The respondent-assessee claimed interest on the amount refunded which was not allowed by the Assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount on which interest was payable under sub-section (1) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and in a case where the interest is reduced, the Assessing Officer shall serve on the assessee, a notice of demand in the prescribed form specifying the amount of the excess interest payable and requiring him to pay such amount; and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly. (2) On any portion of such amount which is refunded under this Chapter, interest shall be payable only up to the date on which the refund was made. ** ** ** Section 244(1): 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 a period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter March 31, 1975 (which will include tax deducted at source and advance tax to the extent the same has been retained and treated by the Income-tax Officer as payment of tax in discharge of the assessee's tax liability in the assessment order), becomes refundable wholly or in part as a result of any appellate or other order passed, the Central Government will have to pay the assessee interest on the refundable amount under section 244(1A). For the purpose of this section, the amount of advance payment of tax and the amount of tax deducted at source must be treated as payment of income-tax pursuant to an order of assessment on and from the date when these amounts were set off against the tax demand raised in the assessment order, in other words the date of the assessment order. (iii)With effect from April 1, 1985, interest payable under section 214 will increase or decrease in accordance with the variation in the quantum of the excess payment of tax brought about by orders passed subsequent to the regular assessment as mentioned in sub-section (1A). 6. The provisions of section 244A read as follows: (1) Where refund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... after the expiry of three months from the end of the month in which such order was passed to the date on which refund was granted. The rate of interest under all the three sections was 15 per cent per annum. 11.3 These provisions, apart from being complicated, left certain gaps for which interest was not paid by the Department to the assessee for money remaining with the Government. 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 sections 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. 8. In the case of Sandvik Asia Ltd. v. CIT[2006] 280 ITR 643 , the Supr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 244A(1)(a). The Madras High Court further observed:- It is also trite law that wherever the assessee is entitled to refund, there is a statutory liability on the Revenue to pay the interest on such refund on general principles to pay the interest on sums wrongfully retained (reference Sandvik Asia Ltd.). 10. The Supreme Court dismissed the Special Leave Petition (SLP) No. 16877/2008 filed by the Revenue against the decision in Cholamandalam Investment Finance Co. Ltd.'s case (supra ), vide order dated 3-12-2009. The Supreme Court has also, recently, in the case of CIT v. H.E.G. Ltd. [Civil Appeal No. 8176/2009, Civil Appeal No. 8177 and 8187/2009, S.L.P. (C) No. 34268/2009 (CC 10437/2009) vide its order dated 3-12-2009], held that the expression refund of any amount would include interest under section 244A (on refund of tax deducted at source) to which the assessee was lawfully entitled but had been wrongly withheld by the Department. 11. On an analysis of section 244A of the Act it is seen that where refund of any amount becomes due to the assessee, the assessee is entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee, the assessee would not have been deprived by the use of money. In such a situation, where pre-paid taxes are in excess of the assessed tax, the assessee is entitled to refund of such tax along with interest thereon. 13. Where an assessee out of abundant caution pays self-assessment whilst staking a claim in the return, which claim is accepted, resulting in refund of self-assessment tax, the assessee should be equally entitled to interest thereon. 14. Section 244A was inserted in the statute as a measure of rationalization to ensure that the assessee is duly compensated by the Government, by way of payment of interest for monies legitimately belonging to the assessee and wrongfully retained by the Government, without any gaps. 15. Therefore, in our view where the self-assessment tax paid by the assessee under section 140A is refunded, the assessee should be, on principle, entitled to interest thereon since the self-assessment tax falls within the expression refund of any amount . The computation of interest on self-assessment tax has to be in terms of section 244A(1)(b), i.e., from the date of payment of such a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ayable 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 the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand. The aforesaid provision makes it clear, where any amount becomes due to the assessee under the Act by way of refund, the assessee is entitled to receive the said amount of refund with simple interest thereon. How the interest is to be calculated and the rate of interest is provided in the clauses (a) and (b). In calculating the interest payable, the section provides for different dates from which the interest is to be calculated ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is payable on such excess payment of tax. 10. The learned counsel for the revenue submitted that if the case does not fall under any of these clauses, then there is no liability to pay tax at all. If at all tax is to be paid, it is from the date of the determination of the tax liability, i.e., the passing of the assessment order, on which date, the tax paid is adjusted towards the tax liability. This problem did confront the Department. Therefore, they have issued a Circular No. 549, dated 31-10-1989. After referring to the salient features of the said section in detail at Paragraph 11.3, it is stated as under : These provisions, apart from being complicated, left certain gaps for which interest was not paid by the Department to the assessee for money remaining with the Government. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng 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 refunded with interest from the date of payment of such tax. 13. In the instant case, it is not in dispute that the assessee has paid a sum of ₹ 15.5 crores on 29-6-2002, even before the date of filing of the returns. It is that amount which is ordered to be refunded as excess payment. Though the occasion to order for refund arose after the assessment order in which the payment of tax was adjusted towards the tax liability, the case does not fall under clause (a) or Explanation to clause (b). The said excess payment is to be refunded with interest from the date of payment of such tax, that is from 29-6-2002, till the date of refund. This is precisely what the Appellate Commissioner as well as the Tribunal has said. It is in accordance with law. No illegality nor any case for interference is made out. The substantial question of law is answered in favour of the assessee and against the revenue. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment year and on the date of grant of the refund. No interest shall, however, be payable, if the amount of refund is less than 10 per cent of the tax determined on regular assessment; (b) if the refund is out of any tax, other than advance tax or tax deducted at source or penalty, interest shall be payable for the period starting from the date of payment of such tax or penalty and ending on the date of the grant of the refund. (Refer to example III in para 11.8). (Emphasis supplied) The inferences to be drawn from the Board's circular is clear that if refund is out of any tax other than out of advance-tax or tax deducted at source, interest shall be payable from the date of payment of tax and ending on the date of the grant of refund. It is to be noted that nowhere does the CBDT even remotely suggest that interest is not payable by the Department on self-assessment tax. Moreover, the amount paid under Section 140A of the Act on self assessment is an amount payable as and by way of the tax after noticing that there is likely to be shortfall in the taxes already paid. Thus this payment is considered to be a tax under the aforesaid p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he following observations with regard to the liability to pay interest : 'A tax refund is a refund of taxes when the tax liability is less than the tax paid. As per the old section an assessee was entitled for payment of interest on the amount of taxes refunded pursuant to an order passed under the Act, including the order passed in an appeal. In the present fact scenario, the deductor/assessee had paid taxes pursuant to a special order passed by the assessing officer/Income Tax Officer. In the appeal filed against the said order the assessee has succeeded and a direction is issued by the appellate authority to refund the tax paid. The amount paid by the resident/ deductor was retained by the Government till a direction was issued by the appellate authority to refund the same. When the said amount is refunded it should carry interest in the matter of course. As held by the Courts while awarding interest, it is a kind of compensation of use and retention of the money collected unauthorizedly by the Department. When the collection is illegal, there is corresponding obligation on the revenue to refund such amount with interest in as much as they have retained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such cases, as the opening words of clause (b) specifically referred to as in any other case , the interest is payable from the date of payment of tax. The sequel of our discussion is the resident/deductor is entitled not only the refund of tax deposited under Section 195(2) of the Act, but has to be refunded with interest from the date of payment of such tax.' (Emphasis supplied). From the aforesaid observations of the Apex Court in Tata Chemicals, it would be clear that the requirement to pay interest arises whenever an amount is refunded to an assessee as it is a kind of compensation for use and retention of money collected by the revenue. 10. The only distinction being made in the present facts and those of Apex Court decision in Tata Chemicals is that the amount paid as tax on self assessment was paid voluntarily in the present case while in the case of Tata Chemicals Ltd. (supra) the tax was deducted at a higher rate in view of the order passed by the authority under the Act. We are unable to appreciate this distinction. This is for the reason that when an assessee pays tax either as Advance tax or on self assessment, it is paid t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x. 13. We find support for our view from the decisions rendered by Karnataka High Court in CIT v. Vijaya Bank [2011] 338 ITR 489/201 Taxman 371/12 taxmann.com 485 and Delhi High Court in CIT v. Sutlej Industries Ltd. [2010] 325 ITR 331/190 Taxman 136 (Delhi). In both cases in identical circumstances it was held that interest is payable from the date of payment of the tax on self assessment to the date of refund of the amounts under Section 244A of the Act. 14. Accordingly, for all the aforesaid reasons, we set aside the impugned order dated 28 September 1999. We direct the Assessing Officer to compute the interest payable from the date of payment on self-assessment tax i.e. 31 August 1994 till the date of refund i.e. 24 October 1998. The revenue is directed to compute the interest due to the petitioner and pay the same within six weeks from today. 6.9 However Later, the Hon ble Delhi High Court in the case of CIT v. Engineers India Limited reported in (2015) 373 ITR 377(Delhi) vide judgment dated 26.02.2015 took a view in favour of Revenue by not following its own decision in the case of CIT v. Sutlej Industries Limited(20 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... calculated at the rate of one 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 date on and from which the amount of tax or penalty 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. ** ** (Emphasis Supplied) 15. In Sandvik Asia Ltd. (supra), the issue for consideration and determination by the Supreme Court was as to whether the assessee is entitled to be compensated by the Revenue for delay in payment of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er section 156 of the Act. Where there is a shortfall in payment of tax vis- -vis the tax finally due on the assessed income, the assessee is liable to pay interest under section 234B of the Act. Conversely, where the Revenue makes a high-pitched assessment which is subsequently reduced/modified in appeal, any payment of taxes made, which are subsequently refunded as a consequence of relief obtained in appeals etc., are monies legitimately belonging to the taxpayers and wrongly withheld by the Government. This is based on the principle that if the Revenue had, in the first instance, made correct assessment of the tax liability of the assessee, the assessee would not have been deprived by the use of money. In such a situation, where pre-paid taxes are in excess of the assessed tax, the assessee is entitled to refund of such tax along with interest thereon. Where an assessee out of abundant caution pays self-assessment whilst staking a claim in the return, which claim is accepted, resulting in refund of self-assessment tax, the assessee should be equally entitled to interest thereon. Section 244A was inserted in the statute as a measure of rationalization to ensur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same not an interest on interest. 8. Further it is brought to our notice that the Legislature by the Act No. 4 of 1988 (w.e.f. 1-4-1989) has inserted Section 244A to the Act which provides for interest on refunds under various contingencies. We clarify that it is only that interest provided for under the statute which may be claimed by an assessee from the Revenue and no other interest on such statutory interest. (Emphasis Supplied) 20. The question before the Supreme Court in the case of Tata Chemicals Ltd. (supra) mainly was as to whether the deductor of TDS is also entitled to interest on refund of excess deduction or erroneous deduction of tax at source under Section 195 of the Income Tax Act. The observations of the Supreme Court, to the extent relevant here, may be quoted verbatim as under:- 30. The refund becomes due when tax deducted at source, advance tax paid, self-assessment tax paid and tax paid on regular assessment exceeds tax chargeable for the year as a result of an order passed in appeal or other proceedings under the Act. ... No interest is payable for the period for which the pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under like circumstances. The obligation to refund money received and retained without right implies and carries with it the right to interest. Whenever money has been received by a party which ex ae quo et bono ought to be refunded, the right to interest follows, as a matter of course. (Emphasis Supplied) 21. A similar issue arose before the High Court of Bombay in the case of Stock Holding Corpr. of India Ltd. (supra). The ITAT in that case had held that no interest was payable under Section 244A(1)(b) on refund of excess amount paid as tax on self-assessment under Section 140A. The assessee had filed the return for assessment year 1994-1995 declaring income of ₹ 13.12 Crores on which tax payable was computed at ₹ 6.79 Crores. Some amount had been earlier paid as advance tax and TDS credit was also claimed. To make good the shortage, the assessee paid ₹ 2.60 Crores by way of tax on self-assessment. The AO determined the income at ₹ 1.27 Crores and, thus, raised a further demand of ₹ 1.76 Crores by way of notice under Section 156. It appears that refund was due to the assessee for the assessment year 1995-1996 and the demand by no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e and relief of tax or deduction of tax (Section 199) if any claimed, etc. Thus, at the time of furnishing the return, the assessee is required to engage in an exercise of self-assessment under Section 140A and pay the balance liability (if any) on such computation. 25. There are detailed provisions relating to collection and recovery of tax in Chapter XVII of the Income Tax Act which include, in part-C the provisions for advance payment of tax . Section 207 declares generally the liability of the assessee to pay in advance the tax during the financial year in respect of the total income which would be chargeable to tax for the assessment year immediately following . The computation of advance tax on the current income for such purposes is carried out in accordance with Section 209, clause (a) of sub-section (1) whereof only needs to be noted as under:- where the calculation is made by the assessee for the purposes of payment of advance tax under sub-section (1) or sub-section (2) or sub-section (5) or sub-section (6) of section 210, he shall first estimate his current income and income-tax thereon shall be calculated at the rates in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o a notice under sub- section (1) of section 142, or a regular assessment of the assessee is made in respect of a previous year later than that referred to in sub-section (3), the Assessing Officer may make an amended order and issue to such assessee a notice of demand under section 156 requiring the assessee to pay, on or before the due date or each of the due dates specified in section 211 falling after the date of the amended order, the appropriate percentage, specified in section 211, of the advance tax computed on the basis of the total income declared in such return or in respect of which the regular assessment aforesaid has been made. (5) A person who is served with an order of the Assessing Officer under sub-section (3) or an amended order under sub-section (4) may, if in his estimation the advance tax payable on his current income would be less than the amount of the advance tax specified in such order or amended order, send an intimation in the prescribed form to the Assessing Officer to that effect and pay such advance tax as accords with his estimate, calculated in the manner laid down in section 209, at the appropriate percentage thereof specified i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er position to arrive at a more accurate estimate and compute the tax liability when time comes for submitting the return under Section 139 and calculating the self-assessment tax under Section 140A. A person who is served with an order of the Assessing Officer under sub- section (3) or amended order under sub-section (4) shall, if in his estimation the advance tax payable on his current income would exceed the amount of advance tax specified in such order or amended order or intimated by him under sub-section (5), pay on or before the due date of the last instalment specified in section 211, the appropriate part or, as the case may be, the whole of such higher amount of advance tax as accords with his estimate, calculated in the manner laid down in section 209. (Emphasis Supplied) 30. The declaration of the taxable income or tax liability in the return is subject to order of assessment required to be passed by the AO, amongst others, under Section 143. There is no finality given to the order of assessment at the hands of the AO. There are provisions for rectification, appeal, etc. There are also provisions for dealing with income that escapes assessment. When ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rwise than in compliance with demand notice or voluntarily. This is the import and effect of the explanation if the language employed thereof is read, understood and construed in its natural and ordinary sense. Since the words used are clear, plain and unambiguous, there is no scope for beneficent construction since it would lead to re-legislation, which is impermissible. 33. The observations of the Supreme Court in Sandvik Asia Ltd. (supra) must be understood in the light of clarification given in the case of Gujarat Fluoro Chemicals (supra). There is no liability of the Revenue to pay tax on refund beyond the liability created by the statutory provisions. In the case of Tata Chemicals (supra), the collection of the tax (through deductor) was found to be illegal, thus giving rise to the liability to pay interest on the refunded amount. 34. We, thus, conclude that there cannot be a general rule that whenever a refund of income tax paid in excess is to be made, the Revenue must necessarily pay interest on the refunded amount. The letter and spirit of the law on the subject is that the party which committed the error in proper calculation (or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or interest on excess payment voluntarily made cannot be sustained. In the result, the appeal is allowed and the impugned order passed by ITAT directing the AO to pay interest to the assessee on the refunded amount is set aside. 6.10 In another matter which later came up before Hon ble Delhi High Court in Sutlej Industries Limited v.CIT reported in (2016) 67 taxmann.com 76(Delhi) on the same issue, the Hon ble Delhi High Court took notice of conflicting decision of Division Benches of its Court in CIT v. Sutlej Industries Limited reported in (2010) 325 ITR 331(Delhi) and in the case of CIT v. Engineers India Limited(supra) and it was proposed to refer the matter to Larger Bench of three judges of Hon ble Delhi High Court by holding as under: 1. These appeals by the Assessee under Section 260A of the Income Tax Act, 1961 ('Act') are directed against the common order dated 10th March 2003 passed by the Income Tax Appellate Tribunal (ITAT') in ITA Nos. 6199 and 6200/Del/1997 for the Assessment Years ('AYs') 1994-95 and 1995-96 respectively. 2. In both the appeals, the questions of law already stand framed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 358 ITR 291 and of the DB of this Court the CIT v. Engineers India Ltd. [2015] 373 ITR 377/232 Taxman 287/55 taxmann.com 1. 7. At must be noticed that the questions that arose for consideration both in Sutlej Industries Ltd. (supra) for AY 1998-99 and Engineers India Ltd. (supra) were identical to the issues that arise in the present appeals, viz., whether the Assessee is entitled to interest on refund of self assessment tax and further, if so, the date from which such interest would be payable? The said questions were answered in favour of the Assessee by a DB of this Court in Sutlej Industries Ltd. (supra) for AY 1998-99. However, in Engineers India Ltd. (supra) another DB of the same strength has answered the question against the Assessee and has distinguished the decision in Sutlej Industries Ltd. (supra). 8. It is urged on behalf of the Revenue that the judgment in Engineers India Ltd. (supra) being latter in point of time should be followed by this Court, particularly in view of the decision of the Supreme Court in Gujarat Fluoro Chemicals (supra) which was delivered by the larger Bench of the three learned Judges. 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Hon ble Delhi High Court filed an SLP with Hon ble Supreme Court, wherein Hon ble Supreme Court after noticing that the Division Benches of the Hon ble Delhi High Court has taken a divergent view on the same issue in Sutlej Industries Limited(2010) 325 ITR 331(Delhi) and further noticing that already Larger Bench of three judges is referred to be constituted by Hon ble Delhi High Court in another case of Sutlej Industries Limited v. CIT reported in (2016) 67 taxmann.com 76(Delhi) granted leave and thereafter set aside and restored the matter to Hon ble Delhi High Court to be decided by Larger Bench on this issue in Engineers India Limited v. CIT vide judgment dated 06.07.2017 reported in (2017) 397 ITR 16(SC), by holding as under: 2. We have heard the learned counsel for the parties. 3. The issue pertains to grant of interest under Section 244A of the Income Tax Act which is decided by the High Court vide impugned judgment against the assessee. The impugned judgment of the High Court reveals that another judgment of the Coordinate Bench of the same High Court in the case of CIT v. Sutlej Industries Ltd. [2010] 325 ITR 331/190 Taxman 136 (De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 the date on and from which the amount of tax or pena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax or TDS which are covered under that section. Similarly, it has been contended that the assessee's case also does not fall under section 244A(1)(b) also since coupled with the section thereto the sum does not represent amount of tax specified in the notice of demand. 15. But, as we have pointed out, 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 residuary clause, as could be seen from the usage of the expression in any other case . Therefore, the starting point for the computation of interest under clause (b) is the date of payment. The provisions under section 244A do not distinguish the cases where payment is made on assessment under section 140A. The explanation to section 244A does not really talk about the entitlement or disentitlement. The explanation, which we have extracted above, would ..... X X X X Extracts X X X X X X X X Extracts X X X X
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