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TMI Blog2024 (2) TMI 930X X X X Extracts X X X X X X X X Extracts X X X X ..... omprising of Rs. 20,44,29,076/- as advance tax and tax deducted at source (TDS) and Rs. 2,24,33,634/- of self assessment tax (SA Tax)]. While processing appellant's return under Section 143(1) of the Act, the Assessing Officer made certain additions raising a demand of Rs. 1,61,73,216/-. The said amount was paid by appellant on 25th June 1991. 3. Appellant's return was picked up for scrutiny and in the order of assessment dated 21st March 1992 under Section 143(3) of the Act, income was ascertained at Rs. 45,91,84,440/- determining a tax of Rs. 24,35,95,193/-. A demand of Rs. 3,32,42,443/- was raised of which a sum of Rs. 3,19,86,809/- was paid by appellant on 22nd April 1992. 4. Appellant challenged the assessment order before the Commissioner of Income Tax (Appeals) [CIT(A)] who, by an order dated 29th January 1993, disposed the appeal. The Assessing Officer on 31st May 1993 passed an order giving effect (OGE) to the CIT(A)'s order computing income of appellant at Rs. 35,93,17,870/-, i.e., even below the originally returned income of Rs. 43,64,37,800/- and determining tax thereon at Rs. 18,99,09,619/-. In the circumstances, appellant was entitled to a refund of Rs. 5,24,29,950/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act is not payable and appellant is entitled to interest on advance tax and TDS under Section 244A(1)(b) of the Act for the reasoning given by him for allowing interest on SA Tax. The CIT(A), however, held that interest should be granted only from the date of regular assessment (and not earlier) as otherwise it would amount to granting interest specifically declined under Section 244A(1)(a) of the Act. This finding of the CIT(A) has also been accepted by the Department. 7. Appellant carried the matter in appeal before Income Tax Appellate Tribunal (ITAT). The Tribunal, by the impugned order dated 5th December 2002, relying on the order of the Hon'ble Calcutta High Court in Kooka Sidhwa & Co. V/s. Commissioner of Income Tax (1964) 54 ITR 54 (Calcutta), dismissed the appeal holding that the words "regular assessment" meant the assessment pursuant to the CIT(A) order. 8. The Assessing Officer/CIT(A) have based their conclusion that the advance tax and TDS component in the amount of refund is hit by the proviso to Section 244A(1)(a) of the Act, on the following working : a. Income as per original return (returned income) 43,64,37,800 b. Income determined after CIT(A) O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich 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. (3) Where, as a result of an order under [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, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e enough to include even the interest collected by the Department alongwith the tax and it was consequently held that appellant therein was entitled to interest on the aggregate amount. 13. The submission of Ms. Goel that Advance Tax and TDS component in the amount of refund is hit by proviso of Section 244(1)(a) of the Act is fallacious. According to Ms. Goel, since, out of the refund Advance Tax/TDS component is only Rs. 1,45,14,457/- and that being less than Rs. 1.89 Crores being 10% of the tax liability, whether pre or post CIT(A) order, i.e., Rs. 24,35,95,193/- or Rs. 18,99,09,619/-, it will be hit by the proviso. We cannot accept this submission because if that is the way we have to read, the proviso would have said "provided that no interest shall be payable if the amount is less than 10% of the ADVANCE TAX OR TDS COMPONENT or treated as paid under Section 199 of the Act". Whereas, the proviso says "provided that no interest shall be payable if the amount of refund is less that 10% of tax as determined under sub-Section (1) of Section 143 of the Act or on regular assessment". 14. Apart from the above, the proviso refers to refund on the basis of tax determined under Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t replacing the law then existing (w.e.f., from 1st April 1989) to specifically to overcome the inequities prevalent under the old law, as explained in the Circular No. 549 dated 31st October 1989 explaining the provisions of Direct Tax (Amendment) Act, 1987. In the circumstances, the decision in Modi Industries (Supra) can be of no assistance to decide the controversy in the present case which is concerned with the amended law. Secondly, the submission of the Revenue and its reliance on findings in Modi Industries (Supra) would only mean that appellant would be entitled to interest for the whole of the amount refunded, i.e., Rs. 5,24,29,950/- under Section 244A(1)(b) of the Act in which case interest would be payable from the date of actual payment. 16. On the contrary, the Hon'ble Apex Court has subsequently analysed the provisions of the amended law, i.e., the law after 1st April 1989, in its decision in the case of Tata Chemicals Ltd. (Supra), and it is this decision which is relevant for the purposes of deciding the controversy in the present case. The Hon'ble Apex Court has clearly explained the purpose of the amended law and has held in paragraph 30 that "refund becomes due ..... X X X X Extracts X X X X X X X X Extracts X X X X
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