Case Law Details
DCIT Vs Savita Oil Technologies Ltd. (ITAT Mumbai)
A careful look at sub-section (1) of section 244A would reveal that it has three parts. The first part deals with the entitlement of a person to interest whenever he is due to get a refund from the Department. The second part relates to the method of computation of such interest. There are two methods of computation of interest, one provided in clause (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).
There is no dispute about the fact that the case of the appellant does not fall under section 115WJ or 206 or 199. Therefore, it would, naturally, fall under the residuary provision in clause (b) of clause 1 of section 244A.
Unfortunately, the Tribunal proceeded on the footing that since the refund to which the assessee was entitled had been paid before the completion of assessment, the assessee may not be entitled to interest under section 244A.
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 show that the expression “date of payment 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.
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