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.
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 section 244A. Therefore, the question of law is answered in favour of the assessee.
FULL TEXT OF THE ITAT JUDGEMENT
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 directing the Assessing Officer to grant interest u/s.244A , without appreciating the fact that the same is beyond the preview of the provisions enshrined in the Income-tax Act.”
2) “On the facts and circumstances of the case and in law, the Ld. CIT(A) erred in holding that the assessee is eligible to receive interest u/s.244A relying on the submissions made by the appellant without calculating the interest, if any , payable as per the provisions of the Income-tax Act”
The appellant prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer be restored.
The appellant craves leave to amend or alter any ground and/or add new grounds which may be necessary.”
3. A question which has arisen in this appeal for our adjudication is as to whether the assessee based on the facts and circumstances of the case is entitled for interest u/s 244A of the Income-tax Act,1961 ( hereinafter called “the Act”) on the refund payable to the assessee arising out of self assessment tax paid in excess than the tax due by the assessee The interest on refund so quantified u/s 244A of the 1961 Act by learned CIT(A) in its appellate order dated 16.09.2016 at page 1 is Rs. 65,04,559/- payable to the assessee on refund due to the assessee arising out of self assessment tax paid in excess than tax due by the assessee. The AO , however, did not granted any interest on refund due to the assessee on account of self assessment tax paid in excess than tax due by the assessee. The relevant assessment yearbefore us is AY 2010-11 , while Section 244A of the 1961 Act was brought into statute by Direct Tax Laws(Amendment) Act , 1989 , w.e.f. 01.04.1989. As we will see later in this order, the issue is contentious as Courts have interpreted this issue differently , so much so Hon’ble Supreme Court has set aside the matter to Hon’ble Delhi High Court in the case of Engineers India Limited v. CIT reported in (2017) 397 ITR 16(SC) to be decided by larger Bench as Hon’ble Delhi High Court has taken a view in favour of Revenue in the case of CIT v. Engineers India Limited reported in (2015) 373 ITR 377(Del) as against its earlier decision in the case of CIT v. Sutlej Industries Limited (2010) 325 ITR 331(Del) wherein view in favour of the tax-payer was taken by Hon’ble Delhi High Court. 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 in the case of CIT v. Engineers India Limited(supra) after duly considering the decision of Hon’ble Bombay High Court in the case of Stock Holding Corporation Limited(supra) and took a view in favour of Revenue by holding that Hon’ble Bombay High Court did not notice the clarification given by Hon’ble Apex Court in the case of CIT v. Gujarat Flouro Chemicals 2013 (296) ELT 433(SC): (2013) 358 ITR 291(SC).
3.2 The brief facts of the case are that the assessee has filed its return of income with Revenue on 24.09.2010 , declaring total income of Rs. 102,50,48,112/- . The return of income was processed by Revenue on 05.03.2012 u/s. 143(1) of the Act determining refund due to assessee of Rs. 1,09,84,740/-. The case was selected for framing scrutiny assessment u/s 143(3) read with Section 143(2) of the 1961 Act. The assessee revised its return of income declaring total income of Rs. 102,56,82,471/-. The AO framed assessment u/s 143(3) vide order dated 30.03.2013 assessing total income at Rs. 109,31,57,263/- under normal provisions of the 1961 Act while book profit was computed u/s 115JB at Rs. 130,76,03,940/- . The income was later revised by the AO to Rs. 108,07,80,966/- to correct mistakes apparent from records u/s 154 of the 1961 Act vide order dated 10.06.2014. The assessee had filed an appeal with learned CIT(A) challenging additions made by the AO while framing scrutiny assessment and learned CIT(A) was pleased to grant relief to the assessee vide appellate order dated 28.02.2015 in Appeal No. CIT(A)-50/IT-631/2013-14 . The AO was pleased to pass an order dated 29.06.2015 giving effect to the appellate order dated 28.02.2015 passed by learned CIT(A), wherein the income computed was Rs. 1,01,85,84,082/- after taking into effect relief granted by learned CIT(A). The assessee was granted further refund of Rs. 1,70,84,640/- vide order dated 29.06.2015. Thus, the total refund which stood granted to the assessee was Rs. 2,80,69,376/- ( Rs. 1,09,84,740/- vide order u/s 143(1) and Rs. 1,70,84,640/- vide order dated 29.06.2015 giving appeal effect to learned CIT(A) appellate order dated 28.02.2015 . No interest u/s. 244A of the Act was allowed to the assessee by the AO while granting aforesaid refunds aggregating to Rs. 2,80,69,376/- to the assessee, while learned CIT(A) has held in favour of the assessee 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 here under:
( In Rs.)
