Interest U/s. 244A on refund of excess SA tax payable from self-assessment tax payment date

Asst. CIT Vs. Bharat Petroleum Corporation Ltd. & Vice-Versa (ITAT Mumbai)

As per the decision of the Hon’ble Bombay High Court in the case of The Stock Holding Corporation Of India Ltd.  and Calcutta High Court in the case of Birla Corporation Limited, we are of the view that refund under section 244A(1)(b) of the Act on self assessment tax is to be paid from the date of payment of self assessment tax till the date of grant of refund.

3. Briefly stated facts are that the assessee is a public sector undertaking of Ministry of Petroleum and Natural Gas, Govt. of India. It is engaged in the business of refining of crude oil and marketing of petroleum products all over India. Originally assessment was framed by the assessing officer under section 143(3) of the Act vide order dated 27-12-2006 by making certain dis allowance/ rejection of claim of the assessee. Aggrieved, assessee preferred the appeal before Commissioner (Appeals), who vide his order dated 1-6-2011 allowed the deductions in respect to some issues. Consequent to the appellant order of Commissioner (Appeals), assessing officer passed the order giving effect to the order of Commissioner (Appeals) dated 7-2-2012. The assessing officer allowed double deduction under chapter VIA and hence committed mistake. Thereafter, the assessing officer issued notice under section 154 of the Act dated 19-12-2013 and consequent to this, the assessing officer passed an order under section 154 of the Act dated 14-5-2013 rectifying the above mistake. The assessee also filed separate rectification under section 154 of the Act before the assessing officer on 12-6-2013 as the assessing officer has not granted any interest under section 244A(1)(b) on self assessment tax paid, which became refundable consequent to the order of Commissioner (Appeals). The assessee claimed that assessee corporation paid self-assessment tax under section 140A of the Act amounting to Rs. 68 crores for the relevant assessment year 2004-05 on 28-04-2004. Pursuant to the order of Commissioner (Appeals), certain portion of self assessment tax paid under section 140A of the Act became excess and refundable to the assessee. Aggrieved, against the non allowance of interest on refund, the assessee preferred the appeal before Commissioner (Appeals). The Commissioner (Appeals) following the decision of Hon’ble Bombay High Court in the case of Sitaram v. CIT (2012) 341 ITR 549 (Bom) allowed the claim of the assessee on excess payment of self assessment tax from the date of assessment order and not from the date of payment of self assessment tax by observing in Para 5.1, 5.2.1 and 5.2.2 as under: —

“5.1 I have carefully and dispassionately considered the facts and circumstances of the case, written submissions and arguments made by the learned Authorised Representative before the undersigned. The appellant has raised solitary ground of appeal involving granting of interest under section 244A(1)(b) on delayed refund of self- assessment tax paid under section 140A of the Act, which is decided as under: —

5.2.1 Having considered the rival submissions, it is noted that the Section 244A(1)(b) of the Act, on which the appellant has placed reliance, is a specific provision which deals with interest on refunds “in any other case”. It states that where refund of any amount becomes due to assessee under the Act, he is entitled to receive the said amount along with simple interest thereon. Thus, the provisions of Section 244A(1)(b) are relevant for this appeal. Here, the self-assessment tax under section 140A of the Act of Rs.68 crores has been admittedly paid by the appellant on 28-4-2004. It is, therefore, obvious that the appellant could have claimed interest on self-assessment tax and the assessing officer is duty-bound to grant interest under section 244A(1)(b) of the Act on refund of excess payment of self-assessment tax from the date of assessment order and not from the date of payment of self-assessment tax. Strong reliance is placed on the following decisions: —

• Sitararn v. CIT (2012) 341 ITR 549 (Bom)
• (2013) 352 ITR 273 (Delhi)
• India Trade Promotion Organization v. CIT (2013) 263 CTR (Del) 18
• Addl. CIT v. Grindwell Norton Ltd. (2006) 100 ITD 245 (Mumbai)
• Addl. CIT v. Novartis India Ltd. (ITA No. 5848/Mum/2000)

5.2.2 Having regard to the facts and circumstances of the case and in view of the above, the assessing officer is directed to grant correct interest under section 244A(1)(b) of the Act, as per law, to the appellant after verification of facts at the time of giving appeal effect. Accordingly, Ground of appeal No.1 is allowed. NO other ground of appeal has been raised.”

Aggrieved, against the direction of Commissioner (Appeals) allowing refund on excess payment of self assessment tax from the date of assessment order, Revenue is in appeal before us. The assessee is in cross appeal against the direction of Commissioner (Appeals) not allowing the refund on excess payment of self assessment tax from the date of payment of self assessment tax.

4. At the outset, the learned Counsel for the assessee argued that this issue is settled by Hon’ble Bombay High Court in the case of Stock Holding Corporation v. NC Tewari (2015) 373 ITR 282 (Bombay) wherein, after considering the provisions of section 244A (1b) of the Act, the Hon’ble High Court considered this issue and allowed the claim of the assessee vide para 12 to 14 as under: —

“12. Similarly, the next contention urged on behalf of the revenue that the payment of interest should only be made from the date of notice under Section 156 of the Act is issued to the petitioner in terms of Explanation to Section 244A(1)(b) of the Act cannot be accepted for two reasons. Firstly, as held by the Supreme Court in Tata Chemicals Ltd. (supra), the Explanation would have effect only where payments of tax have been made pursuant to notice under Section 156 of the Act. In this case, the payment has not been made pursuant to any notice of demand but prior to the filing of the return of income in accordance with Section 140A of the Act. Secondly, the provisions of Section 244A(1)(b) very clearly mandate that the revenue would pay interest on the amount refunded for the period commencing from the date the payment of tax is made to the revenue up to the date when refund is granted to the revenue. Thus, the submission of Mr. Pinto that the interest is payable not from the date of payment but from the date of demand notice under Section 156 of the Act cannot be accepted as otherwise the legislation would have so provided in Section 244A1(b) of the Act, rather then having provided from the date of payment of the tax.

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 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.”

5. On this the learned Sr. DR relied on the decision of Hon’ble Delhi High court in the case of CIT v. Engineers India Ltd. (2015) 373 ITR 377 (Del) wherein the decision of Hon’ble Bombay High Court was considered. The learned Counsel for the assessee also relied on the decision of Hon’ble Calcutta High Court in the case of CIT v. Birla Corporation Ltd. in ITA No. 526 of 2004, wherein the issue of refund on self-assessment tax was granted from the date of making payment till the date of grant of refund from the date of payment till the date of grant of refund by observing in final finding as under: —

“Under section 154 of the Act only a “mistake apparent from the record” is rectifiable. Thus the precondition to invoke section 154 is the presence of a mistake and that the same must be apparent from the record. The power to rectify a mistake under section 154, however, does not extend to revision or review of the order. The word apparent means something, which is clearly visible or understood or obvious. Therefore a mistake which can be rectified under section 154 is one which is patent, which is obvious and whose discovery is not dependent on argument or elaboration. The rectification of an order does not imply that the original order is replaced by a completely new order. In the instant case the assessing officer has attempted to substitute the original order which is not permissible under section 154.

An error, which is by no means self-evident, cannot be called an apparent error. Nevertheless a mistake capable of being rectified under section 154 is not limited to clerical or arithmetical mistakes only. However it does not include any mistake which may be discovered by a complicated process of investigation, argument or proof. Reference in this regard may be made to T.S. Balaram, ITO v. Volkart Bros (1971) 82 ITR 40 (SC). A decision on a debatable point of law or a disputed question of fact is not a mistake apparent from the record. The ordinary meaning of the word “apparent” is that it should be something, which appears to be so ex facie that it does not admit scope for any argument or debate. It, therefore, follows that a decision on a debatable point of law or fact or failure to apply the law to a set of facts which remains to be investigated cannot be corrected by way of rectification. Reference in this regard may be made to CIT v. MMTC Ltd (supra). Section 244A does not mandate that interest cannot be allowed on self assessment tax paid under section 140A. As discussed earlier it cannot be said that interest under section 244A can be allowed only in cases where excess payments of tax is made consequent to a notice of demand under section 156. The language of the Act is clear and there is no ambiguity in it. Hence the assessee is clearly entitled to claim interest under section 244A on refund of excess self assessment tax.

In K.K.J. Foundations v. The Asst. DIT (ITA. No. 242 of 2014) the Kerala High Court by Judgment dated 8-9-2015 held as follows:-

“By invoking the power of rectification, the ultimate conclusion of a decision cannot be changed. So also, the employment of the words phraseologies in section 154 shows that by rectification it intended only to correct any mistake and amend the same accordingly. It is a settled proposition of law that rectification is a process by which a mistake is set at right. It thus means correcting an error which was apparent from record and not deciding the matter over and again on merits and that the rectified order does not supersede the original order but continues with the incorporated changes. Moreover, we have come across two judgments of the ‘Hon’ble Apex Court in ‘S. Nagaraj v. State of Karnataka’ ((1993) Supp. 4 SCC 595) and ‘Ammonia Supplies Corporation Pvt. Ltd. v. Modern Plastic Containers Pvt. Ltd.’ (AIR 1998 SC 3153), by which it was held in the former judgment that rectification of an order stems from fundamental principle that justice is above all. It is exercised to remove the error and not for disturbing finality. In the latter judgment, it was held that rectification connotes something what ought to have been done but by error is not done and what ought not to have been done was done requiring rectification. Rectification, in other words, is the failure to comply with the directions under the Act. Therefore, it is apposite and clear that the power under section 154 can be invoked only to correct an error and not to disturb a concluded finding.”

Thus in the instant case there was no mistake apparent from the record which could be rectified under section 154 of the Act. In that view of the matter, the question Nos.1, 3 and 4 are answered in the affirmative. The question No.2 is answered in the negative.

We therefore direct the assessing officer to compute the interest payable from the date of payment of tax on the basis of self-assessment till the date of grant of refund. The revenue is directed to compute the interest due to the assessee and pay the same within a reasonable time.”

6. After hearing both the sides and going through the facts of the case it is clear that as per the decision of the Hon’ble Bombay High Court in the case of The Stock Holding Corporation Of India Ltd. (Supra) and Calcutta High Court in the case of Birla Corporation Limited (supra), we are of the view that refund under section 244A(1)(b) of the Act on self assessment tax is to be paid from the date of payment of self assessment tax till the date of grant of refund. Respectfully following the Hon’ble Bombay High Court in the case of The Stock Holding Corporation Of India Ltd. (Supra), we direct the assessing officer to allow the interest in term of the decision of Hon’ble Bombay High Court. The appeal of assessee is allowed and that of the Revenue is dismissed.

7. In the result, the appeal of assessee is allowed and that of the Revenue is dismissed.