Assistant Commissioner of Income Tax, Circle (1) vs Kerala Transport Co.

A.M. Shaffique, J.—This appeal is filed by the revenue against the judgment of the learned Single Judge allowing the writ petition to the extent of modifying Ext. P4 order declining interest on refund of self-assessed tax and directing the Assessing Officer to grant eligible interest on refund of excess self-assessed tax paid from the date of first regular assessment and adjustment till date of refund at the rate provided under Clause (b) of Section 244A(1) of the income tax Act, (hereinafter referred as the Act). The facts involved in the above writ petition would disclose that with reference to assessment year 1990-91 the Assessee paid tax after making a self-assessment. The assessment was completed u/s 144 of the Act on 23.03.1993 as per Ext. P1. While making self assessment the assessee had paid a sum of Rs. 13,94,620/-. An additional amount of Rs. 4,34,349/- was raised based on Ext. P1 assessment order. The same was collected on 16.08.1993. After a series of appeals preferred by the petitioner the assessment was revised to give effect to the order dated 30.01.2002 of the ITAT thus setting off the loss determined for the earlier year. An order was passed by the Assistant Commissioner of income tax u/s 154 of the Act fixing the revised total income at Rs. 39,56,950/- and tax at Rs. 10,10,521/-. Since the petitioner had paid excess tax, the 1st respondent again passed an order dated 18.12.2002 determining the excess tax paid by the petitioner amounting to Rs. 9,40,669/- and classifying excess tax paid under two categories. Rs. 5,06,320/- paid as self-assessed tax u/s 140A and Rs. 4,34,349/- as tax paid vide notice u/s 156 of the Act. The 1st respondent also allowed interest u/s 244A on the excess tax of Rs. 4,34,349/- paid on 16.08.1993 and held that no interest u/s 244A is payable by the department on tax paid by way of self-assessed tax and there is no provision for the same. Ext. P3 is the said order. Aggrieved by Ext. P3 the petitioner preferred a revision and the 2nd respondent rejected the same as per Ext. P4 order. The petitioner had filed the writ petition seeking a declaration that he is entitled to get interest u/s 244A(1) of the Act on the balance refund amount of Rs. 5,06,320/- and for a direction to the respondents to pay the interest on the said amount.

The learned Single Judge found that it is clear from Section 244A(1)(b) and the explanation that the department cannot dispute that the assessee is entitled to interest on refund of all payments of tax in excess of actual tax found due. It is found that if any self-assessed tax paid and adjusted against the demand, was later found to be refunded, then the assessee will be entitled to get interest u/s 244A(1)(b) of the Act on such excess tax adjusted against demand. Accordingly, the writ petition was allowed as stated above. The learned counsel for the appellants based on the Explanation to section 244A would contend that as far as self-assessment is concerned, there cannot be any refund under the normal circumstances. Such a procedure is not taken care of u/s 244A(1)(b) of the Act is concerned. Section 244A(1)(b) and Explanation reads as under:

244A. Interest on refunds.--(1) Where refund of any amount becomes due to the assessee under this Act, he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated in the following manner, namely:--

(a) ** ** **

(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 u/s 156 is paid in excess of such demand.

The argument is that going by the Explanation to Section 244A(1)(b) the liability to pay interest is only in respect of the tax paid after a demand is made u/s 156 of the Act. We do not think that such a differentiation can be made to the aforesaid provision and Explanation does not give a different meaning at all. Any amount due to the assessee under the Act mentioned in section 244(1) clearly takes in all forms of refund, either self assessed tax or tax paid as per notice u/s 156 of the Act. As far as the explanation is concerned it only indicates the date on which the interest is liable to paid. That being the position, we do not think that there is any illegality or perversity in the judgment of the learned Single Judge.

Accordingly, this appeal is dismissed.