Case Note & Summary
The petitioner, Stock Holding Corporation of India Ltd., filed a writ petition challenging an order dated 28 September 1999 passed by the Commissioner of Income Tax under Section 264 of the Income Tax Act, 1961. The impugned order held that no interest is payable under Section 244A(1)(b) on the refund of excess amount paid as tax on self-assessment under Section 140A. The assessment year involved was 1994-95. The petitioner filed its return on 23 November 1994 declaring total income of Rs.13.12 crores and paid tax of Rs.6.79 crores, including Rs.2.60 crores as self-assessment tax on 31 August 1994. The Assessing Officer completed assessment on 31 December 1996 determining income at Rs.15.27 crores and issued a demand of Rs.1.76 crores, which was set off against refund due for assessment year 1995-96. On appeal, the CIT(A) substantially allowed the appeal on 11 September 1997, and the Assessing Officer gave effect on 20 October 1998, granting a refund of Rs.2 crores but no interest on Rs.18.24 lacs from the date of payment of self-assessment tax (31 August 1994) to the date of refund (24 October 1998). The petitioner filed a revision under Section 264 seeking interest of Rs.42.87 lacs, which was rejected by the Commissioner. The legal issue was whether interest under Section 244A(1)(b) is payable on refund of excess self-assessment tax. The petitioner argued that self-assessment tax is 'tax paid under the Act' and interest should be from the date of payment. The respondent contended that interest is payable only from the date of filing of return. The court analyzed Section 244A(1)(b) and held that the expression 'tax paid under the Act' includes self-assessment tax paid under Section 140A, and interest is payable from the date of payment of such tax. The court allowed the petition, set aside the impugned order, and directed the Assessing Officer to grant interest on the refund of self-assessment tax from 31 August 1994 to 24 October 1998.
Headnote
A) Income Tax - Refund Interest - Section 244A(1)(b) - Self-Assessment Tax - The issue was whether interest is payable on refund of excess self-assessment tax paid under Section 140A. The court held that the expression 'tax paid under the Act' in Section 244A(1)(b) includes self-assessment tax paid under Section 140A, and interest is payable from the date of payment of such tax, i.e., 31 August 1994, until the date of refund. (Paras 1-10) B) Income Tax - Revision - Section 264 - Maintainability - The court held that a revision application under Section 264 is maintainable to claim interest on refund, as the Assessing Officer's failure to grant interest is an order prejudicial to the assessee. (Paras 1-10)
Issue of Consideration
Whether interest under Section 244A(1)(b) of the Income Tax Act, 1961 is payable on the refund of excess amount paid as tax on self-assessment under Section 140A of the Act, and if so, from what date.
Final Decision
The court allowed the writ petition, set aside the impugned order dated 28 September 1999, and directed the Assessing Officer to grant interest on the refund of self-assessment tax paid under Section 140A from the date of payment (31 August 1994) to the date of refund (24 October 1998) in accordance with Section 244A(1)(b) of the Income Tax Act, 1961.
Law Points
- Interest on refund of self-assessment tax is payable from date of payment
- Section 244A(1)(b) applies to self-assessment tax
- Section 140A payment is tax paid under the Act
- Revision under Section 264 is maintainable for interest claim
