DCIT CIR 2(2)(1), MUMBAI vs. STATE BANK OF INDIA, MUMBAI

We have heard the rival submissions, perused the orders of the authorities below. The only issue to be decided is whether the assessee shall be entitled to interest u/s. 244A in respect of excess self-assessment tax paid. We find that the issue is squarely covered by the decision of the Hon'ble Jurisdictional High Court in the case of Stock Holding Corporation of India Limited v. CIT (supra) wherein their Lordships after considering various decisions of the Hon'ble Supreme Court and Hon'ble High Court’s held that assessee is entitled for interest u/s. 244A(1)(b) of the Act on the excess amount paid towards self-assessment tax.

In so far as the decision of the Hon'ble Supreme Court in the case of CIT v. Gujarat Flouro Chemicals (supra) is concerned, we find that the Hon'ble Supreme Court has not laid down any ratio on the issues. The Hon'ble Supreme Court set aside the entire Batch of appeals to High Courts clarifying the circumstances under which the view taken by their Lordships in Sandvik Asia Ltd v. CIT [280 ITR 643] that assessee is entitled for interest on the interest for the inordinate delay on the part of the Revenue in granting interest refund. The Hon'ble Supreme Court,

On the other hand, the Hon'ble Jurisdictional High Court in the case of Stock Holding Corporation of India Ltd. (supra) it has been held that tax paid on self-assessment would fall under section 244A(1)(b) i.e. a residuary clause covering refunds of amount not falling u/s. 244A(1) and therefore interest is payable u/s. 244A(1)(b) on refund of excess amount paid on self-assessment tax. Therefore, respectfully following the binding decision of the Hon'ble Jurisdictional High Court in the case of Stock Holding Corporation of India Ltd. v. CIT (supra), We uphold the order of the Ld.CIT(A) and reject the ground of the Revenue on this issue.

The second issue in the appeal of the Revenue is in respect of whether adjustment of refund already granted should be adjusted against interest first and thereafter the balance against tax or not.

At the time of hearing, Learned Counsel for the assessee submitted that the issue in appeal is decided in the case of DCIT v. State Bank of (A.Y: 2000-01) M/s. State Bank of India Saurashtra in ITA.No. 5336/Mum/2015, 5338/Mum/2015 and 5339/Mum/2015 for the Assessment Years 1999-2000, 2007-08 and 2000-01 by order dated 20.11.2017. It is submitted that in this decision it has been held that the Assessing Officer should recompute the amount of interest u/s. 244A by first adjusting the amount of refund already granted towards interest component and balance left if any shall be adjusted towards the tax component. Copy of the order is placed on record.

Ld.DR relied on the order of the Assessing Officer.

We have heard the rival submissions, perused the orders of the authorities below and the decision of the Coordinate Bench. We find that an identical issue came up in the case of DCIT v. State Bank of Saurashtra (supra) which was later merged with the assessee bank. The Coordinate Bench in its order dated 20.11.2017 upheld the order of the Ld.CIT(A) by following the order of the Tribunal in assessee’s own case for the Assessment Year 2008-09, wherein it has been directed the Assessing Officer to recompute the amount of interest u/s. 244A by first adjusting the amount of refund already granted towards interest component and balance left if any to be adjusted towards the tax component. Thus, respectfully following the said decision of the Tribunal for the Assessment

In the result, appeal of the Revenue is dismissed.