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Facts
The assessee filed its return for AY 2009-10, which was processed, and a refund was issued. Subsequently, a revised return was filed, and a fresh demand was raised. The assessee paid part of the demand and appealed the assessment order. The CIT(A) granted partial relief, leading to a refund. The assessee claimed interest on excess self-assessment tax and additional interest for delayed implementation of the CIT(A)'s order, which were denied by the AO and partially by the CIT(A).
Held
The Tribunal held that the assessee is entitled to interest on refund arising out of excess self-assessment tax under Section 244A(1)(b) for the period prior to the amendment w.e.f. 01.06.2016, relying on High Court decisions. Regarding the claim for additional interest due to the delay in giving effect to the CIT(A)'s order, the Tribunal held that the assessee is entitled to interest from 01.06.2016 till the date of refund.
Key Issues
Whether the assessee is entitled to interest on excess self-assessment tax and additional interest for delayed implementation of the CIT(A)'s order.
Sections Cited
244A(1)(b), 244A(1A), 244A(1)(aa), 153(5), 153(3)
AI-generated summary — verify with the full judgment below
Before: SHRI ANIKESH BANERJEE & SMT. RENU JAUHRI
& 2752 /Mum/2024 A.Y. 2009-10 Indian Oil Corporation Ltd. आदेश / O R D E R PER RENU JAUHRI [A.M.] :- These cross appeals are filed by the assessee and the revenue against the order of the Learned Commissioner of Income-tax (Appeals), Mumbai/National Faceless Appeal Centre, Delhi [hereinafter referred to as “CIT(A)”] dated 21.03.2024 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2009-10.
The assessee has raised following grounds of appeal:
1. The learned Commissioner (Appeals) erred in dismissing the appeal without appreciating the fact that the appeal has no connection with the application/ declaration filed by the appellant for opting the Vivad se Vishwas Scheme.
2. The learned Commissioner (Appeals) erred in dismissing the appeal without granting any opportunity of personal hearing to the appellant.
3. The learned Commissioner (Appeals) ought to have appreciated that the appeal was with respect to the interest under section 244A(1)(b) not granted by the Deputy Commissioner on the refund arising out of self-assessment tax paid by the appellant.”
3. The revenue has raised following grounds of appeal: “1) Whether on the facts and circumstances of the case and in law, the Ld. CII(A) erred in allowing the interest on excess payment of Self Assessment Tax without considering the fact that the provisions of section 244(1)(au) was introduced from 01.06.2016 by Finance Act, 2016 and therefore assessee's case is not covered under the said clause as assessec's case pertains to A.Y. 2009-10. 2) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) erred in allowing the interest on excess payment of Self Assessment Tax by relying on the decision of Bombay High Court in case Stock Holding Corporation of India Ltd. ignoring the fact that the said decision was rendered by Hon'ble High Court before the amendment of section 244 by Finance Act, 2016. 3) 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. 4) The appellant craves leave to amend, or alter any grounds or add a new ground, which may be necessary.”
& 2752 /Mum/2024 A.Y. 2009-10 Indian Oil Corporation Ltd.
Brief facts are that the assessee filed its original return on 24.09.2009 declaring income of Rs. 2425,43,25,219/- under normal provisions and taxable book profit u/s 115JB of Rs. 4328,58,33,339/- . The return was processed u/s 143(3) and refund was issued. Subsequently, the assessee filed revised return enhancing its total income under normal provisions to Rs. 2650,73,96,126/-. Thereafter, the assessment was finalized u/s 143(3) vide order dated 12.03.2012 wherein a fresh demand of Rs. 619,42,03,502/- was raised on 12.03.2012 after consideration of the refund already issued to the assessee at the time of processing.
The assessee made a part payment of Rs. 61,18,00,000/- on 21.03.2012 against the demand and also filed an appeal against the assessment order before Ld. CIT(A). Vide order dated 15.11.2012, Ld. CIT(A) gave partial relief to the assessee. After giving effect to order of the Ld. CIT(A), a refund of Rs. 18,61,65,829/- was issued to the assessee on 30.07.2013. As the AO had not allowed certain credits of advance tax, TDS and also interest on excess payment of self-assessment tax, the assessee filed an appeal before the Ld. CIT(A) who issued necessary directions to the AO vide order dated 13.08.2014. The appeal effect to this order of Ld. CIT(A) was given only on 28.08.2019 vide OGE order dated 28.08.2019 (i.e. after a gap of 5 years) . However, the interest on excess payment of & 2752 /Mum/2024 A.Y. 2009-10 Indian Oil Corporation Ltd. self-assessment was again denied in OGE order dated 28.08.2019 which giving effect to the order of Ld. CIT(A).
Being aggrieved with the order dated 28.08.2019 of the Ld. AO whereby interest on excess payment of self-assessment tax had been denied, the assessee again filed an appeal before Ld. CIT(A) on 23.09.2019 seeking interest u/s 244A(1)(b) on excess self-assessment as well as addition interest u/s 244A on account of delay in passing OGE.
On the other hand, revenue being aggrieved with the order of Ld. CIT(A) on merits had filed an appeal before ITAT on 18.02.2013 and a cross appeal was also filed by the assessee against the order of Ld. CIT(A). During these pendency of both these appeals, the assessee availed the ‘Vivad se Vishwas Scheme’ in 2020. The Ld. PCIT, Mumbai-6 accepted the assessee’s application and issued form No. 3 on 25.03.2021 wherein a demand of Rs. 112,49,12,651/- was notified for settlement of both the appeals. The assessee made the payment of demanded tax on 30.09.2021 and form No. 5 was issued on 02.03.2022.
Meanwhile, the appeal regarding non-grant of interest on self- assessment tax while giving effect to CIT(A)’s order dated 13.08.2014 was wrongly dismissed by the Ld. CIT(A) under a misconception that the dispute had been resolved after availing of “Vivad se Vishwas Scheme” by & 2752 /Mum/2024 A.Y. 2009-10 Indian Oil Corporation Ltd. the assessee. The assessee filed an appeal before the ITAT against this dismissal. The matter was remanded back to the file of the Ld. CIT(A) by the order of the co-ordinate bench for denovo adjudication of the issue.
The ld. CIT(A), vide order dated 21.03.2024, decided the issue in appeal as under:
“Respectfully, following the order of the Hon'ble ITAT Bench, the present appeal is heard and disposed in the following manner. The first ground of appeal taken by the assessee relates to non-granting of interest u/s. 244A(1)(b) of Rs. 43,64,53,900/- on refund of Rs. 3,96,77,62,722/- arising out ofSelf Assessment Tax. As already discussed in the preceding para, the interest was denied with the specific reason cited by the AO that interest on excess payment of Self Assessment Tax was not payable till the Amendment to this effect was introduced w.e.f 01/06/2016 by insertion of clause (aa) in Section 244A(1). I have perused the order of the AO. I have also perused the order of the Hon'ble High Court at Bombay in writ petition No. 823 of 2000, in the case of the Stock Holding Corporation of India Ltd. Vs. the CIT-III, Mumbai, where in the order dated 17/11/2014 the Ld. High Court clearly stated that interest u/s. 244A(1)(b) is allowable on account of excess payment of tax on Self Assessment from the date of payment of such tax to the date of refund of such excess payment. Respectfully following the said decision along with the various other decisions submitted by the assessee where also the decision of the Bombay High Court stated supra were relied on, I hold that interest on excess amount of Self Assessment Tax should be refunded with interest as per provisions of Section 244A(1)(b) for AYs relating to period prior to the amendment inserted w.e.f 01/06/2016. Therefore, the ground of the assessee is allowed. In the next ground No. 2, the assessee claimed that the AO has erred in not granting additional interest u/s. 244(1A) for delay in giving effect to the CIT(A)'s order. As narrated in earlier paragraphs the direction of the CIT(A) was received through his order dated 13/08/2014 and the effect was given on 28/08/2019. Therefore, it is admitted that there was a substantial delay in giving effect of the order. However, additional interest is payable in terms of Section 244A(1A). Such provision of additional interest was introduced w.e.f 01/06/2016. In the said sub-section it was mentioned that delay in giving effect to an appellate order beyond the time stipulated u/s. 153(5) will be the cause for payment of interest. Such limiting of time frame for giving effect of any appellate order was also introduced w.e.f 01/06/2016. Prior to such amendment there had been no time limit specifically prescribed in the Act in giving effect of an appellate order in terms of the pre-amended position of Section 153(3). Factually speaking when the order of the CIT(A) was received in August, 2014, the time limit for giving effect of the order was not there in the statute. Therefore, I do not hold the AO & 2752 /Mum/2024 A.Y. 2009
10. Indian Oil Corporation Ltd. in default for delay in the give effect order which was issued on 28/08/2019. Therefore, in this case the assessee's claim for additional interest u/s. 244A(1A) is denied.” Aggrieved with the said order, both the revenue and the assessee have filed appeal before us.
9. Ld. AR has submitted a chart regarding timeline of the events beginning with the filing of the return till date showing the chronology and especially highlighting the delay in giving effect to Ld. CIT(A)’s order. He has further placed reliance on the order of the Ld. CIT(A)s in its own case in earlier years wherein interest u/s 244A(1)(b) has been allowed on refund arising out of self- assessment tax. Copies of the orders for AYs 2009-10 and earlier years have also been filed. With regard to the additional interest u/s 244A(1), Ld. AR has pointed out that the AO had passed the order giving effect to Ld. CIT(A)’s order on 28.09.2019 i.e. after a delay of 57 months and the refund amounting to Rs. 64.53 crore resulting therefrom has been granted on 28.07.2020. Therefore, there was an inordinate delay of 68 months from December 2014 to July 2020 in granting refund due to the assessee. Accordingly, he argued that the assessee is entitled to additional interest @3% per annum u/s 244A(1)(b) for the entire period. Ld. AR further placed reliance on the following decisions in support of its claim.
(i) Stock Holding Corporation of India v/s N.C. Tewari, CIT, Mumbai City- III (2015) 53 taxmann.com 106 (Bom) wherein it was held that tax paid on self-assessment tax would fall under the residuary clause i.e. 244A(1)(b), & 2752 /Mum/2024 A.Y. 2009-10 Indian Oil Corporation Ltd. covering refunds on amounts not falling u/s 244A(1). It was further held that the interest is payable from the date of payment of tax on self-assessment tax till the date of refund of amount u/s 244A.
(ii) Nima Specific Family Trust v/s ACIT, Circle (2) (2018) taxmann.com 262 (Guj). In this case it was held that where the assessee’s claim for refund of excess of tax calculated was withheld and refunded after a huge delay, the assessee would be entitled to compensation by way of interest for such delay. It was further held that the assessee would be entitled for such additional interest u/s 244(1)A only for period of delay after introduction of relevant statutory provisions from 01.06.2016.
On the other hand, Ld. DR has relied upon the orders of the lower authorities and pointed out that the amendment made by Finance Act, 2016 inserted subsection A(1) w.e.f. 01.06.2016. Accordingly, there is no case for the assessee to claim additional interest prior to that date.
We have heard the rival submissions and considered the material placed before us. It is seen that section 244A dealing with interest on refund was amended by the Finance Act, 2016 and clause (aa) specifically providing for interest on self-assessment tax was introduced w.e.f. 01.06.2016. However, even before the amendment, provisions of section 244A(1)(b) covered the residuary cases and provided as under: “244A (1) [Where refunds of any amount becomes due to the assessees under this Act], he shall, subject to the provisions of this section, be entitled to receive, in addition to & 2752 /Mum/2024 A.Y. 2009-10 Indian Oil Corporation Ltd. the said amount, simple interest thereon calculated in the following manner, namely :- (a) (a) where the refund is out of any tax collected at source under section 206C or paid by way of advance tax or treated as paid under section 199, during the financial year immediately preceding the assessment year, 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.- ..... ...... .......... (b) in any other case, such interest shall be calculated at the rate of [one-half per cent] for every month¹ 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.”
Thus, the assessee’s claim for interest on self-assessment tax is clearly covered under the provisions of clause (b) of section 244A(1). Even though the self-assessment tax was not specifically mentioned therein, it has been held by various High Courts as well as co-ordinate benches of ITAT that the assessee is entitled to interest on refund arising out of excess amount paid as self- assessment tax. The insertion of subsection (aa) in section 244A(1) was made by the Finance Act, 2016 to clarify the intent of revenue to grant interest on self- assessment tax. The issue is also covered by the decision of the Hon’ble Jurisdictional High Court in the case of Stock Holding Corporation of India Ltd. (supra). The contention of the revenue is that the decision was rendered prior to insertion of clause (aa) which was brought in with prospective effect is not acceptable. There have been numerous decisions, both before and after the insertion of clause (aa) on this issue, granting the assessee’s claim for interest u/s 244A on excess self-assessment tax. Moreover, in assessee’s own case in earlier years, such interest has been granted by the Ld. CIT(A)/Ld. AO.
& 2752 /Mum/2024 A.Y. 2009-10 Indian Oil Corporation Ltd. Accordingly, we hold that the assessee is entitled to interest on refund arising out of excess self-assessment tax from the date of payment of self-assessment tax till the date of grant of refund.
In view of above, revenue’s appeal on this issue is dismissed.
With regard to the second issue pertaining to interest on delayed grant of refund, it is seen that there has been an inordinate delay of more than five years in giving effect to the order of Ld. CIT(A) by the AO.
In the impugned order, Ld. CIT(A) has referred to section 244A(1)(a) to hold that prior to the introduction of this subsection w.e.f. 01.06.2016, there was no time limit specifically prescribed in the Act for giving effect to an appellate order. Accordingly, since the order of the Ld. CIT(A) was received in August 2014, there was no time limit provided at that time in the statute for giving effect to this order. He, therefore, held that the AO is not in the default for delay in giving effect to the order which was done vide order dated 28.08.2019. Accordingly, the assessee’s claim for additional interest was rejected by the Ld. CIT(A).
We have considered the rival submissions. Since a specific provision to grant interest on delayed refunds was introduced by the Finance Act, 2016 by inserting subsection (IA) in section 244 w.e.f. 01.06.2016, we are of the view that the assessee is entitled to get interest on the delayed refund from the date of introduction of this provision i.e. 01.06.2016 till the date of grant of refund.
& 2752 /Mum/2024 A.Y. 2009-10 Indian Oil Corporation Ltd. In this regard, the decision of the Hon’ble Gujrat High Court in the case of Nima Specific Family Trust (supra) is squarely applicable to the facts of this case. It was held therein that the assessee would be entitled to get additional interest w.e.f. 01.06.2016 in view of the insertion of subsection (1)(A) by finance Act, 2016 w.e.f. 01.06.2016 prospectively.
In view of above, the assessee’s appeal with regard to the claim of additional interest on delay refund is partly allowed and revenue’s appeal is dismissed.
In the result, the appeal of the assessee is partly allowed and that of the revenue is dismissed. Order pronounced in the open court on 31.12.2024.