ASST CIT 1(3), MUMBAI vs. STCI LTD, MUMBAI

This appeal has been preferred by the revenue against order dated 12/06/2014 passed by the Ld. CIT (Appeals)- 2, Mumbai, for the assessment year 2003-04, whereby the Ld. CIT(A) has partly allowed the appeal of the assessee filed against the order passed by the AO u/s 154 of the Income Tax Act,1961 (for short ‘the Act’).

In the present case order u/s 154 of the Act was passed on 27.9.2010. The assessee pointed out certain mistakes in calculating tax liability. On verification the contention of the assessee was found to be correct. Accordingly, the mistake apparent was rectified and revised and order was passed to give credit to TDS of Rs. 7,67,840/-, to charge interest u/s 234C as per law and allow interest u/s 244A as per law. The said order was challenged by the assessee before the Ld. CIT(A) on the ground that the AO has erred in not granting proper/full interest u/s 244A of the Act. The Ld. CIT(A) after hearing the assessee partly allowed the appeal and directed the AO to take into consideration the self-assessment tax component as well and grant interest up to the actual date of issue of refund to the appellant.

Aggrieved by the order of Ld. CIT (Appeals), the revenue has preferred this appeal on the following effective grounds:- i. “Whether on facts and in the circumstances of the case and in law, the Ld. CIT (A) was justified inholding that the assessee is entitled for the interest u/s 244A on the refund of self assessment tax paid u/s 140A and the same to be calculated from the date of payment of tax till the date of refund?” ii. “Whether on facts and in the circumstances of the case and in law, the Ld. CIT (A) was justified in direction the Assessing Officer to grant interest u/s 244A without appreciating the fact that the Explanation to section 244A (1) (b) specifies the basis for grant of interest to be the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand?” iii. “Whether on the facts and in the circumstances of the case and in law, the Ld. CIT (A) was justified in directing the Assessing Officer to grant interest u/s 244A without appreciating the fact that the self assessment tax is not contemplated to be covered under clause (b) of section 244A (1) and only the refund arising 3 Assessment Year: 2003-04 out of the payments made on account of post assessment taxes are included in its scope?”.

Before us the Ld. departmental representative relying on the findings of the AO submitted that the Ld. CIT(A) has wrongly allowed the relief sought by the assessee. As per clause (b) of section 244A(1) such interest shall be calculated for every month or part of a month comprised in the period or periods from the date or dates of payment of the tax or penalty to the date on which the refund is granted. Explanation to section 244A(1)(b) further says that the date of payment of tax or penalty means the date on which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand. Therefore, the order of the Ld. CIT(A) is contrary to the expressed provisions of the law and liable to be set aside.

On the other hand, the Ld. Counsel for the assessee submitted that the since, the findings of the Ld. CIT(A) are based on the law laid down by the Hon’ble jurisdictional High Court in the stock holding corporation of India Ltd. Vs. N.C. Tiwari, the Commissioner of Income Tax, there is no merit in the revenue’s appeal.

We have heard the rival submissions and carefully perused the material placed on record. The Ld. CIT(A) has decided the issue involved in this appeal holding as under: “The facts of the case, the stand taken by the AO in assessment order and the contentions of the appellant company during the appellate proceedings as well as the written submissions made and carefully considered. It is stated that the AO has not granted interest on the refund arising on account of self-assessment tax paid. Further, it is apparent from the facts of the case the AO has not granted interest u/s 244A of the Act up to the date of actual issue of refund order to the applicant. It is a settled legal position that an assessee/appellant is entitled to interest u/s 244A of the 4 Assessment Year: 2003-04 Act up to the date of actual issue of refund. Accordingly, the AO is hereby directed to take into consideration the self-assessment tax component as well and grant interest up to the actual date of issue of refund to the appellant.”