2007-VIL-472--DT

Equivalent Citation: [2007] 295 ITR 114 (Mad)

HIGH COURT, MADRAS

T. C. (A) No. 13 of 2004

Date: 26.02.2007

COMMISIONER OF INCOME-TAX

Vs

SIV INDUSTRIES LTD. (IN LIQUIDATION)

BENCH

JUDGMENT

JUDGMENT

The judgment of the court was delivered by

P.D. DINAKARAN, J.- The above tax case appeal is directed against the orderof  the Income-tax  Appellate  Tribunal  in  ITA  No.1733/Mds/1995  dated 22.7.2003, raising the following substantialquestion of law.

"Whether in the facts and circumstances of  the  case, the Tribunal was right  in holding that tax paid under section  140A can   be  treated  as  "amount  paid   in pursuance  of  any order  of  assessment" for  the  purpose  of computing  interest under  section 244(1A) of the  Income-tax Act, 1961?"

2. The facts which are necessary for the disposal of this appeal are as under :

3. The assessment of the assessee company for the assessment year 1985-86 was completed.  The unabsorbed business loss relating to the assessment year 1984-85 was set off in the assessment year in question. Then, the assessee  applied  for  rectification  on  the  ground  that carried  forward deduction under section 80J of the  Income-tax   Act,  1961  (in  short  'the  Act')  relating  to  the assessment  years  1978-79  to  1981-82  was  not  set  off. Accordingly, the total income was revised.   Deducting  the advance  tax,  tax  under section 140A  and  interest  under sections 216  &  139(8) of the Act, refund was  determined. The assessment again rectified and interest under section 244 of the Act payable to the assessee on the amount of refund was determined.

4. Contending that the computation of interest by the Assessing  Officer  was not correct, the assessee  filed  an appeal before the Commissioner of Income-tax (Appeals), who, by  order  dated 17.12.1989, held that since  the  assessing officer  did not grant the refund within a period  of  three months  from  the  end of the month in which  the  order  of refund was passed, the assessee is entitled to interest from the  date following the expiry of the period of three months to   the  date  on  which  the  refund  was  granted. The Commissioner of Income-tax (Appeals) held that the interest should be paid to the assessee from June 1,1989 to July 23, 1989, viz., the date following the expiry of three months from the end of the month in which the appellate order was passed to the date of refund. The Commissioner of Income-tax (Appeals) also excluded the payment made under section 140A of the Act. Finding that the rate of  interest  was  not correct,  the Commissioner of Income-tax (Appeals)  enhanced the  same  from  1% to 15% per annum and determined the interest payable at Rs.58,22,026/- as against Rs.6,83,974/-as determined by the assessing officer.

5. The Appellate Tribunal, on appeal, confirmed the same.  Exasperated by the order of the Appellate Tribunal, the Revenue has come forward with this appeal raising the question of referred to above.

6. The main point involved in the question is whether the tax paid under section 140A of the Act can be taken into account while determining the interest on refund payable to the assessee. In this connection, it is  brought  to  our notice  the decision in  CIT v. Ashok Leyland Ltd. [2002] 254  ITR 641 wherein, this court, after referring to the decision of Apex  Court  in Modi Industries Ltd. v. CIT [1995] 216 ITR 759, held  that  after adjustment of advance tax at the  time  of regular assessment, if some balance remains to the credit of the assessee, that balance is treated as excess  amount  of advance tax which has to be refunded with interest. This Court also held that the assessee is entitled to interest under section 18 of the Surtax Act read with section 244(1A) of the Income-tax Act, 1961, on the over payment of the self-assessment tax paid by the assessee.

7. Applying the ratio laid down by this Court in CIT v. Ashok  Leyland  Ltd. [2002] 254  ITR 641,  we  hold  that  while determining interest under section 244(1A) of the Act,  the self-assessment tax paid under section 140A should  also  be taken  into consideration as the tax paid by way of self-assessment under section 140A of the Act would get  adjusted against  the assessed tax and partake the character  of  tax paid in pursuance of the assessment order.

8.  We therefore hold that the Appellate Tribunal was correct  in holding that the tax paid under section 140A of the  Act can be treated as amount paid in pursuance of order of  assessment  for the purpose of computing interest  under section  244(1A) of the Act.  Accordingly, the question of law is answered in the affirmative and against the Revenue. The appeal stands dismissed. No costs.

 

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