Karnataka High Court
The Commissioner Of Income Tax vs Shri A Nanda Kumar (Huf) on 24 August, 2011
Bench: N.Kumar, Ravi Malimath
HJTHEfflG%ECOURTEN7KARNATAKA!U"BANGALORE
DATED THIS THE 24"" DAY OF AUGUST
PRESENT
THE HGNBLE MR. JUsT1C'E1N'.K{}M,_:A #§'T71
AND
THE HONBLE MR.JU§377:ii3.E R;=a \2:._rv:;e1.:,:rv;/::':€§¥4""
BETWEEN: "
1.THE __C_QM'~MI'£3i5.::QVVNE_R ox: 1:x.:.r:VQr>«%:?E: mx cE?¢TRAL..{:1_RC£i"§E' % {\£0;__55/_'1, sH£;;Pfi;S,HR.EE-,. ' ' \lIDH.YAR.ANYA"C'Q_MP§gE»><;' \/IswasHwA'R_Are.A»3,A's§2, MYSQRE"; V' ' ,2, V-"ff?-EE:»_ ;$S§IST;?'#m""'e;'§$MMISSEGNER <3? 5I'gia'§f' §<,'*J.»*3aR,ég'»¢'1?%£D, Aavecmag 3 £%/,.
A «.',INc:o:\§E''mx * T_<::;2::4§,E'~»::"'<.j.)<';;.. _ "-§x;;3."5:5';'~%:_§ ;3;+i:L9AsHREE, ' _v'z9H&fA:1;:NvA éosvwgaxf '{2'§SHf\/ES'HW,%RANAGAR, M'~r~~:_0'RE. .,.A§?E§_LA§\§TS AND:
Shri ANANDA KUMAR (HUF) A.SHANE<AR SHE-TFY EEWELLERS, §<.R.CIRLCE, ~ EVEYSORE. ...RESPC%f§§_QE.E§jT ' ' (BYSHSRPARTHASARATHI,ADVOCATE}d7d:'d >§<>k>§< TTHSETA fimd undersetfién 26O4A_GfIfRA€L 1961 arising out of erder daf:e_d_"'-».23<~_12--2OGS__ passed in ETA.No.1077/Bang/20,0'§.__for the iks$eSSment year 1996-97, praying {:0 f0rmuiate"'--t!fle' '5uti_$ta:i'ti}:.iAA'questions of iaw stated therein, aiiow the -appe~a'f =an_.d_ 'své;t.a_side the erders passed bytfie rrAT;:3angakwe-§;:TA;mc;i07?/Bang/2003 dated 23-12»-_-G4:)_5"_rcoriqfirmirég'-th'e.i_"a.rdef% of the Appeiiate Commissiozjeéi ._cc.nfirr*nV th-ajj--.oe'dé"r' passed by the Asst.Comz1<éissi,()--nVe'f"kgf 'I:5déj'x:.c;»é*;':..s_=;:'d.Ta.§<,* (Investigation Cinde- 1(1), Banga'§.gre.:',:_;,' 3 * fmsITACdfi£fi§cd§h%heaflng§ms{%y,ELKUMAR}, delivered 'med fgliowfng : 3 :}U9GMENT 'A "If.s?3é%Rvie':sVe_nue has preferred this appeai chafiengéng 1"'ehé.--._;3é~"dé?'_"_v.§3a';égéé.d by the "§"r§§:.ma§ whécfi hag ugheid the V . erdés" {.2-dfisiéd by the appefiate Cdmmésgéener which hag '"4"._:d§r«:3.Cted" the 3SS§$$i3"3g 0§'§EC@%' id a%§:3:«:' interegi under .' ';§f.--"3icfE'§:0n 244;': an sud: prewaid tax Eiéé the date 6? regufar E a/"
assessment for the relevant assessment year 1$#9__6--97 nameiy, 193-1999.
2. The substatztiei quest§_on of '4a.Ei$e}A.fe"':<.A 2 consideration in this apgeai is as u"ede%::t~"'t \\ Whether the was "En":
directing the Assessirtgt-!j_tfi;er té "gK.E%'f;_€ etedit for the pre-;3z:{i:gii"V-taxrée HMOA of the Act: in regzgfat'ate3'es_5§jm£;_a;.t"'anti further aiiow é;fate_;*estt,';'r#'d'<'V.%'rj an excess amQ{._;:nté}?ef. _.4.4te;«x'é:';ufficfuding 140A 'i}vhe:§é':e':'t'hVe"'.é.sse$Sée is not entitfed For.:AVe'ije'ire"fi:3.-- i'§2te'restA"i3's":der Section 244A ef the as per section 244A '{.1}'{a) 'arid Act '9"
«~..A?:e;'.:-Cirazgxrt :2»; t;'2e_'E:ai"sé'ef COMIVFISSIGKVER OF zzvaeme "mx __5<"{%.fiJ§,7?"§':i~:€§§4"tr<$[.:.ifIJA 'ri<'~'% e,4;w< fit 27% M45/20:2 sflispesea' eff 2%? 292:; hag hefa' as :;ma'ez':~ '*5, Seattiee 244% grevzfiee fer irzteregt en refende wfecf? reafie es eneer."
"Interest on refunds.
244/4. (1) Where refund of any emeunt becemes due te the assessee under this Act, he shall, subject to the provisions of this sec:tfer{f*-!2Te entitied to receive, in addition to the said simpfe Interest thereen calculated in the . manner, name/y:-
(a) where the re';'un}ti;év och? _e;'<.ee}/ paid under seV::e.:~...r_j: 11"5m/J or t'{je:'§?e;:feVc' .9ar% source under seetier; 206C'otrpeid way of advafikse taker' esgjaid under section "financial year immediate-iv... j:precerjie§§'v_ assessment ' ~ :e:»61.e.sAr:i f@'su¢jr;«..f;::teré9sE V shall be eeicuiatea' at 'thheefate..V_Lef,:':e.ne-he/f per cent for every " of a month comprised in the 'V gaeffeet team the 13' day of Ape? cf the esseeéktzvent yeer te the (fate er: whieh the {:*e.2.':.;;7t:i He greeted:
herevidee that we mtereet eheis' ee eeyeefe utfvev emeeet ef refund is fess than ten eer cent at"
" the tex es efeterméeee eeder 5ee~seet§ee {E} 9?"
eectéers EEEWE er eeeeeetiee {E} ef eectéee :43 er en regefer essesemexm ;
(b) in eny other Case, smrh interest she}! be Ceicuieted at the rate of or2e~he/f per cent fer every month or pert of {:2 menth Cemgtieed in--.{he period or periods from the date or, as _ may be, detee of payment of the tax _ to the date on which the refund is gtaydted; ' Exp/enetion.~-For the pU}fpG$e'$_ .' 'date of payment oftex ,'§ene/tyfh,r:1ee:ésVthee 'V date on and from the."em'cr.,;t3't: dfdhtexhhjar penalty specified in th_et:VVtr»Qtice othdenfiventjfiissued under section i;¥e'idV__v;e"«.excess 0!' such demand. "
The te3'e_teee.?d p.r_d'v,:'_sf:m_' makee it clear, where any emetdsnt beC%q'm»ee..'dde to the eesessee under the ' ~ géicrt Livy-. efretund, the assessee is entitled to ;,.,';fe€"§e5.a{e thehhheeid emeeet of refund with eémpie ' thereee. How the interest 55 fie be ,.__'Ce-feefetee? end' the F358 er' énterest 53 provided in x "the cieese 5e) end (23). fie eeieeietieg the Eetereet payabfe, the section provides for different dates from which the interest is te be Ce/euiated. .7'. Clause (3) deals with refund in respe.et'44'c>Vf't4!5'eV'V V' fo/iewing categorfes of the taxes: ' . (.9 the tax ptgsé ';g:;c:e;eL set$¢}¢t;;VVteiz:';r;§ W which dea/s with tax frfrrge benefits; K V. V' ' (r7:'):4't!7e atéteearee under Section tax deducted at ' = way 0:' advance tax;
treated as said under 'V "which is known as tax deducted vet seetee by the creefiter of tee eesessee, A St fr: 3!? theee eesee, if tee emezmt ef tex ' .. is in excess of the tax iieeéféty ef the eseeesee and Ceeseeeeetiy the eeseseee £5 eeetfeeg te refune' at exeese tax paid, the game Es refunefebie ! with interest at 1 '/2 percent for every month. The interest pa}/abie or: the tax to be refunded is to he Calculated from the first day of April of assessment year to the date on which ~ is peid. In other words, r'rres,oet.tive of thefdete payment of these taxes, in f'e_f'~es interest is concerned, be"Ce/c::{ateAd§._tt'em future date namety thet..fitst._day "AtIrjji/ the assessment years' :"'.;"f7e-- this provision exemfif? 4:'--'i':'"'°'3»*."7"e"i75V"'*:j'r xtf amount of refund"!s..__/esg t'f:5{m___:'1..0% at the tax determined Lieder 1"}. of Section 115 WE or sub~ sectiehht .:Se£:tien 143 or on regular . assessment,' V _ " se feres Cieese (5) is eeecereee', it e cese white is eat ceveted tinder "C§e~use {e}. The interest Es eeyeeie from the date ef eegzmeet :2? text en exefeeetiee is eeeed te ties eieuse eefines the meaning of the word 'dete ef M'.
g, payment of tax er penalty' in the aforesaid clause to mean, the date on and from which the amount ef tax specified la the rzetice of demand under Section 156 is paid in excess__--'§;of'4A:;%";'Ve;i't§:'l:' payment. Therefore, if tax is; in a notice of demand issued the Act, and if that tax 'aey cf Vb ordered to be ls refundable withv }"ntereet_ date of such pa yment. ' _:.2'n__ eth:er"vr--drde'; payable on such from the First A--p':r:'l.bf'j':tl§:e_a'see;3sm'ent year as provided in clause' "('a).x" this background, we have to .»«.i.aee if arvy-..tax paid which does not far'! under tb_ese4.,i;Categrories, from what date the frzterest is * pa;%saraaa each excess payment of tax, Id. The learned eetmeel fer the revenge aebmrtted teat if tea eaee daee eat fab' eeder are; er' these elauees; than there la ne iiabfflty ta pay"
§ 2/ tax at all. If at a/I tax is to be paid, it is from the date ef the determination ef the tax iiabiiity i;ie.",». the passing of the assessment erder, ori~~----2r;{;'f:ig;ji';'.j' date, the tax paid is adjusted towards'~~the:jftax it /iabi/ity.
This problem ;eer2fre'r:t"--.t Department, Thereferef the-y_"'haveeV.v--i;:ss;'1ed V Circular No.54? dated ~»é%fte;'9': referring to the salient feattires the" ~~seCtiori"ii§VV detail at Paragraph 1 1 t h A '_'Th%ese€ pro ' -- apart: from being """ 'Cer:?piii§é§i'ed,*._:'i-eft '"'C"ei'tain gaps for which = paid by the Department to hadtiae 'asse'sse.e""-ferJfimoney remaining with the flC§se.1}erniner':t.«"':Te remove this inequity, as ..r;alsoufe'sii<:'ipii:';r the previsiens in this regard; A Amending Act, 1987, has inserted' a flew Z 244A ii'? the Irzeerr:e~tax Act, ~ Zvespeiiceeie free? the 3SS€SSi'3'?€i'2§ year $89» §Q and eewarde' which eeetairze aii' the previsiees fer ;'}8§/:"??€i'§§ er ieterest by the Separtmersé fer deiagz ii: She graeé er' referieis, The rate ef ii'?€ei"€S£" has been ieereesed frem t E
-10....
the ear/fer 15 per Cent per annum ta 1.5% per month or part of a month comprised in the period 0:' deiay in the grant of reft:;r?;'.t}',t The amending Act, 1987, has efse Section 214, 243 and 244 to provide'thet'*th'e:A ~ provisions of these sectttms to the assessment year subsequent assessment:';{ee--rf§." ' "
11. Therefere, th'e.tV:.t3bject tjehine' ihsyertien ef Section 244A the Dvegaenrtment is that, an assesse'7e._ssfehtitfetz'--'.fi'to__'_'.~payment of interest;_fer"t;{2§onejx re:neih'ing-:.'w:'thVt.the Government " oifdeted to be refunded, Thegfefofre', ebject behind the insertion j.-efLASetfi','en=,244,i;, the contention of the Revenue that the jceeehvsfees net fez'? under either 0:' the ';:?e~a.:eee"e-5;?Section 244$, 99 énteresir Es eeyebie, Es ;e5§~i't%o3;'.ef any sebeteeee, .22, Cfeeees {ex} eat? {5} seecéféceéiy refer ta the Enstemres where Eeterest is peid amfes' the /~f3:CZ".. M11- It is not exhaustive. It is possible, in as given case, that after the expiry of the finarzciei year, assessee may pay tax either eieng with t;'¢~e4'.f$é._£f§'.j' assessment return or even before the, is 1 filed. If ultimately the said _ in excess and the Depet_te?eh:'~aef:'eoses.'»--'tet 'V the said amount, then hey what date interest~._ is hthtehtest is payable ertsuch 244,4, In the Contained in Cfaus€eVV.(£;4€);;.'_ zbev~Asaig:f"that the interest is eayable. of Apr}! of the assessment yeet;.__¢ kit: the'usarhe"_.'e'time, as the said payment of ~3;_te§<~ was 's:--e.tv___f?'secie in pursuance of e eetiee of detnessfiyissued under 5ec:£*§on 156, expienetieh to Cieaifsie has me eeeiicetéent In such cases, as §:i'§e eeeeieg words ef Ciaese (b) seee:::'5eei!;/ 'A rehfertee' fie "es 3:'? eey eéher s::ese"", see Eeéerest is AA eeyeeie free: we dates of peymeez" ef gee tax, es % W... ....
Ciause (b) expressly provid€3$ in any other case the payment of tax subsequent to the First defef Aprii of the assessment year, either bef9'r_e:'__'_ct aiong with filing of the return would fei! T' under Clause (b) and thereterffi «.wh_eri2" J amount is ordered to be_ refunded, the'..2rzte';*est'1-tie"u V to be Ca/cuiated from th"e"t'e»t:ft:te' of tax. Having ef Svection 244,4, andthe c:r§t;;a;§k which shows ho';te%.VL:e)the ':'2é.St:'tf'Qtna'erstoec3' the Sectihn ,gic;};§):ed 'tact' that the principle t}vnd¢?tiy<it§:gv;v':'thL:e --Section is that, any excess payumefzty by the assessee is not eniy to 53* refL:h2:feef______;b:Jt It has to be refunded' with ;'.:'}_teret;§ft, if the case of the asseseee does net fez'? éfitéhese (3) er the 8><Qf5:"?§§§Of'? to Cietise (5), "the eecess tax eats' shat? be refuedee' with Entereet AA item the {fate cf eeymeht at such tax, ,.. 33 __
13. In the instant Case, it is not in dispute that the assessee has paid a sum of {Stores on 29.06.2002, even before filing of the returns. It is that ame;;_h:t1 ordered to be refunded Though the occasicm »te4 ore'et.;"fer are:%e"' 'V after the assessment otb'e}':'n' of tax was adjueted étiebiifty, the Case does not expianation to C!au$e'{h); 7:7_hegse?d"e}Eeéss_..§ti§yment is to be refunded wiifgtg ~~,€htefe-St ffem the date of payment of sfiuch "taxi __29.06g2002, till the date at refzjhdfhh . Ti<;_;'§*._:'S=firecisely what the Appeflate C:'c§tems$$f'e2'":Ae{__.§s wet? are the Trieeeai hes semi It §s._V'f;?:'ee'Ce_reence with few, Ne iffegeifty HGF any " eesheu-"f;:>f1'i:sterfereeCe is made east, "fee eubgterztiei ' gzeeetioe as' few is ensweree' 55 fewer ef' the AA "=.,_essee.eee ewe egeéegt tee revenge, Aeeeef eteeeie dismfeseai Ne zrestef' L ..,,, 14 ._ in View of the aforesaid Judgment the substantiai question of Eaw is answered in favour of the assessee and against: the Revenue.