Income Tax Appellate Tribunal - Ahmedabad
Dhanvi Trading & Investment (P) Ltd. vs Assessing Officer on 11 March, 1999
Equivalent citations: [2000]72ITD245(AHD)
ORDER
T. N. Chopra, A.M.
1. This appeal filed by the assessee is directed against the order of the learned CIT(A), dt. 17th July, 1988, for asst. yr. 1992-93 whereby the rejection of claim of interest under s. 244A made by the AO has been upheld.
2. The brief facts of the case, relevant for resolving the controversy before us may be noticed :
3. For the assessment year under consideration, the assessee filed the original return on 31st December, 1992, and paid self-assessment tax under s. 140A amounting to Rs. 2,89,479 on 31st December, 1992. Thereafter, a revised return was filed on 29th January, 1993, and a further payment of self-assessment tax amounting to Rs. 4,41,799 was made on 28th January, 1993. The AO completed the assessment on 30th March, 1995. For the earlier asst. yr. 1989-90, the Tribunal vide its order, dt. 30th September, 1996, allowed substantial relief, thus entitling the assessee to carry forward loss of Rs. 53,96,082. In pursuance of the Tribunal's order, the total income of the assessee for the asst. yr. 1992-93 under appeal was reduced to Rs. nil after allowing set off of unabsorbed business loss as allowed by the Tribunal. The AO, therefore, passed order of rectification under s. 154 on 8th October, 1996, granting the refund. However, the AO declined to allow any interest under s. 244A. The assessee claimed payment of interest on the self-assessment tax paid on 1st January, 1993, 31st December, 1992, and 28th January, 1993. Aggrieved with the order of the AO, the assessee carried the matter in appeal before the learned CIT(A). The learned CIT(A) held that Explanation to s. 244A refers to post-assessment payments of tax where the notice of demand is to be issued under s. 156 and, therefore, the payments made under s. 140A are not covered under cl. (b) of s. 244A(1). The learned CIT(A), accordingly, dismissed the appeal of the assessee. Aggrieved with the order of the learned CIT(A), the assessee has filed the present appeal before us.
4. Before us, the learned counsel for the assessee relying upon the decision of the Hon'ble Gujarat High Court in the case of D.J. Works vs. Dy. CIT (1992) 195 ITR 227 (Guj) and Laxmiben Hemdas Patel (1994) 209 ITR 267 (Guj) argued that the assessee is entitled to interest on the excess payments made by it even if the same include payments made under s. 140A. The learned counsel further placed reliance on the following decisions of the Tribunal :
(i) Phelps & Co. (P) Ltd. vs. ITO (1988) 25 ITD 96 (Del);
(ii) Smt. K. Mahalakshmamma vs. ITO (1984) 7 ITD 180 (Hyd); and
(iii) 129 Taxation 67 (JP).
5. The learned Departmental Representative, on the other hand, supported the order of the learned CIT(A) and argued that Explanation appended to s. 244A(1) clearly exclude self-assessment tax from the purview of s. 244A(1) and no interest, therefore, is allowable on the self-assessment tax paid by the assessee.
6. We have considered the rival submissions and also gone through the various authorities cited before us. Sec. 244A is applicable w.e.f. 1st April, 1989, and provides for payment of interest in case the tax paid by the assessee by way of advance tax, TDS, etc. is found to be in excess of the tax finally determined as payable by the assessee. Prior to 1st April, 1989, analogous provisions for excess payment of tax were contained in provisions under s. 214 as well as s. 244. The Hon'ble Supreme Court has interpreted the scope and ambit of the provisions contained under ss. 214 and 244(1A) in its landmark judgment in the case of Modi Industries Ltd. & Ors. vs. CIT & Anr. (1995) 216 ITR 759 (SC). The legal position which emerges from the detailed analysis of the provisions relating to payment of advance-tax, tax deducted at source, self-assessment tax as well as the tax paid on regular assessment in context of the provisions of s. 214 as well as 244(1A) has been summarised in the judgment at p. 808 of report. Insofar as s. 244(1A) is concerned, their Lordships held that advance tax payments as well as tax deducted at source must be treated as payment of income-tax pursuant to an order of assessment from the date when these amounts were set off against the tax demand raised in the assessment order; in other words, the date of assessment order. The scheme for payment of interest on excess payment of tax as contained under s. 244(1A) relevant for the assessment year under appeal would have to be construed in the context of the principles enunciated by the Hon'ble Supreme Court in the case of Modi Industries cited supra. The collection and recovery of tax under the IT Act essentially involved the following four categories :
(i) Deduction of tax at source - ss. 192 to 206.
(ii) Advanced payment of tax - ss. 207 and 219.
(iii) Payment of self-assessment tax - s. 140A.
(iv) Collection and recovery pursuant to notice of demand under s. 156.
7. Income-tax is levied on the total income of a person for a given year under the provisions of s. 4(1), which is the charging section of the IT Act. Deduction of tax at source or advance payment of tax or self-assessment tax shall not prejudice the charge of tax levied under s. 4(1). Credit for tax deducted at source will have to be given under s. 199 to the assessee from whose income tax has been deducted while making the regular assessment. Similarly, s. 219 provides for credit in respect of payment of advance tax against the amount of tax determined as payable in the assessment order under s. 143(3) or s. 144. Similarly, the provisions of s. 140A(2) provide that any amount paid under s. 140A(1) by way of self-assessment tax shall be deemed to have been paid towards the regular assessment made under s. 143 or s. 144. The moment the adjustment of advance tax, TDS and self-assessment tax is made towards tax liability created under the regular assessment, the intrinsic character of these tax payments alters and take the shape of payment of tax in pursuance of the order of assessment. Once the amount of advance tax, TDS or self-assessment tax is treated as payment of tax in respect of the relevant previous year and credit as such for the amount has been given to the assessee in the assessment order, the amount loses its character of advance-tax, TDS or self-assessment tax and becomes income-tax paid in respect of the income of the relevant previous year.
8. Now, coming to provisions as contained in s. 244A, two situations have been envisaged as under :
(i) Refund is out of TDS or advance tax.
(ii) In any other case which by implications pertained to refund out of self-assessment tax or any other tax paid under s. 156.
9. In the first situation, interest is to be calculated from the 1st April of the assessment year to the date of granting the refund. In the second situation, refund is to be calculated from the date of payment to the date of refund. Explanation appended to s. 244A(1) defines the date of payment of tax or penalty.
10. The first feature to be noted is that in respect of first category date from which the interest is payable is not the date of payment of advance tax/TDS but the first day of the relevant assessment year. In the second category of cases, interest is to be paid from the date from which the amount of tax specified in the notice of demand issued under s. 156 is paid in excess of such demand. Self-assessment tax has been paid by the assessee under s. 140A(1) on the basis of the total income declared in the return. So long as the self-assessment tax possesses and retains the character of self-assessment, there is no question of reckoning the same for the purposes of treating it as excess payment and allowing interest as envisaged under s. 244A till the regular assessment is made under s. 143 or s. 144. It is only on the date the assessment is made that the deeming fiction contained under s. 140A(2) comes into play and the self-assessment tax is deemed to have been paid towards the regular assessment. It is, therefore, on the date of the regular assessment that the self-assessment tax loses its identity and assumes the character of tax paid for the purposes of quantification of any excess of tax payment in response to notice of demand issued under s. 156. The Explanation appended to s. 244A(1) amply clarifies the position as explained above.
11. In the facts and circumstances of the case, we are inclined to hold that the assessee is entitled to interest under s. 244A. However, the date from which interest is to be calculated is the date of the assessment order i.e., 30th March, 1995, whereby self-assessment tax paid by the assessee was adjusted by the AO towards the tax payable for the assessment year under appeal. We are not inclined to accept the contention of the assessee that interest is to be calculated from the actual day self-assessment tax was paid by the assessee.
12. The judicial authorities relied upon by the learned counsel support the case of the assessee that interest under s. 244A is to be allowed if the refund has been worked out of self-assessment tax payment. The decision of the Hon'ble Supreme Court in Modi Industries cited supra also supports the case of the assessee for grant of refund under s. 244A. We would, accordingly, reverse the order of the learned CIT(A) and direct the AO to grant refund of excess payments made by way of self-assessment tax from 31st March, 1995, to the date of granting the refund i.e., 30th September, 1996.
13. In the result, the appeal of the assessee is partly allowed.