Interest Allowable to Delay in Refund in case of Self-Assessed Tax u/s 244A(1) of Income Tax Act: ITAT [Read Order]

Pune bench of Income Tax Appellate Tribunal (ITAT) ruled that interest is allowed to delay in refund in self-assessment tax under section 244A(1) of Income Tax Act, 1961.

The appeal was filed by the Revenue assailing the correctness of the order passed by the Commissioner of Income Tax (Appeals) [CIT(A)] in relation to the A.Y. 2007-08.  

The fact is that the Assessing Officer (AO), in computing interest payable to the assessee on refund under section 244A of the Income Tax Act, did not include the amount of self-assessment tax paid by the assessee.

The CIT(A) accepted the assessee’s contention and directed to allow interest, on the amount of self-assessment tax. Aggrieved thereby, the Revenue preferred appeal before the Tribunal.

The panel noted that interest is allowed on refunds under Section 244A of the Income Tax Act. The section 244A(1)(a) allowed interest on refunds resulting from any tax deducted at source, advanced tax, or collected at source under section 206C. Interest on self-assessment tax is not mentioned in this paragraph expressly.

Further highlighted that the section 244A(1)(b) directed the granting of interest `in any other case’ at the specified rate and the period. The expression “in any other case” used in clause (b), ergo, encompasses the granting of interest on refund in all cases except those specifically covered in sub-clause (a), viz., tax collected at source under section 206C or advance tax or TDS.

The tribunal emphasised that the 2016 modification, which was previously impliedly included in clause (b) and expressly in clause (aa), has the effect of specifically covering interest on refund owing to payment of self assessment tax .

Mohit Jain, Department Representative accentuated the insertion of clauses (a) and (aa) to section 244A by the Finance Act, 2016, substituting the hitherto clause (a) of section 244A(1). In that view of the matter, it was urged that no interest on self assessment tax could be allowed for the period anterior to such insertion, which is the position under consideration.

The tribunal of members S. S. Viswanethra Ravi (Judicial Member) and R. S. Syal (Vice-president) dismissed the appeal of the department and observed that if an assessee has been deprived of the amount lawfully due to him, the refund has to go with interest only unless there is an express statutory embargo.

Further, no such prohibition has been brought to our notice by the counsel of the department and therefore supported the view canvassed CIT(A).

To Read the full text of the Order CLICK HERE

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