The Mumbai Bench of the Income Tax Appellate Tribunal ( ITAT ) granted interest on excess self-assessment tax under Section 244A(1)(b) of the Income Tax Act, 1961, and partially allowed claim for additional interest under Section 244A(1A), restricting it to the period post-01.06.2016.
Indian Oil Corporation Ltd. (IOC) originally filed its income tax return on 24.09.2009 and later revised it, increasing the reported income. After an assessment order was passed on 12.03.2012, the tax department raised a fresh demand of Rs. 619.42 crore.
The assessee appealed to CIT(A) because the tax department did not grant interest on excess self-assessment tax. CIT(A) instructed the Assessing Officer (AO) to look into the matter on 13.08.2014. However, the AO took five years to act on the order and only implemented it on 28.08.2019, again refusing to pay interest on the excess self-assessment tax.
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Aggrieved, the assessee again appealed to CIT(A) on 23.09.2019, asking for interest on the extra tax paid and additional interest for the delay in refund. Meanwhile, the revenue department also challenged CIT(A)’s decision in the ITAT. While these appeals were pending, the assessee opted for the Vivad Se Vishwas Scheme (VSV) in 2020, settling a tax demand of Rs. 112.49 crore. CIT(A) wrongly assumed that this scheme also settled the interest dispute and dismissed the assessee’s appeal, leading the assessee to approach ITAT again.
The revenue argued that before 2016, interest on excess self-assessment tax was not allowed under the law. They pointed out that the 2016 amendment to Section 244A, which introduced a specific clause for self-assessment tax, was meant to apply only from 01.06.2016. The revenue also claimed that the Vivad Se Vishwas Scheme settled all disputes, making the appeal unnecessary.
The assessee countered this argument by stating that Section 244A(1)(b) already covered cases of extra tax payments before the 2016 amendment. It relied on earlier High Court rulings, including the Bombay High Court judgment in Stock Holding Corporation of India Ltd. (2015), which said that taxpayers should get interest on extra tax paid from the date of payment until the refund is issued. The assessee also highlighted that the AO delayed the refund by 68 months, and as per the law, additional interest under Section 244A(1A) should be given from 01.06.2016 onwards.
Comprehensive Guide of Law and Procedure for Filing of Income Tax Appeals, Click Here
The ITAT, led by Judicial Member Anikesh Banerjee and Accountant Member Renu Jauhri, heard both sides. The tribunal confirmed that interest on excess self-assessment tax should be paid even before the 2016 amendment, based on earlier judgments.
The tribunal agreed with the revenue that additional interest for refund delays could only be granted after 01.06.2016, as per the Gujarat High Court ruling in Nima Specific Family Trust (2018). The tribunal also stated that the Vivad Se Vishwas Scheme only settled tax payments, not interest disputes, so CIT(A) was wrong in dismissing the appeal. The tribunal dismissed the revenue’s appeal and partially allowed the assessee’s appeal, allowing interest on excess self-assessment tax while limiting additional interest to the period after 01.06.2016.
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