Commissioner Of Income Tax-Icoimbatore v. Siv Industries Ltd., Coimbatore

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED: 26.02.2007 CORAM THE HON'BLE MR.JUSTICE P.D.DINAKARANANDTHE HON'BLE MRS.JUSTICE CHITRA VENKATARAMAN T.C.(A).No.13 of 2004 Commissioner of Income Tax-ICoimbatore...Appellant Vs. SIV Industries Ltd., Coimbatore...Respondent Appeal under Section 260A of the Income Tax Act, 1961 against theorder of the Income Tax Appellate Tribunal, 'C' Bench, Chennai dated22.7.2003 in ITA No.1733/Mds/1995 for the assessment year 1985-86.againstthe order of the Commissioner of Income Tax (Appelas) Coimbatore dated15/6/95 in IT Appeal No. 372-C/94-95 agaisnt the order of the AssistantCommissioner of Income Tax (Assessment) Range, Coimbatore dated 24/3/88 inproceedings No 47-023-CN-0158-85-86/IAC (A) R.I For Appellant : Mr.N.Muralikumaran, Sr.SC for ITFor Respondent : Official Liquidator (under liquidation) -----J U D G M E N T (Delivered by P.D. DINAKARAN, J.) The above tax case appeal is directed against the order of theIncome-tax Appellate Tribunal in ITA No.1733/ Mds/1995 dated 22.7.2003,raising the following substantial question of law. " Whether in the facts and circumstances of the case,the Tribunal was right in holding that tax paid undersection 140A can be treated as "amount paid inpursuance of any order of assessment" for the purposeof computing interest under section 244(1A) of theIncome-tax Act?" 2. The facts which are necessary for the disposal of this appeal areas under: 2.1. The assessment of the assessee company for the assessment year1985-86 was completed. The unabsorbed business loss relating to theassessment year 1984-85 was set off in the assessment year in question.Then, the assessee applied for rectification on the ground that carriedforward 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 setoff. Accordingly, the total income was revised. Deducting the advancetax, tax under section 140A and interest under sections 216 & 139(8) ofthe Act, refund was determined. The assessment again rectified andinterest under section 244 of the Act payable to the assessee on theamount of refund was determined. 2.2. Contending that the computation of interest by the assessingofficer was not correct, the assessee filed an appeal before theCommissioner of Income-tax (Appeals), who, by order dated 17.12.1989, heldthat since the assessing officer did not grant the refund within a periodof three months from the end of the month in which the order of refund waspassed, the assessee is entitled to interest from the date following theexpiry of the period of three months to the date on which the refund wasgranted. The Commissioner of Income-tax (Appeals) held that the interestshould be paid to the assessee from 1.6.1989 to 23.7.1989, viz., the datefollowing the expiry of three months from the end of the month in whichthe appellate order was passed to the date of refund. The Commissioner ofIncome-tax (Appeals) also excluded the payment made under section 140A ofthe Act. Finding that the rate of interest was not correct, theCommissioner of Income-tax (Appeals) enhanced the same from 1% to 15% perannum and determined the interest payable at Rs.58,22,026/- as againstRs.6,83,974/- as determined by the assessing officer. 2.3. The Appellate Tribunal, on appeal, confirmed the same.Exasperated by the order of the Appellate Tribunal, the Revenue has comeforward with this appeal raising the question of referred to above. 2.3. The Appellate Tribunal, on appeal, confirmed the same.Exasperated by the order of the Appellate Tribunal, the Revenue has comeforward with this appeal raising the question of referred to above. 3. The main point involved in the question is whether the tax paidunder section 140A of the Act can be taken into account while determiningthe interest on refund payable to the assessee. In this connection, it isbrought to our notice the decision in CIT v. Ashok Leyland Ltd. (254 ITR641) wherein, this court, after referring to the decision of Apex Court inModi Industries Ltd. v. CIT (216 ITR 759), held that after adjustment ofadvance tax at the time of regular assessment, if some balance remains tothe credit of the assessee, that balance is treated as excess amount ofadvance tax which has to be refunded with interest . This Court also heldthat the assessee is entitled to interest under section 18 of the SurtaxAct read with section 244(1A) of the Income-tax Act, 1961, on the over payment of the self-assessment tax paid by the assessee. 4. Applying the ratio laid down by this Court in CIT v. Ashok LeylandLtd. (254 ITR 641), we hold that while determining interest under section244(1A) of the Act, the self-assessment tax paid under section 140A shouldalso be taken into consideration as the tax paid by way of self-assessmentunder section 140A of the Act would get adjusted against the assessed taxand partake the character of tax paid in pursuance of the assessmentorder. 5. We therefore hold that the Appellate Tribunal was correct inholding that the tax paid under section 140A of the Act can be treated asamount paid in pursuance of order of assessment for the purpose ofcomputing interest under section 244(1A) of the Act. Accordingly, thequestion of law is answered in the affirmative and against the Revenue.The appeal stands dismissed. No costs. na. Sd/Asst. Registrar /true copy/ To Sub Asst.Registrar 1. THE ASSISTANT REGISTRAR INCOME TAX APPELLATE TRIBUNAL, RAJAJI BHAVAN, BESANT NAGAR, CHENNAI 2. THE INCOME TAX APPELLATETRIBUNAL CHENNAI C BENCH CHENNAI. 3. THE COMMISSIONER OF INCOME TAXAPPEALS, COIMBATORE, 4. THE ASSISTANT COMMISSIONEROF INCOME TAX, (ASSESSMENT) RANGE I COIMBATORE. 5. THE COMMISSIONER OF INCOMETAX-I COIMBATORE. + One cc to Mr. N. Muralikumaran Advocate SR 12005KSJ (co) sg 14/3/07 T.C.(A).No.13 of 2004 26.2.2007