Court In Sandvik Asia Ltd v. Cit[[1]]. In Sandvik Asia The Supremecourt Did Not Restrictively Interpret The Amplitude Of Section 244A. It

THE HONOURABLE SRI JUSTICEGODA RAGHURAMANDTHE HONOURABLE SRI JUSTICEN. RAVI SHANKAR ITTA No. 211 of 2012 Dated: 13-07-2012 Between The Commissioner of Income Tax-III,Hyderabad And Smt Phoola Rani Gupta …Appellant …Respondent Judgment:(Per Hon’ble Sri Justice Goda Raghuram) No substantial question of law arises for consideration in thisappeal by the Revenue directed against the order of the Income TaxAppellate Tribunal (for short ‘the Tribunal”, Hyderabad Bench, dated23-2-2010 in ITA No. 1048/Hyd/09. To the extent relevant and material for the purpose of this appealsuffice it to record that the Assessment order dated 20-09-2007 computed the total income at Rs.31,19,670/- anddetermined the tax thereon at Rs. 6,23,934/- and additional surchargeof Rs.93,590/-. The assessee had paid self-assessment taxofRs.6,25,000/-. Against the order of assessment, the assesseepreferred an appeal to the Commissioner (Appeals). The appellateauthority, by the order dated 29-1-2008 modified the order ofassessment and deleted in toto the computation of income by theAssessing authority. Consequently, the Assessing authority by the order dated 6-3-2008 computed the taxable income as nil and recorded a refund tothe assessee of Rs.6,25,000/-, paid by the assessee as self-assessment tax. Aggrieved by the failure of the Assessing authority’s order dated6-3-2008 in directing payment of interest under Section 244A of theIncome Tax Act, 1961, the assessee preferred an appeal to theCommissioner (Appeals). By the order dated 11-8-2009 the Appellateauthority allowed the appeal directing refund of the self-assessmenttax of Rs.6,25,000/- and directed that interest is payable. Thereagainst, the Revenue preferred an appeal in respect of therespondent-assessee and another appeal in respect of another assessee Lekhraj Gupta (since deceased). The Tribunal confirmedthe order of appellate authority, in view of the clear and unambiguousphraseology of Section 244A and dismissed the appeal by theRevenue. Sub-section (1) of Section 244 of the Act enjoins that whererefund of any amount becomes due to the assessee under the Act, heshall, subject to the provisions of this section, be entitled to receive, inaddition to the said amount, simple interest thereon calculated in themanner specified in clauses (1) and (b). On a true and fair construction and on a grammaticalinterpretation of the phrase ‘any amount due to the assessee under theAct’, the assessee shall be entitled to interest at the rate and themanner specified in the provision. Sri B.Narsimha Sharma, learned Senior Standing counsel for theIncome Tax however contends that on a purposive construction ofSection 244A, it requires to be held that no interest liability ariseswhere the tax is paid by an assessee on self-assessment and unless itis wrongfully withheld by the Revenue. The factual substratum of the above contention, urged by Sri Sharma is on the syllogism is that the order of assessment dated20-9-2007 determined the liability of the assessee on a computed totalincome of Rs.31,19,670/- whereon a tax and surcharge liability ofRs.7,17,523/- was determined. That order cannot be considered aswrongful until it was modified by the Commissioner of Appeals, by theorder dated 29-1-2008. Only after the appeal was allowed on 29-1-2008 was the assessee’s liability to tax scaled down to nil and thequestion of refund arose. Support to the contention that interest liability arises only whererefund becomes due to the assessee and such refund is “wrongfully”withheld by the Revenue is placed on the decision of the Supreme Court in Sandvik Asia Ltd. V. CIT[[1]]. In Sandvik Asia the SupremeCourt did not restrictively interpret the amplitude of Section 244A. It merely observed: “In view of the express provisions of the IncomeTax Act, 1961, an assessee is entitled to compensationby way of interest for the delay in the payment ofamounts lawfully due to the assessee which are withheldwrongly and contrary to law”. Support to the contention that interest liability arises only whererefund becomes due to the assessee and such refund is “wrongfully”withheld by the Revenue is placed on the decision of the Supreme Court in Sandvik Asia Ltd. V. CIT[[1]]. In Sandvik Asia the SupremeCourt did not restrictively interpret the amplitude of Section 244A. It merely observed: “In view of the express provisions of the IncomeTax Act, 1961, an assessee is entitled to compensationby way of interest for the delay in the payment ofamounts lawfully due to the assessee which are withheldwrongly and contrary to law”. The same issue again fell for consideration in Commissioner ofIncome Tax v. Cholamandalam Investment and Finance Co.Ltd.[[2]]. The Madras High Court following its earlier decision inCommissioner of Income Tax v. Ashok Leyland Ltd[[3]]and thedecision in Sandvik Asia held that wherever the assessee is entitledto refund, there is a statutory liability on the Revenue to pay the intereston such refund; even where the tax is paid under Section 140A on self-assessment. In the case on hand, the assessee was initially assessed liableto tax on the assumption that the income of Rs.31,19,670/- wasexigable to tax. However the assessee preferred an appeal successfulwhereat the computation of the income by the Assessing authority wasreversed and the taxable income was declared as nil andconsequently refund was ordered. Even in these circumstances, theobligation under Section 244A of the Act renders the Revenue liable topay interest. The judgment of the Supreme Court in Sandvik Asiadoes not enunciate any contrary principle. We are also in respectfulagreement with the interpretation of Section 244A by the Madras HighCourt in Cholamandalam Investment and Finance Co. Ltd (2supra). On the above premises there is no question of law let alonesubstantial question of law that arises for consideration in this appeal. It is therefore dismissed at the stage of admission. But in thecircumstances, without costs. __________________________ GODA RAGHURAM, J 13[th] July, 2012 GRR [1](2006) 280 ITR 643 (SC) [2](2007) 294 ITR 438 (Mad.) [3](2002) 254 ITR 641 (Mad.) _________________________ N. RAVI SHANKAR, J