Section 244A – Interest is payable on refund arising out of payment of self-assessment tax even though refund is less than ten per cent of tax determined

4. [2020] 119 taxmann.com 40 (Del.)(Trib.) Maruti Suzuki India Ltd. vs. CIT ITA Nos. 2553, 2641 (Delhi) of 2013 &
others A.Ys.: 1999-00 to 1994-95 Date of order: 31^st August, 2020

Section 244A – Interest is payable on
refund arising out of payment of self-assessment tax even though refund is less
than ten per cent of tax determined

FACTS

The assessee
claimed refund of Rs. 201,37,93,163 comprising of advance tax, TDS and
self-assessment tax of Rs. 14,59,79,228 and Rs. 186,78,13,935, the tax paid on
different dates. The A.O. did not allow interest u/s 244A(1)(a) on the amount
of Rs. 14.59 crores as the refund was less than 10% of the tax determined u/s
254 r/w/s 143(3).

Aggrieved, the
assessee preferred an appeal to the CIT(A) who confirmed the order on the
ground that to give effect to the provisions of section 244A(3), the assessee
had to mandatorily cross the limitations imposed u/s 244A(1)(a).

Aggrieved, the
assessee preferred an appeal to the Tribunal.

HELD

The Tribunal observed that the CIT(A) treated the entire amount of Rs.
14.60 crores as prepaid taxes for the purpose of section 244A(1)(a). This, according to the Tribunal, was where the
CIT(A) considered / read the provisions wrong. The Tribunal held that the
prepaid taxes consist of TDS and advance tax. The provisions of self-assessment
tax are governed by section 140A which is not covered by the provisions of
section 244A(1)(a). Self-assessment tax which is payable on the basis of return
does not constitute part of advance tax. For the purpose of embargo of 10% of
tax determined in accordance with the provisions of section 244A(1)(a), it is
clear from the provisions of the section that self-assessment tax does not form
part of the embargo as self-assessment tax falls under clause (b) of section
244A(1). The proviso to clause (a) of sub-section (1) of section 244A is
applicable and has to be considered for the computational purpose of interest
computable for the refund payable u/s 244A(1)(a).

As regards the
question whether or not interest is payable on self-assessment tax paid, the
Tribunal observed that it is trite law that whenever the assessee is entitled
to refund, there is a statutory liability on the Revenue to pay the interest on
such refund on general principles to pay interest on sums wrongfully retained.

Section 244A does
not deny payment of interest in case of refund of amount paid u/s 140A. On the
contrary, clause (b) being a residuary clause, necessarily includes payment
made u/s 140A. Since there is no proviso attached to sub-clause (b), the
embargo of 10% is not applicable for calculation of interest for the refund
arising out of payment of self-assessment tax.

The Tribunal held
that with regard to the self-assessment tax paid, the assessee is eligible for
interest on the total amount of refund in accordance with the provisions of
section 244A(1)(b). This ground of appeal was allowed.