[CIT v. Asian Paints Ltd., 12 Taxman.com 484 (Bom.)]
The assessee deposited cheque for amount of tax demanded with authorised agent of the Central Government on 29-12-2003 and account of assessee was debited to that extent on 30-12-2003. On appeal, assessment was set aside and the assessee became entitled to refund of tax paid. The Assessing Officer refunded tax with interest u/s.244A from January, 2004 till grant of refund and declined to grant interest for month of December, 2003 on ground that tax paid by the assessee was credited to the Central Government account on 12-1-2004. The Tribunal held that the assessee was entitled to interest for the month of December 2003.
On appeal by the Revenue, the Bombay High Court upheld the decision of the Tribunal and held as under:
“(i) According to the Counsel for the Revenue, though the assessee had deposited the cheque towards the tax demand on 29-12-2003, the amount was actually credited to the Central Government account on 1-1-2004 and therefore, on grant of refund, the assessee was entitled to interest from January, 2004. In support of the above contention, counsel for the Revenue relied upon a decision of the Rajasthan High Court in the case of Rajasthan State Electricity Board v. CIT, (2006) 281 ITR 274 and the decision of the Delhi High Court in the case of CIT v. Sutlej Industries Ltd., (2010) 325 ITR 331/190 Taxman 136.
(ii) U/s.244A(1)(b) of the Act, interest on refund is payable from the date of payment of tax to the date on which refund is granted. In the present case, admittedly the cheque for the amount of tax demanded was deposited with the authorised agent of the Central Government on 29-12-2003 and the account of the assessee was debited to that extent on 30-12-2003. The question therefore, to be considered is, whether debiting the tax amount from the bank account of the assessee by the authorised agent of the Central Government account viz. the authorised bank constitutes payment of tax under section 244(A)(i)(b) of the Act?
(iii) Once the authorised agent of the Central Government collects the tax by debiting the bank account of the assessee, the payment of tax to the Central Government would be complete. The fact that there is delay on the part of the authorised agent to credit that amount to the account of the Central Government, it cannot be said that the payment of tax is not made by the assessee, till the amount of tax is credited to the account of the Central Government. For calculating interest u/s.244A(1)(b) of the Act the relevant date is the date of payment of tax and not the date on which the amount of tax collected is credited to the account of the Central Government by the agent of the Central Government.
(iv) Therefore, in the facts and circumstances of the present case, the decision of the ITAT in holding that the assessee had paid the taxes on 30-12- 2003 cannot be faulted.
(v) Once it is found that the tax was paid on 30-12- 2003, then as per the Rule 119A(b), of the Incometax Rules, on the tax becoming refundable, the assessee had to be refunded tax with interest for the entire month of December, 2003. Thus, in the facts of the present case, no fault can be found with the decision of the ITAT in holding that the tax was paid on 30-12-2003 and therefore, the tax was liable to be refunded with interest for the entire month of December, 2003.
(vi) The decision of the Rajasthan High Court, as also the decision of the Delhi High Court relied upon by the counsel for the Revenue are distinguishable on the facts as in both the above cases, the Courts were not called upon to consider the scope of the expression ‘payment of tax’ contained u/s.244A(1)(b) of the Act. In fact, the Circular No. 261, dated 8-8-1979 issued by the Board to the effect that the date of presenting the cheque should be the date of payment supports the contention of the assessee.”
