S. 244A – Interest is payable even on refund arising out of self-assessment tax paid from the date of payment of self-assessment tax.

Pursuant to the order passed by the Assessing Officer (AO) on 3rd October, 2008 the assessee was entitled to refund of
Rs.1,99,47,368. This refund comprised tax paid on regular assessment and also
part of self-assessment tax paid on 13-2-2006. The AO granted interest on refund
arising on the amount of tax paid on regular assessment, but did not grant
interest on refund arising on amount of tax paid as self-assessment tax. He did
not assign any reason for not granting interest on refund of self-assessment tax
paid on 13-2-2006.

Aggrieved, the assessee preferred an appeal to the CIT(A) who
held that the provisions of S. 244A(1)(b) include all situations of refund other
than those covered by S. 244A(1)(a) i.e., refunds arising out of advance tax or
TDS. He held that interest u/s. 244A(1)(b) is payable even if refund arises on
account of self-assessment tax paid by the assessee. The CIT(A) allowed the
appeal and held that the assessee is entitled to additional interest u/s.244A on
the amount of self-assessment tax paid from the date of payment till the date of
granting
of refund.

Aggrieved by the order of the CIT(A) the Revenue preferred an
appeal to the Tribunal.

The Tribunal noted that while allowing the claim of the
assessee the CIT(A) has followed the decision of the Co-ordinate Bench of the
Tribunal in the case of DCIT v. BSES Ltd., (113 TTJ 227) (Mum).
The Tribunal also noted that the AO had not assigned any reasons for not
granting interest on refund arising on account of payment of self-assessment
tax. The Tribunal dismissed the appeal filed by the Revenue.