STATE BANK OF INDIA, MUMBAI V. ASST CIT CIR 2(2), MUMBAI

ITA 2018/MUM/2012

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 9902 (ITAT-MUMBAI)
• Duration Of Justice: 5 year(s) 3 month(s) 17 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-07-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 21-04-2017
• Assessment Year: 1999-2000
• Appeal Filed On: 27-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAJAT MITTAL
• Assessee Lawyers: K K VED
• Keywords: Rectification of order; Revised return
• Section: 143(3); 244A; 263; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH E MUMBAI BEFORE SHRI MAHAVIR SINGH (JUDICIAL MEMBER) AND SHRI N.K. PRADHAN (ACCOUNTANT MEMBER) ITA NO.2018/MUM/2012 ASSESSMENT YEAR: 1999 - 2000 STATE BANK OF INDIA FINANCIAL REPORTING & TAXATION DEPT. 3 RD FLOOR, CORPORATE CENTRE, MADAM CAMA ROAD MUMBAI - 400021 (APPELLANT) VS. A CIT CIRCLE - 2 (2) , MUMBAI (RESPONDENT) PAN NO. AAACS8577K ASSESSEE BY : SHRI GIRISH DAVE & SHRI K.K. VED, A R REVENUE BY: SHRI RAJAT MITTAL , DR DATE OF HEARING : 21/04 /2017 DATE OF PRONOUNCEMENT: 14/07/2017 ORDER PER N.K. PRADHAN, A.M THIS IS AN APPEAL FILED BY THE ASSESSEE. THE RELEVANT ASSESSMENT YEAR IS 200 9 - 10 . THE APPEAL IS DIRECTED AGAINST THE ORDER U/S 263 OF THE INCOME TAX, 1961 (THE ACT) DATED 28.02.2012 PASSED BY THE COMMISS IONER OF INCOME TAX (CIT) - 2 , MUMBAI . ITA NO. 2018/MUM/2012 2 2. THE GROUNDS OF APPEAL FILED BY THE ASSESSEE READ AS UNDER: - 1. THE ORDER OF THE LEARNED CIT IS CONTRARY TO THE PROVISIONS OF LAW AND WITHOUT APPRECIATION OF THE FACTS AND CIRCUMSTANCES OF THE CASE IN THEIR RIGHT PERSPECTIVE. 2. THE LEARNED CIT ERRED IN INVOKING THE PROVISIONS OF SECTION 263 AND HOLDING THAT THE ORDER PASSED BY THE ASSESSING OFFI CER WAS ERRONEOUS AND PREJUDICIAL TO THE INTEREST OF THE REVENUE. 3. THE LEARNED CIT ERRED IN DIRECTING THE ASSESSING OFFICER TO RE - COMPUTE THE INTEREST BY TAKING THE EXCESS TAX PAID WITH RESPECT TO INTEREST ON SECURITIES ON DUE BASIS FROM THE DATE OF ORDER O F THE COMMISSIONER OF INCOME - TAX (APPEALS) TO THE DATE OF THE ORDER UNDER REVIEW I.E. 20 JULY 2010. THE LEARNED CIT ERRED IN NOT APPRECIATING THAT THE APPELLANT IS ENTITLED TO INTEREST UNDER SECTION 244A IN RELATION TO TAXATION OF INTEREST ON SECURITIES ON DUE BASIS FROM 1 APRIL 1999 / DATE OF PAYMENT OF TAX. 4. THE LEARNED CIT ERRED IN OBSERVING THAT THERE WAS NO CLAIM BEFORE THE ASSESSING OFFICER AND IT WAS ONLY AT THE APPELLATE STAGE THAT THE APPELLANT MADE A FORMAL CLAIM FOR TAXATION OF INTEREST ON SECURIT IES OIL DUE BASIS. 5. THE LEARNED CIT ERRED IN NOT APPRECIATING THAT AFTER HOLDING THAT THE PROVISIONS OF SECTION 244A(2) WERE NOT APPLICABLE, THERE WAS NO PROVISION UNDER LAW UNDER WHICH INTEREST UNDER SECTION 244A COULD HE DENIED TO THE APPELLANT. 6. THE LEARN ED CIT ERRED IN NOT RELYING ON HIS STAND FOR ASSESSMENT YEARS 2001 - 02 AND 2002 - 03, WHEREIN THE CIT HAD DIRECTED THE ASSESSING OFFICER TO GRANT INTEREST UNDER SECTION 244A ON THIS VERY SAME ISSUE. 7. WITHOUT PREJUDICE TO THE ABOVE, THE LEARNED CIT ERRED IN NOT APPRECIATING THAT WHEN TWO VIEWS ATE POSSIBLE AND ONE OF THE VIEWS HAS BEEN ADOPTED BY THE ASSESSING OFFICER, THE POWER OF REVISION UNDER SECTION 263 CANNOT BE EXERCISED. IN THE INSTANT CASE, THE VIEW TAKEN BY THE ASSESSING OFFICER IS SUPPORTED BY VARIOUS JUDICIAL PRECEDENTS AND ACCORDINGLY THE VIEW TAKEN IS ITA NO. 2018/MUM/2012 3 DEFINITELY A PLAUSIBLE VIEW CONSISTENT WITH THE VIEW TAKEN, EVEN BY THE COMMISSIONER OF INCOME TAX IN THE SUCCEEDING ASSESSMENT YEAR. 8. EACH ONE OF THE ABOVE GROUNDS OF APPEAL IS WITHOUT PREJUDICE TO THE OTHER. 3. IN A NUTSHELL THE FACTS OF THE CASE ARE THAT T HE CIT ISSUED A NOTICE DATED 30.01.2012 TO INITIATE PROCEEDINGS U/S 263 TO REVISE THE RECTIFICATION ORDER U/S 154 PASSED BY THE ASSESSING OFFICER ( AO ) ON 20.07.2010. THEREFORE, IT WOULD BE PROPER TO NARRATE THE SAID RECTIFICATION ORDER PASSED BY THE AO. THE ASSESSEE VIDE ITS LETTER DATED 16.07.2010 SUBMITTED BEFORE THE AO THAT (I) WHILE GIVING EFFECT TO THE CIT(A)S ORDER THE TOTAL INCOME WAS TAKEN AT RS.19,62,06,30,3 42/ - INSTEAD OF RS.19,59,26,63,145/ - AS ASSESSED U/S 143(3) DATED 04.02.2002, (II) INTEREST ON SECURITIES WAS TO BE TAXED ON DUE BASIS INSTEAD OF ACCRUAL BASIS, (III) INTEREST RECEIVABLE U/ 244A WAS RS.399,22,18,915/ - INSTEAD OF RS.252,55,06,630/ - GRANTED TO THEM. THE AO VERIFIED THE CONTENTIONS OF THE ASSESSEE FROM THE OFFICE RECORD AND FOUND THE SAME TO BE SAME CORRECT SUBJECT TO RE - CALCULATION OF INTEREST U/S 244A OF THE ACT. THE AO PASSED THE RECTIFICATION ORDER AS UNDER: RS. RS. TOTAL INCOME OF THE ASSESSEE VIDE ORDER DATED 04.06.2010 AS PER ORDER GIVING EFFECT TO CIT(A)S ORDER: 1406,91,94,640 LESS DEDUCTION UNDER CHAPTER VIA AS PER ORDER U/S 143(3) DATED 04.02.2002: 2,79 , 67,197 LESS INTEREST ON SECURITIES TO BE TAXED ON DUE BASIS AND NOT ON ACCRUAL BASIS VIDE PARA 46 OF CIT(A)S ORDER DIFFERENCE BETWEEN INTEREST ACCRUED BUT NOT DUE AS ON 31.03.1999 AND 31.03.1998: (2060,08,39,619 1641,56,06,400) 418,52,33,219 421,32,00,416 985,59,94,224 ADD: DEDUCTION U/S 36(1)(VIIA) A LLOWED AS PER ORDER U/S 143(3) DATED 04.02.2002 793,82,28,183 LESS: DEDUCTION U/S 36(A)(VIIA) ALLOWABLE RE - ITA NO. 2018/MUM/2012 4 WORKED AS UNDER: 48,68,33,446 REVISED TOTAL INCOME 1034,28,27,670 3.1 THE CIT OBSERVED THAT (I ) AS PER ITNS 150, A SUM OF RS.252,09,63,499/ - WAS DETERMINED AS PAYABLE, WHICH INCLUDED INTEREST U/S 244A AMOUNTING TO RS.221,39,24,597/ - , (II) WHILE AN AMOUNT OF RS.418,52,33,219/ - BEING THE INTEREST ON SECURITIES ACCRUED BUT NOT DUE HAS BEEN INCLUDED IN THE TOTAL INCOME DECLARED IN THE RETURN OF INCOME, SUBSEQUENTLY RELIEF WAS SOUGHT FROM THE CIT(A) THAT THE SAME BE TAXED ONLY ON DUE BASIS, (III) THE CIT(A) ALLOWED THE CLAIM OF THE ASSESSEE THAT INTEREST ON SECURITIES BE TAXED ONLY ON DUE BASIS AND THE A O GAVE THE APPEAL EFFECT VIDE ORDER DATED 04.06.2010 WHICH WAS SUBSEQUENTLY MODIFIED BY ORDER U/S 154 DATED 20.07.2010 WHEREIN THE TOTAL INCOME WAS DETERMINED BY THE AO AT RS.1034,28,27,670/ - , (IV) FURTHER VERIFICATION OF ITNS 150 OF THE LAST REFERRED ORDER U/S 154 REVEALS THAT INTEREST U/S 244A HAS BEEN GRANTED IN RESPECT OF THE SO CALLED EXCESS TAXES PAID ON THE COMPONENT OF TAX PERTAINING TO INTEREST ON SECURITIES COMPUTED ON ACCRUED BUT NOT DUE B ASIS FROM 01.04.1999 TO 10.06.2010 I.E. THE DATE OF ISSUE OF REFUND RESULTING OUT OF ORDER U/S 154 OF THE ACT. THE CIT CAME TO A FINDING THAT (I) THE COMPUTATION WAS INCORRECT AS NO REFUND AROSE TO THE ASSESSEE ON ANY EXCESS PAYMENT, WITH REFERENCE TO TH E INTEREST ON SECURITIES AT THE TIME OF PROCESSING OF RETURN ON 31.03.2001, SINCE THE INCOME AS DECLARED, INCLUDING THE INTEREST ON SECURITIES ON ACCRUAL BASIS STOOD ACCEPTED U/S 143(1), (II) FURTHER NO SUCH CLAIM WAS MADE DURING THE ASSESSMENT PROCEEDINGS RESULTING IN THE COMPLETION OF ASSESSMENT U/S 143(3) ON THE SAME QUANTUM OF INTEREST FROM SECURITIES AS DECLARED IN THE RETURN OF INCOME, (III) IT IS ONLY AT THE FIRST APPELLATE STAGE THAT THE CLAIM OF TAXING ITA NO. 2018/MUM/2012 5 INTEREST ON SECURITIES ON DUE BASIS INSTEAD OF ACCRUAL BASIS WAS ACCEPTED BY THE CIT(A) RESULTING IN REFUND OF TAXES WHICH HAD BEEN VOLUNTARILY PAID BY THE ASSESSEE ON THE DECLARED INCOME AND THEREBY CONVERTING THE VOLUNTARILY PAID TAX AS PER THE RETURN INTO EXCESS PAYMENT , (IV) THE CIT(A) DELETED T HE INCOME OF RS.418,52,33,219/ - OFFERED BY THE ASSESSEE VOLUNTARILY IN THE RETURN OF INCOME. THEREFORE, THE CIT HELD THE GRANT OF INTEREST U/S 244A IN THE ORDER U/S 154 DATED 20.07.2010 AMOUNTING TO RS.221,39,24,597/ - TO BE ERRONEOUS AND DIRECTED THE AO T O RE - COMPUTE THE INTEREST BY TAKING THE EXCESS TAX PAID WITH RESPECT TO INTEREST ON SECURITIES ON DUE BASIS FROM THE DATE OF CIT(A)S ORDER TO THE DATE OF ORDER UNDER REVIEW. 4. BEFORE US, THE LD. COUNSEL OF THE ASSESSEE SUBMITS THE FACTS IN BRIEF AS UND ER: 1. DATE OF FILING THE RETURN OF INCOME 30.12.1999 2. TOTAL INCOME RETURNED 860,81,77,400/ - 3. REFUND CLAIMED AS PER RETURN 648,52,70,249/ - 4. DATE OF PROCESSING OF RETURN 31.03.2001 5. REFUND ALLOWED U/S 143(1) 648,52,70,249/ - 6. INTEREST U/S 244A ALLOWED ON THE ABOVE SUM 155,64,64,860/ - 7. DATE OF ASSESSMENT ORDER U/S 143(3) 04.02.2002 8. ASSESSED INCOME 1959,26,63,154/ - 9. DATE OF ORDER GIVING EFFECT TO CIT(A) ORDER 04.06.201 10. REVISED TOTAL INCOME 1406,91,94,640/ - 11. INTEREST ALLOWED U/S 244A 118,92,17,696/ - 12. INTEREST ALLOWED U/S 244A (1)(B) 133,62,88,934/ - 13. TOTAL INTEREST U/S 244A 252,55,06,630/ - 14. DATE OF ORDER U/S 154 OF THE ACT BY AO 20.07.2010 15. REVISED TOTAL INCOME 1034,28,27,670/ - 16. INTEREST ALLOWED U/S 244A 152,83,17,090/ - 17. INTEREST ALLOWED U/S 244A(1)(B) 211,39,24,597/ - 18. TOTAL INTEREST U/S 244A 374,22,41,687/ - 19. DIFFERENCE IN AMOUNT AT ITEM (13) & (18) 121,67,35,057/ - ITA NO. 2018/MUM/2012 6 THE LD. COUNSEL OF THE ASSESSEE STATES THAT THE CIT HAS HELD IN HIS ORDER U/S 263 THAT GRANT OF INTEREST U/S 244A IN THE ORDER DATED 20.07.2010 AMOUNTING TO RS.221,39,24,597/ - IS ERRONEOUS, THOUGH AN AMOUNT OF RS.133,62,88,934/ - WAS ALREADY ALLOWED BY THE AO IN THE ORDER DATED 04.06.2010 GIVING EFFECT TO THE ORDER OF THE CIT(A). THE LD. COUNSEL OF THE ASSESS EE SUBMITS THAT IN THE SHOW CAUSE NOTICE, THERE IS NO AVERMENT OR OBSERVATION OF THE CIT THAT THE ORDER PASSED BY THE AO IS ERRONEOUS IN SO FAR AS IT IS PREJUDICIAL TO THE INTEREST OF THE R EVENUE. IT IS SUBMITTED BY HIM THAT THE ISSUE WAS IN DISPUTE BETWEEN THE ASSESSEE AND THE REVENUE SINCE CERTAIN PRECEDING YEARS. THE ISSUE IS, HOWEVER, DECIDED IN FAVOUR OF THE ASSESSEE BY THE APPELLATE AUTHORITIES. RELIANCE IS PLACED BY HIM ON THE DECISIO N IN THE CASE OF (I) ADDL. CIT SPECIAL RANGE VS. ACC LTD. (ITA NOS. 6279 TO 6284/MUM/2010), (II) CIT VS. SUTLEJ INDUSTRIES LTD. [2010] 325 ITR 331 (DEL.), (III) CIT VS. SOUTH INDIAN BANK LTD . [2010] 237 CTR (KER.) 74 AND (IV) CIT VS. ASSAM ROOFING LTD . [20 11] 330 ITR 87 (GAU.). 5. ON THE OTHER HAND, THE LD. DR RELIES ON THE ORDER OF THE CIT . HE SUBMITS THAT MERELY A NOTE IN THE COMPUTATION OF INCOME DOES NOT LEAD TO CHANGE IN THE QUANTUM OF INCOME RETURNED. THE LD. DR FURTHER SUBMITS THAT AS PER THE JUDGMEN T OF THE HONBLE SUPREME COURT IN GOETZEINDINA LTD . 284 ITR 323 (SC) ANY VARIATION IN CLAIM BEFORE THE AO HAS TO BE BY WAY OF A REVISED RETURN OF INCOME AND NOT BY FILING ANY REVISED COMPUTATION OF INCOME. IN THE CASE OF THE ASSESSEE THERE WAS NO REVISED R ETURN OF INCOME. ITA NO. 2018/MUM/2012 7 6. WE HAVE HEARD THE RIVAL SUBMISSION S AND PERUSED THE RELEVANT MATERIAL ON RECORD. THE ISSUE RAISED IN THIS APPEAL IS SUMMARIZED AS UNDER: THE CIT VIEWS THE ALLOWANCE OF INTEREST U/S 244A ALLOWED IN THE ORDER DATED 20.07.2010 OF RECTIFICATION U/S 154 BY THE AO AS EXCESSIVE FOR THE REASON THAT THE ASSESSEE INCLUDED THE AMOUNT OF INTEREST ON SECURITIES ON ACCRUAL BASIS AND PAID SELF ASSESSMENT TAX THEREON, THOUGH CLAIMED BY WAY OF A NOTE ACCOMPANYING THE RETURN OF INCOME THE SAID IN COME AS NOT TAXABLE IN THAT YEAR AS IT HAS NOT BECOME DUE. 6.1 A SIMILAR ISSUE AROSE BEFORE THE ITAT E BENCH MUMBAI IN THE CASE OF THE ASSESSEE I.E. STATE BANK OF INDIA, FINANCIAL REPORTING AND TAXATION DEPARTMENT VS. DCIT - 2 (2) IN ITA NO. 6817 & 6823/M UM/2012 (AY 2001 - 02) AND ITA NO. 6818 & 6824/MUM/2012 (AY 2002 - 03). THE TRIBUNAL HAS SUMMARIZED THE FACTS IN THE SAID APPEAL AS UNDER: 2. EFFECTIVE GROUND OF APPEAL IS ABOUT NOT GRANTING OF INTEREST U/S 244A OF THE ACT. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAD OFFERED INTEREST ACCRUED BUT NOT DUE ON SECURITIES AS INTEREST INCOME ON ACCRUAL BASIS IN ITS RETURN OF INCOME AND HAD PAID TAXE S ACCORDINGLY, THAT LATER ON IT WAS CLAIMED THAT THE PORTION OF INTEREST INCOME WHICH HAD NOT BECOME DUE TO THE BANK AS ON 31.03.2001 SHOULD NOT BE TAXED DURING THE YEAR UNDER CONSIDERATION, THAT A NOTE IN THAT REGARD WAS INSERTED TO THE RETURN OF INCOME, THAT THE ASSESSEE PAID TAX ON ACCRUAL BASIS. THE AO WHILE PASSING THE ORDER U/S 143(3) OF THE ACT DID NOT ALLOW THE CLAIM MADE BY IT. AGGRIEVED BY THE ORDER OF THE AO, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE FIRST APPELLATE AUTHORITIES (FAA), IN THE AP PELLATE PROCEEDINGS, THE FAA ALLOWED THE CLAIM OF THE ASSESSEE WITH REGARD TO INTEREST ACCRUED BUT NOT DUE ON SECURITIES AND ALLOWED RELIEF. WHILE GIVING EFFECT OF ORDER OF THE FAA AND ITA NO. 2018/MUM/2012 8 WHILE COMPUTING THE INTEREST DUE TO THE APPELLANT U/S 244A, THE AO COMP UTED THE INTEREST BY EXCLUDING THE REFUND ARISING ON ACCOUNT OF INTEREST ACCRUED BUT NOT DUE ON SECURITIES. THE ASSESSEE FILED AN APPLICATION BEFORE THE AO IN THAT REGARD. HE DISPOSED OFF THE APPLICATION HOLDING THAT EVEN IF THE ASSESSEE GOT RELIEF FROM TH E APPELLATE AUTHORITY, IT COULD NOT GET 244A INTEREST THAT DELAY WAS ON PART OF THE ASSESSEE FOR MAKING CLAIM , THAT THE CLAIM WAS NOT MADE IN THE RETURN OF INCOME. THE ASSESSEE APPROACHED THE CIT AND IN HIS ORDER, PASSED U/S 264 OF THE ACT, HE HELD THAT PR IMA FACIE THE CLAIM MADE BY THE ASSESSEE APPEARED TO THE GENUINE. AS THE AO REFUSED TO GRANT REFUND AS STATED EARLIER, IN RESPONSE TO THE APPLICATION FILED BY THE ASSESSEE U/S 154 OF THE ACT, SO, THE ASSESSEE FILED AN APPEAL BEFORE THE FAA. THE TRIBUNAL A LLOWED THE APPEAL OF THE ASSESSEE AND HELD AS UNDER: THE ASSESSEE HAD FILED THE RETURN OF INCOME IN THE TIME AND THE AO OR THE FAA HAS NOT ALLEGED THAT BELATED RETURN WAS FILED FOR THE YEAR UNDER CONSIDERATION. THEREFORE, IT CANNOT BE HELD THAT THERE WAS DELAY ON PART OF THE ASSESSEE. IT IS OBSERVED THAT THAT THE ASSESSEE HAD IN THE NOTES, ACCOMPANYING THE RETURN, HAD MENTIONED THAT IN THE PAST BANKS CLAIM FOR TAXING ON SECURITIES ON DUE BASIS WAS ALLOWED UP TO AY 1990 - 91, THAT THIS YEAR ALSO INTEREST ON SECURITIES SHOULD BE TAXED ON DUE BASIS. WHILE COMPLETING THE ASSESSMENT THE AO IGNORED THE SAID NOTE, BUT HE TOOK NOTE ABOUT THE BROKEN PERIOD INTEREST (NOTE 13) AND ACCORDINGLY TAXED IT. THE SELECTIVE APPROACH OF THE AO IS BEYOND COMPREHENSION. AS A REP RESENTATIVE OF THE S OVEREIGN, HE WAS COLLECT DUE TAXES ONLY HE IS NOT MERE TAX GATHERER. IT WAS HIS DUTY TO CONSIDER BOTH THE NOTES WHATEVER WOULD HAVE BEEN THE RESULT. BUT, HE CONVENIENTLY OVERLOOKED THE NOTE THAT WOULD HAVE GONE AGAINST HIM. IF HE HAD CO NSIDERED THE FACTS ABOUT BROKEN PERIOD, HE SHOULD HAVE DELIBERATED UPON CLAIM MADE BY THE ASSESSEE FOR TAXING ON SECURITIES ON DUE BASIS. ITA NO. 2018/MUM/2012 9 6.2 WE FIND THAT THE ISSUE IN THE INSTANT APPEAL IS COVERED IN FAVOUR OF THE ASSESSEE BY THE ABOVE ORDER OF THE CO - OR DINATE BENCH. 7. WE NOW TURN TO THE DECISION IN THE CASE OF GOETZE (INDIA) LTD. (SUPRA) RELIED ON BY THE LD. DR. THE ISSUE RELATES TO WHETHER THE ASSESSEE COULD MAKE A CLAIM FOR DEDUCTION OTHER THAN BY FILING A REVISED RETURN. THE ASSESSMENT YEAR IN QUESTION WAS 1995 - 96. THE RETURN WAS FILED ON 30.11.1995 BY THE ASSESSEE FOR THE ASSESSMENT Y EAR IN QUESTION. ON 12.01.1998 THE ASSESSEE SOUGHT TO CLAIM A DEDUCTION BY WAY OF A LETTER BEFORE THE AO. THE HONBLE SUPREME COURT HELD THAT ASSESSEE CANNOT AMEND A RETURNED FILED BY HIM FOR MAKING A CLAIM FOR DEDUCTION OTHER THAN FILING A REVISED RETURN. IN THE INSTANT CASE, THE ASSESSEE INCLUDED THE AMOUNT OF INTEREST ON SECURITIES ON ACCRUAL BASIS AND PAID SELF - ASSESSMENT TAX THEREON, THOUGH CLAIMED BY WAY OF A NOTE ACCOMPANYING THE RETURN OF INCOME THAT THE SAID INCOME HAS NOT TAXABLE IN THAT YEAR AS IT HAS NOT BECOME DUE. THE ISSUE IN THE INSTANT APPEAL IS LIMITED TO THE INTEREST U/S 244A OF THE ACT. 8. IT WOULD NOW BE APPOSITE TO DISCUSS THE JUDGEMENTOF THE HONBLE BOMBAY HIGH COURT IN THE CASE OF STOCK HOLDING CORPORATION OF INDIA LTD. VS. N.C. TE WARI, CIT, MUMBAI CITY - III (2015) 53 TAX MANN.COM 106 (BOM.). THE FACTS IN THE CASE WAS THAT THE ASSESSEE FILED ITS RETURN OF INCOME FOR THE AY 1994 - 95 DECLARING A TOTAL INCOME OF RS.13.12 CRORES. THE TAX PAYABLE ON THE DECLARED INCOME WAS RS.6.79 CRORES. TH E ASSESSEE PAID THE TAX BY WAY OF ADVANCE TAX AND CREDIT FOR TAX DEDUCTED AT SOURCE. HOWEVER, AS THERE WAS STILL A SHORTAGE OF TAX PAYABLE, THE ASSESSEE PAID RS.2.60 CRORES BY WAY OF TAX ON SELF ASSESSMENT. THE AO COMPLETED THE ASSESSMENT AND DETERMINED TH E ASSESSEES INCOME AT ITA NO. 2018/MUM/2012 10 RS.15.27 CRORES. CONSEQUENT TO THE ABOVE, A NOTICE OF DEMAND U/S 156 WAS ISSUED TO THE ASSESSEE. ON APPEAL, THE COMMISSIONER (APPEALS) ALLOWED THE SAME. CONSEQUENTLY, THE AO GAVE EFFECT TO THE ORDER OF THE COMMISSIONER (APPEALS). AS A RESULT, THE ASSESSEE WAS GRANTED A REFUND OF RS.2 CRORES. HOWEVER, NO INTEREST INTER ALIA WAS GRANTED ON SELF ASSESSMENT. THE ASSESSEE PREFERRED A REVISION APPLICATION BEFORE THE COMMISSIONER U/S 264. TO THE COMMISSIONER PARTLY ALLOWED THE ASSESSEES REV ISION APPLICATION. HOWEVER, IT REJECTED THE ASSESSEES CLAIM FOR INTEREST OF REFUND OF TAX PAID ON SELF ASSESSMENT. ON WRIT, THE HONBLE HIGH COURT HELD AS UNDER: 7. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. ON A BARE ANALYSIS OF SECTION 244A(1) OF THE ACT IT IS CLEAR THAT AMOUNT PAID BY THE PETITIONER AS TAX ON SELF ASSESSMENT WOULD NOT STAND COVERED BY SECTION 244A(1)(A) OF THE ACT. THIS IS SO AS IT IS NEITHER THE PAYMENT OF TAX BY WAY OF ADVANCE TAX OR BY WAY OF TAX DEDUCTED AT SOURCE. THUS TAX PAID O N SELF ASSESSMENT WOULD FALL UNDER SECTION 244A(1)(B) OF THE ACT, I.E. A RESIDUARY CLAUSE COVERING REFUNDS OF AMOUNT NOT FALLING UNDER SECTION 244A(1) OF THE ACT. THE REVENUE CONTENDS THAT IN THE ABSENCE OF TAX ON SELF ASSESSMENT FINDING MENTION IN SECTION 244A(1)(A) OF THE ACT, NO INTEREST IS PAYABLE UNDER SECTION 244A(1) OF THE ACT AND SECTION 244A(1)(B) OF THE ACT WOULD HAVE NO APPLICATION. THIS CONTENTION IS OPPOSED TO THE MEANING OF THE PROVISION DISCLOSED EVEN ON A BARE READING. IF THE TAX PAID IS NOT COVERED BY CLAUSE (A) OF SECTION 244A(1), IT FALLS WITHIN CLAUSE (B), WHICH IS A RESIDUARY CLAUSE. BESIDES, THIS CONTENTION STANDS NEGATIVED BY THE CBDT CIRCULAR BEARING NO.549 DATED 31 OCTOBER 1989 WHEREIN REFERENCE IS MADE TO SECTION 244A AND PARA 11.4 THEREOF READS AS UNDER : 11.4 THE PROVISIONS OF THE NEW SECTION 244A ARE AS UNDER: (I) SUB - SECTION (1) PROVIDES THAT WHERE IN PURSUANCE OF ANY ORDER PASSED ITA NO. 2018/MUM/2012 11 UNDER THIS ACT, REFUND OF ANY AMOUNT BECOMES DUE TO THE ASSESSEE THEN (A) IF THE REFUND IS OUT OF ANY ADVANCE TAX PAID OR TAX DEDUCTED AT SOURCE DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR, INTEREST SHALL BE PAYABLE FOR THE PERIOD STARTING FROM THE 1ST APRIL OF THE ASSESSMENT YEAR AND ON THE DATE OF GRANT OF THE REFUND. N O INTEREST SHALL, HOWEVER, BE PAYABLE, IF THE AMOUNT OF REFUND IS LESS THAN 10 PER CENT OF THE TAX DETERMINED ON REGULAR ASSESSMENT; (B) IF THE REFUND IS OUT OF ANY TAX, OTHER THAN ADVANCE TAX OR TAX DEDUCTED AT SOURCE OR PENALTY, INTEREST SHALL BE PAYA BLE FOR THE PERIOD STARTING FROM THE DATE OF PAYMENT OF SUCH TAX OR PENALTY AND ENDING ON THE DATE OF THE GRANT OF THE REFUND. (REFER TO EXAMPLE III IN PARA 11.8).' (EMPHASIS SUPPLIED) THE INFERENCES TO BE DRAWN FROM THE BOARD'S CIRCULAR IS CLEAR THAT IF REFUND IS OUT OF ANY TAX OTHER THAN OUT OF ADVANCE - TAX OR TAX DEDUCTED AT SOURCE, INTEREST SHALL BE PAYABLE FROM THE DATE OF PAYMENT OF TAX AND ENDING ON THE DATE OF THE GRANT OF REFUND. IT IS TO BE NOTED THAT NOWHERE DOES THE CBDT EVEN REMOTELY SUGGEST TH AT INTEREST IS NOT PAYABLE BY THE DEPARTMENT ON SELF - ASSESSMENT TAX. MOREOVER, THE AMOUNT PAID UNDER SECTION 140A OF THE ACT ON SELF ASSESSMENT IS AN AMOUNT PAYABLE AS AND BY WAY OF THE TAX AFTER NOTICING THAT THERE IS LIKELY TO BE SHORTFALL IN THE TAXES A LREADY PAID. THUS THIS PAYMENT IS CONSIDERED TO BE A TAX UNDER THE AFORESAID PROVISION. 8.1 TO SUM UP, THE HONBLE BOMBAY HIGH COURT IN ABOVE CASE HAS HELD THAT TAX PAID ON SELF ASSESSMENT WOULD FALL U/S 244A (1) (B), I.E. A RESIDUARY CLAUSE COVERING REFUNDS OF AMOUNT NOT FALLING U/S 244A (1), THEREFORE, INTEREST IS PAYABLE ON REFUND ON EXCESS AM OUNT PAID ON SELF ASSESSMENT TAX. ITA NO. 2018/MUM/2012 12 9. WE ARE OF THE CONSIDERED VIEW THAT THE ISSUES IN THE INSTANT APPEAL ARE DECIDED IN FAVOUR OF THE ASSESSEE BY THE JUDGMENT OF THE HONBLE BOMBAY HIGH COURT IN STOCK HOLDING CORPORATION OF INDIA LTD. (SUPRA) AND ORDER OF THE CO - ORDINATE BENCH IN THE CASE OF THE ASSESSEE DELINEATED HERE - IN - ABOVE. WE FOLLOW THE SAME AND HOLD THAT THE RECTIFICATION ORDER DATED 20.07.2010 PASSED BY THE AO IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTEREST OF REVENUE. 10 . IN THE RESULT, THE ORDER PASSED BY THE COMMISSIONER U/S 263 IS CANCELLED. THE APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN C OURT ON 14/07/2017. SD/ - SD/ - (MAHAVIR S INGH) (N.K. PRADHAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI ; DATED: 14/07/2017 RAHUL SHARMA, SR. P.S. COPY OF THE ORDER FORWARDED TO : 1. THE APPELLANT 2. THE RESPONDENT. 3. THE CIT(A) - 4. CIT 5. DR, ITAT, MUMBAI 6. GUARD FILE . BY ORDER, //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI