M/S VARUNA HATCHERIES PVT. Ltd., Vijayawada V. The ACIT, Circle-2(1), Vijayawada, Vijayawada

ITA 28/VIZ/2012

• Counselvise Citation: 2825314 RSA 2012
• Duration Of Justice: 2 year(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-03-2014
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-02-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 13-02-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R K SINGH
• Keywords: Revised return
• Section: 244A; 154

Judgement Text

ITA NO.28/VIZAG/2012 M/S. VARUNA HATCHERIES PVT. LT D. VIJAYAWADA IN THE INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM BENCH, VISAKHAPATNAM BEFORE: SHRI J. SUDHAKAR REDDY, ACCOUNTANT MEMBER AND SHRI SAKTIJIT DEY, JUDICIAL MEMBER ITA NO.28/VIZAG/2012 ASSESSMENT YEAR : 2007-08 M/S. VARUNA HATCHERIES PVT. LTD. VIJAYAWADA VS. ACIT CIRCLE-2(1) VIJAYAWADA (APPELLANT) (RESPONDENT) PAN NO.AAACV 7517Q ASSESSEE BY: A.S.R.S.S. SIVAPRASAD, CA REVENUE BY: SHRI R.K. SINGH, ADDL. CIT DATE OF HEARING : 26.02.2014 DATE OF PRONOUNCEMENT : 03.03.2014 ORDER PER SAKTIJIT DEY, JUDICIAL MEMBER:- THIS APPEAL OF THE ASSESSEE IS DIRECTED AGAINST THE ORDER DATED 12.12.2011 OF THE CIT(A), VIJAYAWADA PERTAINING TO THE ASSESSMENT YEAR 2007-08. 2. THE ASSESSEE IS AGGRIEVED BECAUSE OF REFUSAL OF THE DEPARTMENT TO GRANT INTEREST ON REFUND U/S 244A OF THE INCOME TAX ACT FROM THE DATE OF PAYMENT OF SELF ASSESSMENT TAX. 3. BRIEFLY STATED, THE ASSESSEE FILED ITS ORIGINAL RETURN OF INCOME FOR THE IMPUGNED ASSESSMENT YEAR DECLARING TOTAL INCOME OF RS.1,53,26,080/-. THE RETURN WAS PROCESSED U/S 143(1) OF THE ACT ON 2.3.2 009 AND A REFUND OF RS.44,860/- WAS ALSO GRANTED TO THE ASSESSEE. SUBS EQUENTLY, THE ASSESSEE FILED A REVISED RETURN BY DECLARING TOTAL INCOME OF RS.1,35,30,320/- AND CLAIMING REFUND OF RS.7,61,439/-. THE REVISED RETU RN OF INCOME WAS PROCESSED BY THE ASSESSING OFFICER AND REFUND OF RS .7,16,580/- WAS ALSO GRANTED TO THE ASSESSEE. THE ASSESSEE MADE AN APPL ICATION U/S 154 OF THE ACT FOR GRANT OF INTEREST U/S 244A OF THE ACT ON TH E REFUND GRANTED BY ITA NO.28/VIZAG/2012 M/S. VARUNA HATCHERIES PVT. LT D. VIJAYAWADA 2 CLAIMING THAT, HE IS ENTITLED TO INTEREST ON REFUND FROM THE DATE OF PAYMENT OF SELF ASSESSMENT TAX OF RS.10,25,735/- MADE ON 26.10 .2007. THE APPLICATION FILED U/S 154 OF THE ACT WAS HOWEVER REJECTED BY TH E ASSESSING OFFICER WHO HELD THAT THE ASSESSEE IS NOT ENTITLED TO ANY INTER EST ON SELF ASSESSMENT TAX IN TERMS OF SECTION 244A(1)(A) OF THE ACT SINCE THE AS SESSEE HAS NOT PAID THE TAX DURING THE FINANCIAL YEAR 2006-07. THE ORDER PASSE D BY THE ASSESSING OFFICER WAS CHALLENGED BY WAY OF AN APPEAL BEFORE THE CIT(A ). IN COURSE OF HEARING BEFORE THE CIT(A), IT WAS CONTENDED BY THE ASSESSEE THAT THE ASSESSING OFFICER WAS TOTALLY WRONG IN REJECTING THE CLAIM OF INTEREST SINCE ASSESSEE HAS CLAIMED INTEREST ON THE SELF ASSESSMENT TAX PAID AN D THE INTEREST PAYABLE IS AS PER THE PROVISIONS CONTAINED U/S 244A(1)(B) OF T HE ACT. THE CIT(A) AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE WITH RE FERENCE TO THE PROVISION CONTAINED U/S 244A(1)(B) OF THE ACT REJECTED SUCH C LAIM BY HOLDING AS UNDER: A CONJOINT READING OF SECTIONS 156 AND 244A(1)(B) CL EARLY DEMONSTRATES THAT THE REFERENCE TO THE TAX PAID UND ER THIS CLAUSE IS ONLY TO THE POST-ASSESSMENT TAX WHICH IS PAYABLE IN CONSEQUENCE OF THE ORDER PASSED AFTER ADJUSTMENT OF TAXES ALREADY PAID, SELF- ASSESSMENT TAX DOES NOT APPEAR ANYWHERE IN THE NOTI CE OF DEMAND. IN VIEW OF THE EXCLUSIVE DEFINITION TO THE EXPRESSION 'DATE OF PAYMENT OF TAX OR PENALTY' FOR THE PURPOSE OF CLAUSE (B) OF SECT ION 244A(1) IT BECOMES ABUNDANTLY CLEAR THAT THE SELF-ASSESSMENT TA X IS NOT CONTEMPLATED TO BE COVERED UNDER THIS CLAUSE AND ONLY THE REFUND ARISING OUT OF THE PAYMENTS MADE ON ACCOUNT OF POST -ASSESSMENT TAXES ARE INCLUDED IN ITS SCOPE. NO DOUBT CLAUSE (B) REFE RS TO THE CALCULATION OF INTEREST FROM THE DATE OF PAYMENT OF TAX OR PENA LTY BUT WHAT IS CONTEMPLATED AS THE 'DATE OF PAYMENT OF TAX OR PENA LTY' HAS BEEN ELABORATED FURTHER BY THE STATUTE BY INSERTION OF T HE EXPLANATION TO THIS SECTION WHICH CONTAINS AN EXCLUSIVE DEFINITION OF T HIS EXPRESSION WHICH IS RELEVANT ONLY FOR THIS CLAUSE. IN VIEW OF THE EXCLUSIVE DEFINITION TO THE EXPRESS ION 'DATE OF PAYMENT OF TAX OR PENALTY' FOR THE PURPOSE OF CLAUS E (B) OF SECTION 244A(1) THE SELF-ASSESSMENT TAX IS NOT CONTEMPLATED TO BE COVERED UNDER THIS CLAUSE AND ONLY THE REFUND ARISING OUT O F THE PAYMENTS MADE ON ACCOUNT OF POST-ASSESSMENT TAXES ARE INCLUDE D IN ITS SCOPE- THUS, THE APPELLANT WOULD BE ENTITLED TO INTEREST O N THE SELF ASSESSMENT TAX FROM THE DATE OF OF ASSESSMENT ORDER AND NOT FROM DATE OF PAYMENT OF SELF ASSESSMENT TAX. SO, IN THIS CASE ASSESSMENT U/S. 143(1) COMPLETED, AND SO NO INTEREST ON REFUND ARISES ON THE DATE OF ASSESSMENT ORDER. HENCE, APPELLANT NOT ENTITLED FOR THE INTEREST U/S.244A ON THE REFUND. SO APPELLANT SUBMISSION THA T INTEREST ELIGIBLE U/S.244A(1)(B) IS NOT APPLICABLE IN THIS CASE. ITA NO.28/VIZAG/2012 M/S. VARUNA HATCHERIES PVT. LT D. VIJAYAWADA 3 4. WE HAVE CONSIDERED THE SUBMISSIONS OF THE ASSESS EE AND PERUSED THE ORDERS OF THE REVENUE AUTHORITIES AS WELL AS OTHER MATERIALS ON RECORD. WE HAVE ALSO CAREFULLY APPLIED OUR MIND TO THE DECISIO NS RELIED UPON BY THE LD. A.R. UNDISPUTED FACTS ARE THAT THE ASSESSEE HAD OR IGINALLY FILED A RETURN OF INCOME DECLARING TOTAL INCOME OF RS.1,53,26,080/-, WHICH WAS PROCESSED U/S 143(1) OF THE ACT AND REFUND OF RS.44,860/- WAS GRA NTED TO THE ASSESSEE. SUBSEQUENTLY, THE ASSESSEE ALSO FILED A REVISED RET URN ADMITTING INCOME OF RS.1,35,30,320/-, WHICH RESULTED IN A REFUND OF RS. 7,16,580/-, WHICH WAS ALSO GRANTED TO THE ASSESSEE. IT IS ALSO NOT DISPUTED TH AT THE ASSESSEE HAS PAID SELF ASSESSMENT TAX OF RS.10,25,735/- ON 26.10.2007 . IN THE AFORESAID FACTUAL BACK DROP, IT IS TO BE SEEN WHETHER THE ASSESSEE IS ENTITLED TO INTEREST U/S 244A(1) OF THE ACT. AT THIS STAGE, IT WOULD BE REL EVANT TO GO THROUGH THE PROVISION AS CONTAINED U/S 244A(1) OF THE ACT. 244A(1) [WHERE REFUND OF ANY AMOUNT BECOMES DUE TO THE ASSESSEE UNDER THIS ACT], HE SHALL, SUBJECT TO THE PROVISIONS OF T HIS SECTION, BE ENTITLED TO RECEIVE, IN ADDITION TO THE SAID AMOUNT, SIMPLE INT EREST THEREON CALCULATED IN THE FOLLOWING MANNER, NAMELY:- (A) WHERE THE REFUND IS OUT OF ANY TAX [PAID UNDER SECT ION 115WJ OR] [COLLECTED AT SOURCE UNDER SECTION 206C OR] PAID BY WAY OF ADVANCE TAX OR TREATED AS PAID UNDER SECTION 199, DURING TH E FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR, SUCH INT EREST SHALL BE CALCULATED AT THE RATE OF [ONE-HALF PER CENT] FOR E VERY MONTH OR PART OF A MONTH COMPRISED IN THE PERIOD FROM THE 1 ST DAY OF APRIL OF THE ASSESSMENT YEAR TO THE DATE ON WHICH THE REFUND IS GRANTED: PROVIDED THAT NO INTEREST SHALL BE PAYABLE IF THE AMOUNT OF REFUND IS LESS THAN TEN PER CENT OF THE TAX AS DETERMINED [UNDER [SUB- SECTION (1) OF SECTION 115WE OR] SUB-SECTION (1) OF SECTION 143 OR] ON REGULAR ASSESSMENT; (B) IN ANY OTHER CASE, SUCH INTEREST SHALL BE CALCULATE D AT THE RATE OF [ONE-HALF PER CENT] FOR EVERY MONTH OR PART OF A MO NTH COMPRISED IN THE PERIOD OR PERIODS FROM THE DATE OR, AS THE C ASE MAY BE, DATES OF PAYMENT OF THE TAX OR PENALTY TO THE DATE ON WHICH THE REFUND IS GRANTED. EXPLANATION FOR THE PURPOSES OF THIS CLAUSE, DAT E F PAYMENT OF TAX OR PENALTY MEANS THE DATE ON AND FROM WHICH THE AMO UNT OF TAX OR PENALTY SPECIFIED IN THE NOTICE OF DEMAND ISSUED UN DER SECTION 156 IS PAID IN EXCESS OF SUCH DEMAND. ITA NO.28/VIZAG/2012 M/S. VARUNA HATCHERIES PVT. LT D. VIJAYAWADA 4 5. A PLAIN READING OF THE AFORESAID PROVISION WOULD MAKE IT CLEAR THAT IT IS IN TWO PARTS. SUB-CLAUSE (A) OF 244A(1) OF THE ACT PROVIDES INTEREST ON REFUND OUT OF ANY TAX PAID U/S 115WJ, TCS U/S 206 OR ADVA NCE TAX PAID DURING THE FINANCIAL YEAR IMMEDIATELY PRECEDING THE ASSESSMENT YEAR. WHEREAS SUB CLAUSE (B) OF SECTION 244A(1) WHICH APPLIES TO ANY OTHER CASE PROVIDES THAT INTEREST SHALL BE CALCULATED @ 1 % FOR EVERY MONT H OR PART OF A MONTH FROM THE DATE OF PAYMENT OF THE TAX OR PENALTY TO T HE DATE ON WHICH THE REFUND IS GRANTED. HOWEVER, THE EXPLANATION TO CLA USE (B) OF SECTION 244A CLARIFIES THAT DATE OF PAYMENT OF TAX OR PENALTY WO ULD MEAN THE DATE ON AND FROM WHICH THE AMOUNT OF TAX OR PENALTY SPECIFIED I N THE NOTICE OF DEMAND ISSUED U/S 156 OF THE ACT IS PAID IN CASES OF SUCH DEMAND. IN THE LIGHT OF THE AFORESAID STATUTORY PROVISION, IT BECOMES APPARENT THAT THE ASSESSING OFFICERS CONCLUSION THAT THE ASSESSEE IS NOT ENTITLED TO INT EREST AS PER THE PROVISION CONTAINED U/S 244A(1)(A) OF THE ACT IS ABSOLUTELY I NCORRECT AS ADMITTEDLY THE ASSESSEE IS CLAIMING INTEREST ON REFUND FROM THE DA TE OF PAYMENT OF SELF ASSESSMENT TAX AND NOT TAXES REFERRED TO UNDER CLAU SE (A) OF SECTION 244A(1)(A) OF THE ACT. HAVING HELD SO, WE WILL NOW REVERT BACK TO THE ORDER OF THE CIT(A) WHO HAS HELD THAT THE DATE OF PAYMENT OF TAX OR PENALTY AS FINDS PLACE UNDER CLAUSE (B) OF SECTION 244A(1) WOU LD MEAN THE DATE OF PAYMENT OF TAX OR PENALTY IN PURSUANCE TO A DEMAND NOTICE ISSUED U/S 156 OF THE ACT OR IN OTHER WORDS, THE INTEREST WILL BE PAY ABLE ONLY ON THE REFUND ARISING OUT OF THE PAYMENTS MADE ON ACCOUNT OF POST ASSESSMENT TAXES AS CLARIFIED IN THE EXPLANATION TO SECTION 244(1)(B) O F THE ACT. HOWEVER, SUCH CONCLUSION IS NOT ACCEPTABLE IN VIEW OF THE CLEAR P ROVISION OF SECTION 244A(1)(B) OF THE ACT WHICH LEAVES LITTLE ROOM FOR AMBIGUITY. AS PER THE SAID PROVISION, THE ASSESSEE IS ENTITLED TO INTEREST ON THE REFUND GRANTED FROM THE DATE OF PAYMENT OF THE SELF ASSESSMENT TAX. THE CB DT CIRCULAR NO.549 ALSO FURTHER CLARIFIES THIS POSITION WHICH IS EXTRACTED HEREUNDER: IF THE REFUND IS OUT OF ANY TAX, OTHER THAN ADVANCE TAX OR TAX DEDUCTED AT SOURCE OR PENALTY, INTEREST SHALL B E PAYABLE 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. (EMPHASIS SUPPLIED BY US). ITA NO.28/VIZAG/2012 M/S. VARUNA HATCHERIES PVT. LT D. VIJAYAWADA 5 6. THE HONBLE KARNATAKA HIGH COURT WHILE CONSIDERI NG IDENTICAL ISSUE IN CASE OF CIT AND ANOTHER VS. VIJAYA BANK 338 ITR 489 AFTER ANALYZING THE PROVISION CONTAINED U/S 244A(1) OF THE ACT AS WELL AS TAKING INTO CONSIDERATION THE BOARD CIRCULAR NO.549 DATED 31.10.1989 HAS HELD AS UNDER: CLAUSES (A) AND (B) SPECIFICALLY REFER TO THE INST ANCES WHERE INTEREST IS PAID UNDER THE ACT. IT IS NOT EXHAUSTIVE . IT IS POSSIBLE, IN A GIVEN CASE, THAT AFTER THE EXPIRY OF THE FINANCIAL YEAR, THE ASSESSEE MAY PAY TAX EITHER ALONG WITH THE SELF-ASSESSMENT R ETURN OR EVEN BEFORE THE RETURN IS FILED. IF ULTIMATELY THE SAID PAYMENT IS FOUND TO BE IN EXCESS AND THE DEPARTMENT CHOOSES TO REFUND T HE SAID AMOUNT, THEN THE QUESTION WOULD BE, FROM WHAT DATE INTEREST IS PAYABLE SINCE INTEREST IS PAYABLE ON SUCH REFUNDS U NDER SECTION 244A. IN THE ABSENCE OF AN EXPRESS PROVISO AS CONTAINED I N CLAUSE (A), IT CANNOT BE SAID THAT THE INTEREST IS PAYABLE FROM TH E 1ST DAY OF APRIL OF THE ASSESSMENT YEAR. AT THE SAME TIME, AS THE SA ID PAYMENT OF TAX WAS NOT MADE IN PURSUANCE OF A NOTICE OF DEMAND ISSUED UNDER SECTION 156, EXPLANATION TO CLAUSE (B) OF SECTION 2 44A HAS NO APPLICATION, TO SUCH CASES, AS THE OPENING WORDS OF CLAUSE (B) SPECIFICALLY REFERRED TO 'AS IN ANY OTHER CASE', TH E INTEREST IS PAYABLE FROM THE DATES OF PAYMENT OF THE TAX. AS CL AUSE (B) EXPRESSLY PROVIDES IN ANY OTHER CASE THE PAYMENT OF TAX SUBSEQUENT TO THE FIRST DAY OF APRIL OF THE ASSESSMENT YEAR, E ITHER BEFORE OR ALONG WITH FILING OF THE RETURN WOULD SQUARELY FALL UNDER CLAUSE (B) AND, THEREFORE, WHEN THE SAID AMOUNT IS ORDERED TO BE RE FUNDED THE INTEREST IS TO BE CALCULATED FROM THE DATE OF SUCH PAYMENT OF TAX. HAVING REGARD TO THE SCHEME OF SECTION 244A AND THE CIRCULAR ISSUED BY THE BOARD WHICH SHOWS HOW THE DEPARTMENT HAS UND ERSTOOD THE SECTION COUPLED WITH THE FACT THAT THE PRINCIPLE UN DERLYING THE SAID SECTION IS THAT, ANY EXCESS PAYMENT OF TAX PAID BY THE ASSESSEE IS NOT ONLY TO BE REFUNDED BUT IT HAS TO BE REFUNDED W ITH INTEREST, IF THE CASE OF THE ASSESSEE DOES NOT FALL UNDER CLAUSE (A) OR THE EXPLANATION TO CLAUSE (B), THE EXCESS TAX PAID SHAL L BE REFUNDED WITH INTEREST FROM THE DATE OF PAYMENT OF SUCH TAX. 7. THE RATIO LAID DOWN BY THE HONBLE KARNATAKA HIG H COURT (SUPRA) CLEARLY GOVERNS THE ISSUE AT HAND. THE LD. D.R. CO ULD NOT BRING TO OUR NOTICE ANY DECISION CONTRARY TO THE AFORESAID DECISION. T HEREFORE, FOLLOWING THE RATIO LAID DOWN BY THE HONBLE KARNATAKA HIGH COURT , WE HOLD THAT THE ASSESSEE WILL BE ENTITLED FOR INTEREST ON REFUND FR OM THE DATE OF PAYMENT OF SELF ASSESSMENT TAX I.E 26.10.L2007 IN TERMS OF THE PROVISION CONTAINED U/S ITA NO.28/VIZAG/2012 M/S. VARUNA HATCHERIES PVT. LT D. VIJAYAWADA 6 244(1)(B) OF THE ACT. ACCORDINGLY, WE ALLOW THE GR OUND RAISED BY THE ASSESSEE. 8. IN THE RESULT, THE ASSESSEES APPEAL IS ALLOWED. PRONOUNCED IN THE OPEN COURT ON 3 RD MAR14 SD/- SD/- (J. SUDHAKAR REDDY) (SAKTIJIT DEY) ACCOUNTANT MEM BER JUDICIAL MEMBER VG/SPS VISAKHAPATNAM, DATED 3 RD MARCH, 2014 COPY TO 1 M/S. VARUNA HATCHERIES PVT. LTD., 59-13-3, RAMACH ANDRA NAGAR, VIJAYAWADA 2 ACIT CIRCLE-2(1), VIJAYAWADA 3 THE CIT, VIJAYAWADA 4 THE CIT(A), VIJAYAWADA 5 THE DR, ITAT, VISAKHAPATNAM. 6 GUARD FILE. BY ORDER (B. VENU GOPAL) SENIOR PRIVATE SECRETARY INCOME TAX APPELLATE TRIBUNAL VISAKHAPATNAM