SBI CAPITAL MARKETS LTD., MUMBAI V. ASST CIT -LTU-1 , MUMBAI

ITA 549/MUM/2020

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The case involves SBI Capital Markets Limited appealing against the order of the Assistant Commissioner of Income Tax, which withdrew the interest previously granted on a refund due to excess self-assessment tax paid. The original rectification order granted interest under section 244A of the Income Tax Act, 1961, but this was later retracted based on the grounds that the refund was less than 10% of the tax computed under regular assessment. The Tribunal examined the applicability of the amended provisions of section 244A and the specific circumstances of the assessee's case, ultimately deciding in favor of the assessee.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132065 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 1 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 20-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Next Hearing Date: 02-03-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 22-01-2020
• Other Referred Cases: Stock Holding Corporation of India Limited Vs. N.C. Tiwari CIT, Modi Industries Limited Vs. CIT, Maruti Suzuki India Limited Vs. CIT, Sutlej Industries Ltd, Engineers India Ltd, Birla Corpn. Ltd, Stock holding Corpn. of India Ltd. v. CIT
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S ABHIJIT CHAUDHARI; SOMENDU KUMAR DASH
• Keywords: Rectification of order; TDS; Set aside
• Section: 147; 143(3); 244A; 143(1); 143(2); 139(1)

Judgement Text

vk;dj vihyh; vf/kdj.k eqacbZ ihB ßbZÞ eaqcbZ Jh] th- ,l- iUuq] v/;{k ,oa Jh fodkl voLFkh] U;kf;d lnL; ds le{k IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH “E” BENCH BEFORE SHRI G.S. PANNU, PRESIDENT & SHRI VIKAS AWASTHY, JUDICIAL MEMBER vkvkla- 549@eaqcbZ@2020 ¼fu-oa- 2012&13½ ITA NO.549/MUM/2020 (A.Y.2012-13) SBI Capital Markets Limited 202, Maker Tower E, Cuffe Parade, Mumbai-400 005 PAN No. AAACS7914E ..... vihykFkhZ/Appellant cuke Vs. Asst. Commissioner of Income Tax LTU Circle-1, 29 th Floor, World Trade Centre-1 Cuffe Parade Mumbai-400 005 ..... izfroknh/Respondent vihykFkhZ }kjk@Applicant by : S/Shri Nitesh Joshi & Chaitanya Desai izfroknh }kjk@Respondent by : S/Shri Abhijit Chaudhari & Somendu Kumar Dash lquokbZ dh frfFk@Date of hearing : 03/03/2023 ?kks”k.kk dh frfFk@Date of pronouncement : 21/03/2023 vkns’k/ ORDER This appeal by the assessee is directed against the order of Commissioner of Income Tax Appeals-1, Mumbai [hereinafter referred to as the “CIT(A)”] dated 06/12/2019 for the assessment year 2012-13. This appeal is arising out of proceedings u/s 154 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”). P a g e | 2 ITA NO. 549/MUM/2020(A.Y.2012-13) SBI CAPITAL MARKETS LTD. 2. The assessee has assailed the order of First Appellate Authority on following grounds: “1. On the facts and in the circumstances of the case and in law, the learned Assistant Commissioner of Income Tax LTU-1 ("Ld. ACIT") has erred in passing order u/s 154 dated 9-March-2017 for rectification on an issue involving a debatable point of law and the Hon'ble CITIA) has erred in confirming the action of Ld. ACIT The Ld. ACIT be directed to quash order passed u/s 154 dated 9-March-2017 as being bad in law and grant refund including interest u/s 244A of the Income-tax Act, 1961 ("the Act") accordingly. 2. WITHOUT PREJUDICE TO GROUND NO 1, assuming without accepting that Your Honours is of the opinion that the order u/s 154 dated 9-March 2017 is valid, then on the facts and in the circumstances of the case and in law: The Appellant Company prays that the Ld. ACIT has erred in withdrawing interest on refund due u/s 244A without appreciating that the proviso to Section 244A(1) applies in cases of refund determined on regular assessment in orders passed u/s 143(3) or 147 and not in a case of refund determined in order passed u/s 154 of the Act. The Ld. ACIT be directed to grant interest u/s 244A(1) on refund determined in order passed u/s 154 without application of the proviso thereto and issue refund order accordingly. 3. The Appellant Company reserves the right to add, alter, amend or delete any of the ground/s before or during the course of the hearing.” 3. Shri Nitesh Joshi appearing on behalf of the assesssee narrating facts of the case submitted that the assessee filed its original return of income u/s 139(1) of the Act and claimed refund of Rs.2,53,07,446/-. Thereafter, assessee revised its return of income on 28/03/2014 and claimed refund of Rs.2,78,27,972/-. The assessment order u/s 143(3) of the Act was passed by the Assessing Officer (AO) on 10/03/2015 raising demand of Rs.5,68,07,050/-. The assessee filed rectification petition u/s 154 of the Act seeking grant of TDS credit in full. The AO vide order dated 12/05/2015 allowed rectification petition of the assessee and granted balance TDS credit and interest u/s P a g e | 3 ITA NO. 549/MUM/2020(A.Y.2012-13) SBI CAPITAL MARKETS LTD. 244A of the Act. The interest u/s 244A of the Act was computed at Rs.55,09,832/-. Thereafter, the AO issued notice u/s 154/155 on 28/10/2016 to rectify the order dated 12/05/2015 and to withdraw interest allowed u/s 244A of the Act. The reason for withdrawal of the interest was that the refund was less than 10% of tax computed under regular assessment. The AO vide order u/s 154 of the Act dated 09/03/2017 withdrew the interest earlier granted u/s 244A of the Act. The assessee assailed the said order dated before the CIT(A) but remained unsuccessful, hence, the present appeal. 3.1 The learned Counsel for the assessee submits that the refund of Rs.2,97,82,875/- determined in the rectification order dated 12/05/2015 had arisen out of self-assessment tax of Rs.8.70 crores paid u/s 140A of the Act. The AO issued refund aggregating to Rs.3,52,92,707/- including interest u/s 244A of Rs.55,09,832/-. The AO had granted interest u/s 244A of the Act on the amount of excess self- assessment tax of Rs.2,97,82,875/- for 37 months at the rate of 0.5%. Thus, what was refunded to the assessee was self-assessment tax and not the amount of TDS. The learned Counsel referred to the decision of Hon’ble Jurisdictional High Court in the case of Stock Holding Corporation of India Limited Vs. N.C. Tiwari CIT, 53 taxmann.com 106 to contend that tax paid on self-assessment would fall u/s 244A(1)(b) of the Act, that is residuary clause covering refunds of amount not following u/s 244A(1) of the Act. Therefore, interest is payable on refund of excess amount paid on self- assessment. The learned Counsel pointed that provisions of section 244A were amended by the Finance Act, 2016 with the effect from 01/06/2016. After the amendment, the condition was imposed that the interest u/s 244A would not be allowed in excess were refund arising out of TDS/TCS, advance tax and self-assessment tax u/s 140A of the Act is less than 10% of tax liability. The learned Counsel pointed that the amended P a g e | 4 ITA NO. 549/MUM/2020(A.Y.2012-13) SBI CAPITAL MARKETS LTD. provisions would not apply in the instant case as assessment u/s 143(3) was completed on 10/03/2015 and the subsequent rectification order u/s 154 was passed on 12/05/2015. The learned Authorised Representative further submitted that the refund granted to the assessee was not arising out of TDS/TCS or advance tax. This fact can be ascertain from the order passed u/s 154 of the Act. The learned Counsel vehemently submitted that there was no mistake apparent from record which was sought to be rectified by way of notice dated 28/10/2016 and subsequent order dated 09/03/2017. 4. Without prejudice to the primary contention, the learned Counsel submitted that once the order is passed u/s 143(3) of the Act, there is no distinction between advance tax and self-assessment tax. In support of his alternate contention, he placed reliance on the decision in the case of Modi Industries Limited Vs. CIT 216 ITR 579 (SC). 5. Per contra, Shri Abhijit Chaudhari representing the Department vehemently defended the impugned order passed u/s 154 of the Act dated 09/03/2017. The learned Departmental Representative (DR) submits that as per the amended provisions of section 244A of the Act, the interest could not have been granted where the refund is less than 10% of the tax liability as determined u/s 143(1) or 143(2) of the Act. In the instant case, undisputedly, the refund claimed by the assessee is less than 10%, therefore, the AO had erred in granting interest u/s 244A of the Act in first rectification proceedings u/s 154 of the Act. It was mistake apparent on record which was rectified by the AO in subsequent rectification proceedings. 6. We have heard the submissions made by rival sides and have examined the orders of authorities below. The short issue for consideration before us is. Whether the assessee was eligible for claiming interest u/s 244A of the Act on the excess tax deposited by the assessee under self-assessment in the impugned assessment year? P a g e | 5 ITA NO. 549/MUM/2020(A.Y.2012-13) SBI CAPITAL MARKETS LTD. 7. Insofar as facts and sequence of events narrated by Counsel for the assessee, the same are not in dispute. The assessee had paid self-assessment tax on 30/04/2022 amounting to Rs.8,70,00,000/-. As against total tax liability of Rs.112,81,89,837/- for the impugned assessment year, the assessee paid total taxes of Rs.115,90,62,262/- by way of TDS credit, advance taxes and self-assessment tax. Thus, the assessee paid excess self-assessment tax of Rs.2,97,82,875/-. On the said excess taxes paid, the assessee claimed interest u/s244A of the Act. In rectification petition filed before the AO on 20/03/2015, the AO vide order dated 12/05/2015 passed u/s 154 of the Act granted interest of Rs.55,09,832/- u/s 244A of the Act. In subsequent order u/s 154 of the Act dated 09/08/2017, the AO withdraws the interest allowed earlier on the ground that interest u/s 244A of the Act is to be granted only if the refund determined is more than 10% of the gross tax payable u/s 143(1) of the Act or under regular assessment. Since, in the case of assessee, the refund was less than 10%, no interest u/s 244A of the Act was payable, hence, there was apparent mistake in granting interest. 8. The provisions of section 244A were amended by the Finance Act, 2016. Prior to amendment by the Finance Act, 2016, there was no embargo of 10% in respect of self-assessment tax paid u/s 140A of the Act. The Finance Act, 2016 amended the provisions of section 244A inter alia inserting clause (aa). The same reads as under: “(aa) where the refund is out of any tax paid under section 140A, such interest shall be calculated at the rate of one-half per cent for every month or part of a month comprised in the period, from the date of furnishing of return of income or payment of tax, whichever is later, to the date on which the refund is granted: Provided that no interest under clause (a) or clause (aa) 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 143 or on regular assessment.” The aforesaid amendment by the Finance Act, 2016 was effective from 01/06/2016. In the instant case, the assessment order u/s 143(3) of the Act was passed on 10/03/2015 and the rectification order u/s 154 of the Act granting interest u/s 244A P a g e | 6 ITA NO. 549/MUM/2020(A.Y.2012-13) SBI CAPITAL MARKETS LTD. of the Act was passed on 12/05/2015, that is much prior to the amendment. Hence, the amended provisions would have no application. 9. The learned Counsel for the assessee further pointed that tax paid on self- assessment would fall u/s 244A(1)(b) of the Act. In support of this contention reliance is placed on the decision in the case of Stock Holding Corporation of India Limited (supra). In the said case, the Hon’ble jurisdiction High Court has 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 on self assessment would fall under section 244A(1)(Both sides heard) 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)(Both sides heard) 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 (Both sides heard), which is a residuary clause. Besides, this contention stands negative 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 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 1" April of the assessment year and on the date of grant of the refund. No 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 is out of any tax, other than advance tax or tax deducted at source or penalty, interest shall be 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. (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 that interest is not payable by the Department on self-assessment tax. Moreover, the amount paid under Section 140A P a g e | 7 ITA NO. 549/MUM/2020(A.Y.2012-13) SBI CAPITAL MARKETS LTD. of the Act on self assessment is an amount payable as by way of the tax after noticing that there is likely to be shortfall in the taxes already paid. Thus this payment is considered to be a tax under the aforesaid provision. 8. The contention of revenue is that no interest at all is payable to the petitioner under Section 244A(1)(a) and (b) of the Act unless the amounts have been paid as tax. It would not cover cases where the payment is gratuitous as is evident from the fact that the petitioner in its computation after paying tax on self assessment of Rs 2.60 crores seeks a refund of Rs 47 lacs According to him it has to be refund of amounts paid as tax. We find that Section 244A(1) of the Act commences with the word "when refund of any amount becomes due to the assessee under this Act. Sub-clause (b) thereof commences with the words "in any other case "The words used in Section 244A(1) of the Act are clear inasmuch as it Provides that refund of any amount that become due to any assessee under the Act will entitle the assessee to interest. In any case in the present facts, the amount on which the refund is being claimed was originally paid as tax on self- assessment under Section 140A of the Act and evidence of the same in the form of challan was enclosed to the Return of Income In fact when the Assessing Officer passed the Assessment Order on 31 December 1996, he accepted the entire amount paid as tax on self assessment as a payment of tax One more feature to be noticed is that when any refund becomes due to an assessee out of tax paid, it becomes so only after holding that it is not the tax payable. Thus we find no substance in the first objection of the revenue that the amount paid as tax on self assessment is not tax and therefore no interest can be granted on refund of such amounts which are not tax.” 10. In the case of Maruti Suzuki India Limited Vs. CIT, where the AO did not allow interest u/s 244A(1)(a) of the Act on the refund being less than 10% of the tax determined u/s 254 r.w.s. 143(3) of the Act, the Tribunal after thread bear examining the provisions of section as was applicable prior to amendment dated 01/06/2016, and various decisions rendered by the Hon’ble High Courts held: “48. The next question before us is whether interest is payable on the self-assessment tax paid by the assessee or not. 49. We have gone through the judgment of Hon'ble Jurisdictional High Court in the case of CIT v. Sutlej Industries Ltd [2010] 190 Taxman 136/325 ITR 331 wherein the Hon'ble High Court held that where self- assessment tax paid by the assessee u/s 140A is refunded, the assessee should be entitled to interest thereon The Hon'ble High Court held that the self-assessment tax falls within the expression "refund of any amount". The computation of simple interest on self-assessment tax has to be in terms of section 244A(1)(b), ie, from the date of payment of such amount up to the date on which refund is actually granted. The judgment of the Hon'ble jurisdictional High Court was shored up by the judgment of Hon'ble Madras High Court in Cholamandalam Investment & Finance Co. Ltd, (supra) the SLP against which order was dismissed by the Supreme Court. P a g e | 8 ITA NO. 549/MUM/2020(A.Y.2012-13) SBI CAPITAL MARKETS LTD. 50. Even otherwise, it is trite law that wherever the assessee is entitled to refund, there is statutory liability on the Revenue is to pay the interest on such refund on general principles to pay the interest on sums wrongfully retained. 51. The Hon'ble Jurisdictional High Court in the case of CIT v. Engineers India Ltd [2015] 55 taxmann.com 1/232 Taxman 287/373 ITR 377, based on the judgment of the Hon'ble Apex Court in the case of Gujarat Fluoro Chemicals [2014] 42 taxmann.com 1/222 Taxman 349/[2013] 358 ITR 291 held that the assessee is not entitled to get interest u/s 244A on the refund of self-assessment tax which was voluntarily paid u/s 140A and did not agree with the decision of the Coordinate Bench of High Court in the case of Sutlej Industries Ltd. (supra). 52. The Hon'ble Apex Court, having gone through the different views expressed by the Hon'ble Jurisdictional High Court, referred back the matter for adjudication by larger bench. 53. The Hon'ble High Court of Kolkata in the case of CIT v. Birla Corpn. Ltd [2016] 66 taxmann.com 276/238 Taxman 482 held that clause (1)(b) of section 244A is residual in nature which prescribes interest on refund from the date of payment of tax in cases which are not covered by section 244A(1)(a). Necessarily, it will cover interest on refund of excess self-assessment tax paid by the assessee. The proviso to section 244A (1)(a) would have no application as the tax paid was self-assessment tax u/s 140A. Hence according to mandate of section 244A(1)(b), interest is payable on refund of excess self- assessment tax, from the date of payment of such tax to the date when the refund is granted. The Hon'ble Court of Kolkata has duly considered the judgment of Hon'ble High Court of Delhi in the case of Engineers India Ltd. 54. Similarly, the Hon'ble High Court of Bombay in the case of Stock holding Corpn. of India Ltd. v. CIT [2015] 53 taxmann.com 106/229 Taxman 512/373 ITR 282 has elaborately dealt with the question of interest u/s. 140A is refunded, the assessee should be, in principle entitled to interest thereon since the self-assessment tax falls within the expression "refund of any amount". The computation of interest on self-assessment tax has to be in terms of section 244A(1)(b), i.e. from the date of payment of such amount up to the date on which refund is actually granted. 55. Section 244A does not deny payment of interest in case of refund of amount paid under section 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.” (Emphasized by us) 11. From the reading of the provisions of section 244A of the Act as were applicable to the AY under appeal it is unambiguous that minimum limit of 10% of refund would not be applicable on payment of interest on refund. P a g e | 9 ITA NO. 549/MUM/2020(A.Y.2012-13) SBI CAPITAL MARKETS LTD. 12. Thus, in facts of the case, the relevant provisions of section 244A of the Act as were applicable to the assessee and decisions discussed above, we find that the AO has erred in withdrawing the benefit of interest u/s 244A allowed to the assessee vide order dated 12/05/2015 u/s 154 of the Act. 13. Ergo, the impugned order is set aside and appeal of the assessee is allowed. Order pronounced in the open court on Tuesday the 21 st day of March 2023. Sd/- Sd/- (G.S. PANNU) (VIKAS AWASTHY) v/;{k/PRESIDENT U;kf;d lnL;/JUDICIAL MEMBER eaqcbZ/Mumbai, fnukad/Dated: 21/03/2023 Mahesh R. Sonavane izfrfyih vxzsf”kr of the Order forwarded to: 1. vihykFkh/The Appellant , 2. izfroknh/The Respondent. 3. vk;dj vk;qDr ¼v½/ The CIT(A)- 4. vk;dj vk;qDr/ CIT 5. foHkkxh; izfrfu/kh] vk;- vih- vf/k-] eqacbZ/DR, ITAT, Mumbai 6. xkMZ QkbZy/Guard file. BY ORDER, //True Copy// (Dy./Asst. Registrar)/ Sr. Private Secretary ITAT, Mumbai