The order of the Bench was delivered by
R. K. Panda, A. M:-This appeal filed by the assessee is directed against the order dated 22.11.2013 of the CIT(A), Kolhapur relating to A.Y. 2006-07.
2. Despite service of notice, none appeared on behalf of the assessee. Therefore, this matter is being decided on the basis of material available on record and after hearing the Ld. DR.
3. The assessee in the grounds of appeal has challenged the order of CIT(A) in not directing the Assessing Officer to re-calculate the interest under section 234C of the I.T. Act and in not granting interest on the refund under section 244A of the I.T. Act on self assessment tax paid.
4. Facts of the case, in brief, are that the assessee filed its return of income on 13.10.2006 declaring total income of Rs. 14,93,01,700/-. The Assessing Officer completed the assessment on a total income of Rs. 15,03,07,250/-, which was reduced to Rs. 11,32,07,271/- after giving appeal effect. Accordingly, the tax liability was reduced from Rs. 5,05,93,420/- to Rs. 3,81,05,556/-. The assessee moved an application under section 154 of the I.T. Act before the Assessing Officer to re-compute the interest under section 234C of the I.T. Act and allow interest under section 244A of the Act on the self assessment tax paid.
5. So far as the interest under section 234C of the I.T. Act is concerned, the Assessing Officer rejected the claim of assessee on the ground that the assessee filed its return of income on 13.10.2006 declaring total income of Rs. 14,93,01,700/- and interest under section 234C of the I.T. Act is chargeable on the income returned. According to the Assessing Officer, as per order under section 154 of the I.T. Act, dated 27.03.2008 made on computer, the interest under section 234C of the I.T. Act comes to Rs. 23,80,997/-, which is correctly charged. He accordingly, rejected the claim to reduce the interest under section 234C of the I.T. Act.
6. So far as the claim of interest under section 244A of the I.T. Act is concerned, the Assessing Officer held that the refund has arisen on account of payment of self assessment tax of Rs. 5,56,08,917/-. Therefore, the assessee is not entitled to interest under section 244A of the I.T. Act on self assessment tax.
7. In appeal, the Ld. CIT(A) upheld the action of Assessing Officer. According to him, as per provisions of section 234C of the I.T. Act, interest is chargeable on the returned income. As per Explanation to section 234C of the I.T. Act “tax due on the returned income” means the tax chargeable on the total income declared in the return of income furnished by the assessee. He accordingly, held that the Assessing Officer was justified in rejecting the claim of assessee. So far as charging of interest under section 244A of the I.T. Act is concerned, he observed that after appeal effect, refund raised was Rs. 1,39,86,400/-. According to him, the assessee is not entitled to interest under section 244A of the I.T. Act if the refund has arisen out of payment made on account of self assessment tax. The assessee is entitled to interest under section 244A of the I.T. Act only if the refund has arisen out of payment made under sections 115WJ, 199, 206C or advance tax. Distinguishing the decisions cited before him, the CIT(A) rejected the claim of assessee for reduction of interest under section 234C of the I.T. Act and payment of interest under section 244A of the I.T. Act on the self assessment tax paid.
8. Aggrieved with such an order of CIT(A), the assessee is in appeal before us.
9. We have considered the arguments of Ld. DR and perused the material available on record. So far as the non-granting of interest under section 244A of the I.T. Act on self assessment tax paid is concerned, we find the Hon’ble Bombay High Court in the case of Stockholding Corporation of India Vs. CIT & Ors. in W.P No.823 of 2000, order dated 17.11.2014 following the decision of Hon’ble Karnataka High Court in the case of CIT Vs. Vijaya Bank reported in 338 ITR 489 (Kar) and the decision of Hon’ble Delhi High Court in the case of CIT Vs. Sutlaj Industries reported in 325 ITR 331 (Del) has held that the assessee is entitled to interest under section 244A of the I.T. Act from the date of payment of tax on self assessment to the date of refund of the amount. Respectfully following the decision of the jurisdictional High Court, we hold that the assessee is entitled to interest under section 244A of the I.T. Act on that portion of self assessment tax paid from the date of payment of such tax till the date of refund.
10. So far as the interest under section 234C of the I.T. Act is concerned, we find as against returned income of Rs. 14,93,01,700/-, the Assessing Officer has completed the assessment at Rs. 15,03,07,250/- which has got reduced to Rs. 11,32,07,271/- after giving the appeal effect. Although the assessee has computed the interest under section 234C of the I.T. Act at Rs. 23,80,997/- on the basis of the returned income, however, the assessed income has been determined at a figure which is below the returned income. Had the assessed income been more than the returned income, there would have been no issue since interest under section 234C of the I.T. Act is to be computed on the basis of returned income. However, the question that arises is as to what will happen if the assessed income is below the returned income.
11. We find the provisions of section 234C of the I.T. Act are as under:-
“Interest for deferment of advance tax
234C (1) Where in any financial year,-
(a) the company which is liable to pay advance tax under section 208 has failed to pay such tax or-
(i) the advance tax paid by the company on its current income on or before the 15th day of June is less than fifteen per cent of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of September is less than forty-five per cent of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of December is less than seventy-five per cent of the tax due on the returned income, then, the company shall97 be liable to pay simple interest at the rate of [one] per cent per month for a period of three months on the amount of the shortfall from fifteen per cent or forty-five per cent or seventy-five per cent, as the case may be, of the tax due on the returned income;
(ii) the advance tax paid by the company on its current income on or before the 15th day of March is less than the tax due on the returned income, then, the company shall be liable to pay simple interest at the rate of [one] per cent on the amount of the shortfall from the tax due on the returned income: Provided that if the advance tax paid by the company on its current income on or before the 15th day of June or the 15th day of September, is not less than twelve per cent or, as the case may be, thirty-six per cent of the tax due on the returned income, then, it shall not be liable to pay any interest on the amount of the shortfall on those dates;
(b) the assessee, other than a company, who is liable to pay advance tax under section 208 has failed to pay such tax or,-
(i) the advance tax paid by the assessee on his current income on or before the 15th day of September is less than thirty per cent of the tax due on the returned income or the amount of such advance tax paid on or before the 15th day of December is less than sixty per cent of the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of [one] per cent per month for a period of three months on the amount of the shortfall from thirty per cent or, as the case may be, sixty per cent of the tax due on the returned income;
(ii) the advance tax paid by the assessee on his current income on or before the 15th day of March is less than the tax due on the returned income, then, the assessee shall be liable to pay simple interest at the rate of [one] per cent on the amount of the shortfall from the tax due on the returned income:]
[Provided that nothing contained in this sub-section shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of under-estimate or failure to estimate-
(a) the amount of capital gains; or
(b) income of the nature referred to in sub-clause (ix) of clause (24) of section 2,
and the assessee has paid the whole of the amount of tax payable in respect of income referred to in clause (a) or clause (b), as the case may be, had such income been a part of the total income, as part of the [remaining installments of advance tax which are due or where no such instalments are due], by the 31st day of March of the financial year:]
[Provided further that nothing contained in this sub-section shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of increase in the rate of surcharge under section 2 of the Finance Act, 2000 (10 of 2000), as amended by the Taxation Laws (Amendment) Act, 2000 (1 of 2001), and the assessee has paid the amount of shortfall, on or before the 15th day of March, 2001 in respect of the instalment of advance tax due on the 15th day of June, 2000, the 15th day of September, 2000 and the 15th day of December, 2000:]
[Provided also that nothing contained in this sub-section shall apply to any shortfall in the payment of the tax due on the returned income where such shortfall is on account of increase in the rate of surcharge under section 2 of the Finance Act, 2000 (10 of 2000) as amended by the Taxation Laws (Amendment) Act, 2001 (4 of 2001) and the assessee has paid the amount of shortfall on or before the 15th day of March, 2001 in respect of the instalment of advance tax due on the 15th day of June, 2000, the 15th day of September, 2000 and 15th day of December, 2000.]
[Explanation.-In this section, "tax due on the returned income" means the tax chargeable on the total income declared in the return of income furnished by the assessee for the assessment year commencing on the 1st day of April immediately following the financial year in which the advance tax is paid or payable, as reduced by the amount of,-
(i) any tax deductible or collectible at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income;
(ii) any relief of tax allowed under section 90 on account of tax paid in a country outside India;
(iii) any relief of tax allowed under section 90A on account of tax paid in a specified territory outside India referred to in that section;
(iv) any deduction, from the Indian income-tax payable, allowed under section 91, on account of tax paid in a country outside India; and
(v) any tax credit allowed to be set off in accordance with the provisions of section 115JAA [or section 115JD ].]
(2) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989 and subsequent assessment years.]]”
12. From the above, it is clear that interest under section 234C of the I.T. Act has to be calculated on the returned income. As per Explanation to section 234C(1) of the I.T. Act, “tax due on returned income” means the tax chargeable on the total income declared in the return of income furnished by the assessee for the relevant assessment year. Now, the question arises is as to whether the assessee is liable to interest under section 234C of the I.T. Act on the returned income or on the assessed income when such assessed income is lower than the returned income. As mentioned earlier, as per the provisions of the Act, the assessee is liable to interest under section 234C of the I.T. Act for deferment of advance tax on the returned income. However, there are certain exceptions to that. As per the said provisions, the assessee is not liable for interest under section 234C of the I.T. Act on account of any shortfall in the payment of tax due on the returned income where such shortfall is on account of under-estimate or failure to estimate (a) the amount of capital gains or (b) income of the nature referred to in sub-clause (ix) of clause (24) of section 2 and the assessee has paid the whole of the tax payable in respect of such income. The law is not at all clear regarding the chargeability of interest under section 234C of the I.T. Act in a case where the assessment is completed at a figure below the returned income. In our opinion, merely because the assessee has declared higher income due to some error or mistake, the assessee shall not be liable to pay interest under section 234C of the I.T. Act on the returned income when the assessed income falls below the returned income. In our opinion, the assessee should be liable to pay interest under section 234C of the I.T. Act in such a peculiar case only on the assessed income when the same is determined at a figure below the returned income. In this view of the matter, we set-aside the order of CIT(A) and direct the Assessing Officer to re-compute the interest under section 234C of the I.T. Act on the assessed income.
13. In the result, the appeal filed by assessee is allowed.
The order pronounced in the open court on 12th June, 2015.