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Tax Publishers Maruti Suzuki India Ltd. v. CIT [ITA Nos. 2553, 2641/Del/2013, ITA Nos. 468 & 599/Del/2014, dt. 31-8-2020] : 2020 TaxPub(DT) 3416 (Del-Trib) Interest under section 244A on refund of self-assessment tax whether hit by proviso to section 244A(1)(a) *Facts:* Arising out of a tax order a sum of Rs. 14.59 crores comprising advance tax, TDS and self-assessment tax became refundable to the assessee. The department denied paying interest on the tax refund under section 244A to the assessee citing that the restriction in proviso to section 143(1)(a) would be applicable to the assessee which reads that if the tax refundable is 10% of the tax as determined under section 143(1) or 143(3) then no interest shall become payable. Besides this the department gave a reading of payment of interest under section 244A as though to a reading of a month under section 234A/B/C where part of the month is to be read as a month so delays of a few days will not entail refund of interest under section 244A on an in pari materia reading. On higher appeal by the assessee. Held in favour of the assessee -- that they are entitled to the interest on the self-asst tax from the date of payment as it would be covered under section 244A(1)(b) and not under section 244A(1)(a). The reading of month as in section 234A/B/C is not warranted in sec. 244A and the assessee would be entitled to interest on the refund even for a few days. The stand out points on the verdict are - Where refund of any amount becomes due denotes refund arising out of -- Advance tax under section 207 -- TCS under section 206 -- TDS under section 195 -- All credits under section 199 -- Taxes paid as specified under section 156 and -- Self-assessment tax 1. Before 1-6-2016, no interest would be paid if the amount of refund is less than 10% of the taxes determined in case the refund is out of the taxes paid other than self-assessment tax. 2. Before 1-6-2016, in the case of refund arising out of self-assessment tax, interest would be calculated on the entire self-assessment tax refunded from the date of payment of Self-Assessment tax. 3. After 1-6-2016, no interest would be paid if the amount of refund is less than 10% of the taxes determined whether it is under section 140, under section 156, under section 195, under section 199, under section 206 and under section 207. 4. Where refund of "any amount" [244A(1)] due connotes the refund of taxes paid by the assessee. 5. Where refund of "any amount" [244A(1)] is due, the assessee is entitled to simple interest. The simple interest would be calculated at the prescribed percentage after determining the refund due and paid along with the principle. 6. Even, "a single day" should be considered as a part of the month for the purpose of computation of interest. *Applied:* Tata Chemicals Ltd. 6 SCC 335 *Editorial Note:* The case pertains to assessment year 1999-2000 and assessment year 1994-1995 is to be noted. The decision also confirms the fact that interest on interest under section 24A is never envisaged in the scheme of section 244A as held in Sandvik Asia Ltd. v. CIT (2006) 280 ITR 643 (SC) : 2006 TaxPub(DT) 1272 (SC). It makes references to a number of decisions on the controversial topic as to whether interest under section 244A is payable on refund of excess self-assessment tax paid.

Tax Publishers

Maruti Suzuki India Ltd. v. CIT [ITA Nos. 2553, 2641/Del/2013, ITA Nos. 468 & 599/Del/2014, dt. 31-8-2020] : 2020 TaxPub(DT) 3416 (Del-Trib)

Interest under section 244A on refund of self-assessment tax whether hit by proviso to section 244A(1)(a)

Facts:

Arising out of a tax order a sum of Rs. 14.59 crores comprising advance tax, TDS and self-assessment tax became refundable to the assessee. The department denied paying interest on the tax refund under section 244A to the assessee citing that the restriction in proviso to section 143(1)(a) would be applicable to the assessee which reads that if the tax refundable is 10% of the tax as determined under section 143(1) or 143(3) then no interest shall become payable. Besides this the department gave a reading of payment of interest under section 244A as though to a reading of a month under section 234A/B/C where part of the month is to be read as a month so delays of a few days will not entail refund of interest under section 244A on an in pari materia reading. On higher appeal by the assessee.

Held in favour of the assessee -- that they are entitled to the interest on the self-asst tax from the date of payment as it would be covered under section 244A(1)(b) and not under section 244A(1)(a). The reading of month as in section 234A/B/C is not warranted in sec. 244A and the assessee would be entitled to interest on the refund even for a few days.

The stand out points on the verdict are -

Where refund of any amount becomes due denotes refund arising out of

-- Advance tax under section 207

-- TCS under section 206

-- TDS under section 195

-- All credits under section 199

-- Taxes paid as specified under section 156 and

-- Self-assessment tax

1. Before 1-6-2016, no interest would be paid if the amount of refund is less than 10% of the taxes determined in case the refund is out of the taxes paid other than self-assessment tax.

2. Before 1-6-2016, in the case of refund arising out of self-assessment tax, interest would be calculated on the entire self-assessment tax refunded from the date of payment of Self-Assessment tax.

3. After 1-6-2016, no interest would be paid if the amount of refund is less than 10% of the taxes determined whether it is under section 140, under section 156, under section 195, under section 199, under section 206 and under section 207.

4. Where refund of "any amount" [244A(1)] due connotes the refund of taxes paid by the assessee.

5. Where refund of "any amount" [244A(1)] is due, the assessee is entitled to simple interest. The simple interest would be calculated at the prescribed percentage after determining the refund due and paid along with the principle.

6. Even, "a single day" should be considered as a part of the month for the purpose of computation of interest.

Applied: Tata Chemicals Ltd. 6 SCC 335

Editorial Note: The case pertains to assessment year 1999-2000 and assessment year 1994-1995 is to be noted. The decision also confirms the fact that interest on interest under section 24A is never envisaged in the scheme of section 244A as held in Sandvik Asia Ltd. v. CIT (2006) 280 ITR 643 (SC) : 2006 TaxPub(DT) 1272 (SC). It makes references to a number of decisions on the controversial topic as to whether interest under section 244A is payable on refund of excess self-assessment tax paid.