- (1.) HEARD Sri Shambhoo Chopra, Advocate, for appellants -Department and Sri Rupesh Jain, Advocate, holding brief of Sri R.S. Agarwal, Advocate, for respondent -Assessee.
(2.) THE two substantial questions of law, which have been formulated by appellants, i.e., Department of Income Tax, in this appeal filed under Section 260 -A of Income Tax Act, 1961 (hereinafter referred to as "Act, 1961") relate to validity of interest allowed by Commissioner of Income Tax (Appeal) (hereinafter referred to as "CIT(A)") under Section 244A of Act, 1961 and the date from which such interest is payable. The questions read as under: "(i) Whether on the facts and in the circumstances of the case, the Tribunal was legally correct in upholding the order of Commissioner of Income Tax (Appeal) who directed to allow interest under Section 244 -A of Act, 1961 on refund resulted out of Self Assessment Tax Paid? (ii) Whether on the facts and in the circumstances of the case, the Tribunal was justified in upholding the order or Commissioner of Income Tax (Appeal) in directing to allow interest under Section 244 -A of Act, 1961 after considering para 11.4 (b) of CBDT circular No. 549 dated 31 -10 -1989 which provides payment of interest from date of payment of tax of penalty i.e. regular tax and non payment made under Section 140 -A of the Act, 1961 -
(3.) SRI Shambhoo Chopra, Advocate, appearing for Department submitted that the tax paid under Section 140A will not attract Section 244A at all and, therefore, the interest allowed by CIT (A) is clearly illegal. The submission is thoroughly misconceived and glaring misreading of the provisions. Section 244A (1) (a) and (b) of Act, 1961 reads as under: "244A. (1) Where refund of any amount becomes due to the assessee under this Act he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated in the following manner, namely : - (a) where the refund is out of any tax paid under Section 115WJ or collected at source under section 206C or paid by way of advance tax or treated as paid under section 199, during the financial year immediately preceding the assessment year, 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 1st 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 calculated at the rate of one -half per cent for every month or part of a month comprised in the period or periods from the date or, as the case 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, "date of payment of tax or penalty" means the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand " ;