GIRISH CHANDRA GUPTA J.

The revenue has come up in appeal u/s.260A of the Income Tax Act, 1961 (hereinafter referred to as ‘the Act’) against a judgment and order dated 22nd March, 2004 passed by the ITAT ‘A’ bench, Kolkata in ITA No.383 and 384 (Kol) of 2003 pertaining to the assessment years 1992-93 and 1993-94. The questions which arise for determination are as follows:-

(I) Whether in the facts and circumstances of the case the Tribunal was justified in law in granting interest to the assessee u/s.244A of Income including self-assessment tax u/s.140A of the Act. Subsequently, the assessment u/s.143(3) was completed for both the assessment years 1992-93 and 1993-94 and certain additions were made. The assessee preferred an appeal before the Commissioner of Income Tax (Appeals) (hereinafter referred to as ‘CIT(A)’) who allowed certain relief resulting in an order for refund. While giving effect to the said order of the learned CIT(A), an order for refund along with interest was allowed to the assessee for both the years under consideration.

Tax Act, 1961 on refund arising due to excess payment on self assessment of tax in view of Section 244A(1)(b), read with the explanation thereto, of Income Tax Act, 1961?

(II) Whether the explanation to Section 244A(1)(b) of Income Tax Act, 1961 bars payment of interest upon refund of excess payment on self-assessment?

(III) Whether grant of interest to the assessee on refund arising due to excess payment on self assessment is contemplated by the Income Tax Act, 1961?

(IV) Whether in the facts and circumstances of the case the Tribunal was justified in granting the aforesaid relief to the assessee on the ground that the issue was debatable?

The facts and circumstances briefly stated are as follows:-

The assessee paid tax in respect of the relevant assessment years Subsequently, the assessing officer issued a notice u/s.154 and the interest previously allowed u/s.244A(1)(b) on the refund of excess self assessment tax was withdrawn. In his order u/s.154 the assessing officer held that interest u/s.244A(1)(a) is not payable on refund of excess self assessment tax whereas s.244A(1)(b) is not attracted in view of the explanation appended thereto. He relied on the explanation to Clause (b) which provides that the “date of payment of tax or penalty” u/s.244A(1)(b) means the date on and from which the amount of tax or penalty specified in the notice of demand issued u/s.156 is paid in excess of such demand. The assessing officer, therefore held that “since any tax paid after issue of notice of demand does not include self-assessment tax, the interest is not payable on excess payment u/s. 140A.”

The assessee preferred an appeal against the order of the assessing officer before the CIT(A). The CIT(A) reversed the order of the assessing officer by an order dated 20th November 2002 relying upon a judgement of Delhi High Court in the case of CIT Vs. MTC Ltd. reported in 246 ITR 725 and held that the provisions of Section 154 could not be applied to the present case. The revenue unsuccessfully appealed before the Tribunal, which also relied upon CIT Vs. MTC (supra) and upheld the order of CIT(A). The revenue is, as such, in appeal before this Court against the order of the Tribunal dated 22nd March 2004.

For better appreciation of the rival contentions, it is necessary to reproduce the relevant portion of Section 244A of the Act, which reads as under:-

“244-A. Interest on refunds.—(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 u/s. 115-WJ or collected at source u/s. 206-C or paid by way of advance tax or treated as paid u/s. 199, during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of one-