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IN THE HIGH COURT OF JDICATURE AT BOMBAY
ORDINARY ORIGINAL CIVIL JURISDICTION
INCOME TAX APPEAL NO. 4994 OF 2010
The Income Tax Commissioner-LTU ...Appellant.
Vs.
M/s Asian Paints Ltd. ..Respondent
Mr. Suresh Kumar for the Appellant.
Mr. Subhash Shetty for the Respondent.
CORAM : J.P. DEVADHAR AND
A.A. SAYED, JJ.
DATE : 11TH AUGUST, 2011.
ORAL JUDGMENT (PER J.P. DEVADHAR, J.)
1. Not on board. Taken up on board by consent of the parties.
2. The appeal is admitted on the following question of law :
“Whether on the facts and in the circumstances of the
case, ITAT was justified in holding that interest was payable to
the assessee under section 244A of the Income Tax Act, 1961 forthe month of December, 2003, even though the amount of tax
paid by the assessee was credited to the Central Government
Account on 1st January, 2004?”
3. The A.Y. Involved herein is the block period 1-4-1995 to 21-3-2002.
4. In the present case, tax demand raised under the block assessment was
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paid by the assessee by depositing a cheque for the amount of tax demanded
on 29th December, 2003 in the bank authorized by the Central Government.
On 30th December, 2003, the Bank account of the assessee was debited by
the amount of tax under the cheque deposited on 29th December, 2003.
5. As the block assessment order was set aside by CIT(A),the assessee
become entitled to refund of tax paid. The Assessing Officer refunded the tax
with interest under section 244(A) of the Act from January, 2004 till grant of
refund. The assessing officer declined to grant interest for the month of
December, 2003 on the ground that the tax paid by the assessee was credited
to Central Government Account on 1st January, 2004.
6. On appeal filed by the Assessing officer the CIT(A) held that the
assessee was entitled to interest from the month of December, 2003 on the
ground that the amount of tax offered was debited to bank account of the
assessee on 30th December, 2003. On further appeal filed by the revenue, the
ITAT by the impugned order upheld the decision of CIT(A). Being aggrieved
by the aforesaid order, the revenue has filed the present appeal.
7. According to the Counsel for the revenue, though the assessee had
deposited the cheque towards the tax demand on 29th December, 2003, the
amount was actually credited to the Central Government account on 1st
January, 2004 and therefore, on grant of refund, the assessee was entitled to
interest from January, 2004. In support of the above contention, Counsel for
the revenue relied upon a decision of Rajasthan High Court in the case of
Rajasthan State Electricity Board Vs. Commissioner of Income Tax,
(2006) 281 ITR 274 and the decision of the Delhi High Court in the case of
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CIT Vs. Sutlej Industries Ltd. (2010) 325 ITR 331.
8. Under section 244A (1)(b) of the Act, interest on refund is payable
from the date of payment of tax to the date on which refund is granted. In the
present case, admittedly the cheque for the amount of tax demanded was
deposited with the authorized agent of the Central Government on 29th
December, 2003 and the account of the assessee was debited to that extent
on 30th December, 2003. The question therefore, to be considered is, whether
debiting the tax amount from the bank account of the assessee by the
authorized agent of the Central Government account viz. the authorized bank
constitutes payment of tax under section 244(A)(i)(b) of the Act?
9. It is not in dispute that the payment of tax by cheque is a permissible
mode of payment. It is not in dispute that the assessee had deposited the
cheque towards the tax amount in the bank which was authorized by the
Central Government to collect the tax on behalf of the revenue. It is not in
dispute that the authorized agent of the Central Government had debited the
amount of tax from the bank account of the assessee on 30-12-2003. Once
the authorized agent of the Central Government collects the tax by debiting
the bank account of the assessee, the payment of tax to the Central
Government would be complete. The fact that there is delay on the part of
the authorized agent to credit that amount to the account of the Central
Government, it cannot be said that the payment of tax is not made by the
assessee, till the amount of tax is credited to the account of the Central
Government. For calculating interest under Section 244A(1)(b) of the Act
the relevant date is the date of payment of tax and not the date on which the
amount of tax collected is credited to the account of the Central Government
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by the agent of the Central Government. Therefore, in the facts and
circumstances of the present case, the decision of the ITAT in holding that
the assessee had paid the taxes on 30th December, 2003 cannot be faulted.
10. Once it is found that the tax was paid on 30th December, 2003, then as
per the rule 119A(b), of the Income Tax Rules, on the tax becoming
refundable, the assessee had to be refunded tax with interest for the entire
month of December, 2003. Thus, in the facts of the present case, no fault can
be found with the decision of the ITAT in holding that the assessee that the
tax was paid on 30-12-2003 & therefore, the tax was liable to be refunded
with interest for the entire month of December, 2003.
11. The decision of the Rajasthan High Court, as also the decision of the
Delhi High Court relied upon by the Counsel for the revenue are
distinguishable on the facts as in both the above cases, the Courts were not
called upon to consider the scope of the expression ‘payment of tax’
contained under Section 244A(1)(b) of the Act. In fact, the circular No.261
dated 8th August, 1979 issued by the Board to the effect that the date of
presenting the cheque should be the date of payment supports the contention
of the assessee.
12. In the result, the question raised in the appeal is answered in favour of
the assessee and against the revenue. Appeal is disposed of accordingly.
( A.A. SAYED, J. ) ( J.P. DEVADHAR , J.)
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