The Bombay High Court in a judgment dated [date], provided a ruling for the matter of CEAT Limited versus the Commissioner of Income Tax (CIT). The case is concerned with the interpretation and application of Section 244A of the Income Tax Act, 1961, specifically regarding the entitlement to interest on refunds due to taxpayers.
Case background: The dispute in question related to the AY 1989-1990, where Ceat Limited had furnished its income tax return, reporting an income of Rs. 43,64,37,800. During the assessment, the Assessing Officer determined the income to be Rs. 45,91,84,440, resulting in an additional tax demand. Thereafter, Ceat Limited filed a petition against this assessment before the Commissioner of Income Tax (Appeals) [CIT(A)], who amended the income downward to Rs. 35,93,17,870, resulting in a refund of Rs. 5,24,29,950.
Ceat Limited contentions- Ceat Limited argued that under section 244A of the Income Tax Act, was levied to interest on the whole refund amount. But the assessing officer along with the income tax Appellate Tribunal (ITAT) refused the interest on the advance tax and tax deducted at source (TDS) refund element, quoting the proviso to Section 244A(1)(a) of the Act.
The Arguments and Interpretations:
The case is concerned with the interpretation of the term amount of refund in section 244A. The term must be construed with the mean of the whole refund amount as a counter to artificially segregating the same into elements such as advance tax and TDS, Ceat Limited claimed.
The High Court concurred with Ceat Limited’s rendition, highlighting that legal provisions should be consistent as per their plain and normal meaning. The contention of the Revenue is denied that the proviso to Section 244A(1)(a) applied just to the advance tax and TDS component of the refund.
The Court laid on precedents like Union of India v. Tata Chemicals Ltd. and Godrej & Boyce Manufacturing Company Ltd. v. Deputy Commissioner of Income Tax to assist its interpretation.
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It carried that the language of the proviso does not assist the opinion of the Revenue and that Ceat Limited was authorized to interest on the whole refund amount.
The court distinguished the case of Modi Industries Ltd. v. Commissioner of Income Tax, remarking that it is related to the pre-amended law and was hence unrelated to the present case.
The Bombay High Court under the aforesaid arguments and interpretations held in favour of Ceat Limited, stated that the same was qualified for interest u/s 244A of the Income Tax Act on the entire refund amount of Rs. 5,24,29,950.
The same judgment shows the significance of interpreting legal provisions following their plain and ordinary meaning and sets a precedent for similar cases involving the entitlement to interest on tax refunds.
| Case Title | CEAT Limited Vs Commissioner of Income Tax |
| Case Number | Income Tax Appeal No. 320 of 2003 |
| Date | 09.02.2024 |
| Counsel For Appellant | Mr. Nishant Thakkar, A/W. Mr. Rajesh Poojary I/B, Mulla and Mulla and Craigie Blunt and Caroe |
| Counsel For Respondent | Ms. Shilpa Goel |
| Bombay High Court | Read Order |