A two-judge bench of the Kerala High Court in The Commissioner of Income-Tax, Thiruvananthapuram v. The Kerala Minerals And Metals Ltd, held that the assessee would be entitled to the interest on the excess tax paid under self-assessment under the Income Tax Act, 1961. Assessee, in the instant case, made a self-assessment of tax and paid tax, far in excess of that determined under the regular assessment. Subsequently, the assessee claimed refund of the amount along with interest. However, the department rejected the claim and said that no interest can be granted on account of excess tax paid under self-assessment. Aggrieved by the order, the assessee approached the High Court.
Justice K Vinod Chandran and Justice Ashok Menon noticed that the issue has already been settled by the division bench while deciding W.A No.817/2010 dated 08.10.2013 wherein it was held that “The argument is that going by the explanation to Section 244A (1) (b) of the Income Tax Act the liability to pay interest is only in respect of the tax paid after a demand is made under section 156 of the Act. We do not think that such a differentiation can be made to the aforesaid provision and explanation does not give a different meaning at all. Any amount due to the assessee under the Act mentioned in section 244(1) clearly takes in all forms of refund, either self assessed tax or tax paid as per notice under Section 156 of the Act. As far as the explanation is concerned it only indicates the date on which the interest is liable to paid. That being the position, we do not think that there is any illegality or perversity in the judgment of the learned Single Judge.” Following the above decision, the bench allowed the petition and held in favour of the assessee.