2006 (8) TMI 436 - AT - Income Tax

Issues Involved:
1. Admission of additional grounds.
2. Interest under section 244A for delay in grant of interest.
3. Exclusion of interest on tax-free debentures and NSC in computing book profit under section 115J.
4. Computation of interest under section 244A(1) up to the date of the order giving effect to the CIT (Appeals)' order.
5. Treatment of difference in income under section 115J as depreciation not allowed and its impact on WDV of assets.

Detailed Analysis:

1. Admission of Additional Grounds:
In all three appeals, the assessee requested the admission of additional grounds. The Tribunal accepted these additional grounds, citing that they are purely legal and all facts are on record, referencing the precedent set by the Supreme Court in National Thermal Power Co. Ltd. v. CIT [1998] 229 ITR 383 (SC).

2. Interest under Section 244A for Delay in Grant of Interest:
The Tribunal examined whether the assessee is entitled to interest under section 244A for the delay in granting interest on the refund. The Tribunal concluded that the delay in furnishing the original TDS certificates does not constitute a delay in proceedings resulting in a refund. Thus, the assessee is entitled to interest from 1-4-1989 until the date of furnishing the original TDS certificates. Additionally, the Tribunal directed the Assessing Officer to grant interest up to the date of signing the refund voucher, following the precedent in Jay Bros. Investment & Trading Co. (P.) Ltd. v. Dy. CIT [2002] 74 TTJ (Mum.) 748.

3. Exclusion of Interest on Tax-Free Debentures and NSC in Computing Book Profit under Section 115J:
For the assessment year 1990-91, the assessee sought exclusion of interest on tax-free debentures and NSC in computing book profit under section 115J. The Tribunal dismissed this ground as it was not arising from the order of the Assessing Officer giving effect to the CIT (Appeals) order dated 15-3-1994, making the ground infructuous.

4. Computation of Interest under Section 244A(1) Up to the Date of the Order Giving Effect to the CIT (Appeals)' Order:
The Tribunal held that for the assessment years 1989-90, 1990-91, and 1991-92, the assessee is entitled to interest under section 244A(1) up to the date of signing of the refund order/voucher. The Tribunal directed the Assessing Officer to grant interest to the assessee up to the date of signing of the refund order/voucher after verification.

5. Treatment of Difference in Income under Section 115J as Depreciation Not Allowed and its Impact on WDV of Assets:
For the assessment year 1990-91, the assessee argued that the difference between the income as arrived at and the income computed under section 115J should be treated as depreciation not allowed, thereby enhancing the closing WDV of the assets. The Tribunal rejected this ground based on the oral submission of the assessee's representative that this issue is covered against the assessee in ITA No. 2876 (Mum.)/1994.

Conclusion:
The Tribunal allowed the assessee's appeals for the assessment years 1989-90 and 1991-92, and partly allowed the appeal for the assessment year 1990-91. The key determinations were the entitlement to interest under section 244A for delays attributable to the Department and the rejection of the claim for exclusion of interest on tax-free debentures and NSC in computing book profit under section 115J.

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