2010 (7) TMI 1055 - AT - Income Tax

Summary

Issues involved:
The only issue raised in this appeal is whether the CIT(A) was justified in upholding the method adopted by the AO for calculating the interest u/s 244A of the Act by reducing the refund inclusion of the interest already granted from the tax refund to the assessee and computing the interest at the remaining amount.

Summary of Judgment:

Issue 1: Calculation of interest u/s 244A

The assessee contested the method of calculation of interest on the refund u/s 244A, arguing that interest should be calculated on the tax refund without reducing the interest granted earlier on the refund. The AO and CIT(A) upheld the method of reducing both the refund of tax and interest already granted from the refund due to the assessee for calculating interest u/s 244A. However, the Tribunal found that the interest component already granted should be excluded while reducing the refund due to the assessee for future interest calculation. The Tribunal held that the method adopted by the AO resulted in a reduction of interest payable to the assessee and directed the AO to calculate interest on the refund due without reducing the interest u/s 244A granted earlier.

In conclusion, the Tribunal allowed the appeal of the assessee, setting aside the CIT(A)'s decision and directing the AO to recalculate the interest on the refund due without reducing the interest u/s 244A previously granted.