2012 (7) TMI 435 - AT - Income Tax

Calculation of interest on refund claim - application for rectification disposed off by stating that there is no mistake apparent from record - Held that - AO has not made any speaking order instead has followed Supreme Court verdict in the case of CIT v. Amalgamation (1997 (7) TMI 15 (SC))which is based upon section 214 and has calculated the interest up to completion of original asset which is not correct as w.e.f. 1.4.1989 the refund has to be paid in accordance with section 244A, thus keeping in view these provisions for assessment years 1993-94 & 1994-95, the assessee was entitled for interest on refund amount due to TDS from 1.4.1993 and 1.4.1994 respectively to date of grant of refund and in the case of tax paid after assessment from the date of payment of such tax to the date of grant of refund - remit the case back to the file of the AO with the direction to re - calculate the interest - in fvavour of assessee as directed.

Summary

Issues:
Appeal against CIT(A) orders for assessment years 1993-94 and 1994-95 regarding the refund of principal tax amount and interest under section 244A of the Income Tax Act.

Analysis:
1. Grounds of Appeal:
The appellant contested the CIT(A)'s decision regarding the refund legally due, comprising the principal tax refund and unpaid interest, along with interest under section 244A of the Act for assessment year 1993-94. The grounds were common for both years, except for the figures. The appellant argued for the refund legally due and interest on the unpaid amount as per the Act's provisions.

2. Factual Background:
The appellant, a liquor vendor, filed returns for assessment years 1993-94 and 1994-95, claiming refunds. The Department issued refunds, but the appellant sought rectification under section 154 for both years. The Assessing Officer rejected the rectification application, citing no apparent mistake. The appellant moved to the CIT(A) challenging the rejection.

3. Arguments Before CIT(A):
The appellant argued before the CIT(A) that the judgment cited by the Assessing Officer was not applicable post 1989-90, as section 244A governed interest on tax refunds. The CIT(A) rejected the appeal, noting differences in the provisions pre and post 1989-90.

4. Tribunal's Decision:
The Tribunal considered the arguments of both parties and found it to be a case of interest calculation on the refund due as per the law. It noted that the Assessing Officer had erred by following a judgment based on section 214 instead of section 244A. The Tribunal remitted the case to the Assessing Officer to calculate interest and issue refunds as per section 244A for both years.

5. Conclusion:
The Tribunal allowed the appeals for statistical purposes, directing the Assessing Officer to calculate interest and refund the amount due to the appellant in accordance with section 244A of the Income Tax Act. The decision was pronounced in open court on June 15, 2012.