2014 (1) TMI 1040 - HC - Income Tax

Interest on refund u/s 244A - Held that - CIT(A) has directed the Assessing Officer to grant the interest under Section 244A of the Act on the refund issue till the date of issue of the refund order to the assessee in accordance with law and the provisions of the Act which is confirmed by the Tribunal - When the CIT(A) itself has observed that the interest under Section 244A of the Act should be considered in accordance with law and the said order has been confirmed by the Tribunal, apprehension on the part of the appellant is not well founded Decided against Revenue.

Summary

Issues:
1. Appeal against ITAT order for Assessment Year 2005-06 regarding credit refund and interest under Section 244A of the Income Tax Act.

Analysis:
The High Court heard an appeal by the revenue challenging the ITAT's order confirming the CIT(A)'s decision regarding the credit refund and interest under Section 244A of the Income Tax Act for the Assessment Year 2005-06. The assessee was supposed to receive a credit of Rs.1,30,00,000, but the Assessing Officer initially did not grant this credit. The assessee then applied for the credit and interest under Section 244A. The Assistant Commissioner allowed the credit but did not grant interest on the amount. The revenue contended that the assessee should not receive interest due to an error in mentioning the assessment year. The CIT(A) allowed the appeal, directing the Assessing Officer to grant interest on the refund amount. The ITAT upheld this decision, prompting the revenue to appeal to the High Court.

The revenue argued that neither the CIT(A) nor the Tribunal considered whether the fault lay with the assessee or the Department, claiming there was no delay on the Department's part. They asserted that the assessee should not be entitled to interest under Section 244A due to the assessee's mistake. However, the High Court noted that the CIT(A) had directed the Assessing Officer to grant interest on the refund amount in accordance with the law and provisions of the Act until the issue of the refund order. The Court emphasized that all relevant issues concerning the interest under Section 244A needed to be considered.

The Court concluded that since the CIT(A) had ordered the interest to be granted in accordance with the law and the Tribunal had confirmed this decision, there was no valid reason to interfere with the judgments. It was highlighted that all conditions specified under Section 244A of the Act must be met when considering interest. Therefore, the High Court dismissed the revenue's appeal, upholding the decisions of the CIT(A) and the ITAT regarding the grant of interest under Section 244A of the Income Tax Act for the Assessment Year 2005-06.