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2014 (11) TMI 809 - HC - Income TaxWhether the Tribunal is right in law and on facts in directing the AO to grant interest u/s 214 Held that - The issue has been already decided in the judgment of Modi Industries Ltd. and Others vs. Commissioner of Income Tax and Another 1995 (9) TMI 324 - SUPREME Court wherein it has been held that after adjustment of advance tax at the time of regular assessment, if some balance remains to the credit of the assessee, that balance is treated as excess amount of advance tax which has to be refunded with interest u/s 214 up to the date of regular assessment - interest is admissible to the assessee up to the date of regular assessment u/s 214 - the assessee shall be entitled to interest on refund amounts up to the date of regular assessment thus, the order of the Tribunal is partly modified Decided partly in favour of revenue.
Issues:
1. Grant of interest under section 214 of the Income Tax Act while giving appeal effect to the CIT(A) order. Analysis: The High Court of Gujarat was presented with a question referred by the Income Tax Appellate Tribunal regarding the grant of interest under section 214 of the Income Tax Act, 1961. The Tribunal's order dated 04.06.1993 in ITA No. 5509/Ahd/1989 for the Assessment Year 1984-85 raised the issue of whether the Appellate Tribunal was correct in directing the Assessing Officer to grant interest u/s. 214 while giving appeal effect to the CIT(A) order. The Assessing Officer had not granted interest u/s 214 when giving appeal effect to the CIT(A)'s order, leading to subsequent directions from the CIT(A) to grant interest u/s. 214 up to the date of their order. The revenue appealed the CIT(A)'s decision before the Tribunal, which upheld the direction to grant interest based on a Full Bench decision of the Court in the case of Bardolia Textile Mills Ltd. The Hon'ble Supreme Court of India intervened, instructing the Tribunal to refer the question of law to the High Court. The appellant, represented by learned Senior Advocate Mr. M.R. Bhatt, argued that the Tribunal erred in directing the grant of interest u/s 214 until the CIT(A) order date. He cited relevant decisions, including the case of Modi Industries Ltd., to support the revenue's position that interest on refund amounts should be granted up to the date of regular assessment. The High Court analyzed the issue in light of the Supreme Court's decision in Modi Industries Ltd. and the Court's decision in Commissioner of Income Tax vs. Mihir Textiles Ltd. Both these cases established that interest on refund amounts should be granted up to the date of regular assessment under section 214. Considering the precedents and arguments presented, the Court concluded that the assessee is entitled to interest on the refund amount up to the date of regular assessment. Therefore, the Court answered the question raised in the negative and in favor of the revenue, modifying the impugned judgment and partially allowing the reference.
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