2015 (3) TMI 609 - AT - Income Tax

Non-granting of interest on interest on refund due - Assessing Officer sought to recover the excess interest granted to the assessee vide rectification order - CIT(A) allowed claim of the assessee with regard to the refund of the amount with interest is justified but the claim of the assessee with regard to interest on interest was not allowed - Held that - Said judgment of the Supreme Court of CIT v. Narendra Doshi 2001 (7) TMI 10 - SUPREME Court as relied upon by assessee not coming to the aid of the assessee and permit the assessee to claim interest on interest under the given situation. No doubt, when the tax paid is more than what is due, as a result of certain additions, etc., made by the Assessing Officer and in appeal when those are deleted by the appellate authority, the refund of the excess amount is to be made along with interest, as envisaged under section 243 of the Act. It is only when this interest is not refunded that the assessee would become entitled to the interest on the said interest as well. That was the factual position in Sandvik Asia Ltd. v. CIT 2006 (1) TMI 55 - SUPREME Court . In contradistinction, where the interest is paid along with the amount payable as refund, the question of payment of interest on interest does not arise. Present cases fall under this category. In the present case, the order of the CIT (Appeals) would demonstrate that he had taken into consideration that the assessee is entitled to interest for a period from January 1, 1999 to March 19, 2010 and accordingly, he granted the same. Interest on interest is not at all the subject matter of the order passed by the Assessing Officer under section 154 of the Income-tax Act on June 2, 2011. Being so, in the present case, the assessee has been granted interest under section 244A of the Income-tax Act as due to him and the calculation of the interest was not disputed by the assessee. The assessee cannot widen the scope of the provisions of section 154 by putting various debatable issues. The various case law relied on by the learned authorised representative is of no relevance in view of the latest judgment of CIT v. Gujarat Fluoro Chemicals 2013 (10) TMI 117 - SUPREME COURT wherein held that it is only that interest provided for under the statute which may be claimed by an assessee from the Revenue and no other interest on such statutory interest. - Decided against assessee.

Summary

Issues Involved:
1. Non-granting of interest on interest on refund due to the assessee.
2. Applicability of the Supreme Court judgment in CIT v. Narendra Doshi [2002] 254 ITR 606 (SC).
3. Interpretation of statutory provisions related to interest on refunds under the Income-tax Act, specifically sections 240, 243, 244, and 244A.

Issue-wise Detailed Analysis:

1. Non-granting of Interest on Interest on Refund Due to the Assessee:
The primary grievance of the assessee was the non-granting of interest on interest on the refund due. The assessee cited the Supreme Court judgment in CIT v. Narendra Doshi [2002] 254 ITR 606 (SC) to support their claim. The facts of the case revealed that a refund of Rs. 3,97,399 was determined, but Rs. 1,18,092 was adjusted against a tax demand, which was later canceled. The assessee argued that the refund due was Rs. 3,58,726 with interest. The Assistant Commissioner computed the refund with interest from January 1, 1999, to March 19, 2010, but later withdrew excess interest for the period from January 1, 1999, to March 2002, amounting to Rs. 43,070. The Commissioner of Income-tax (Appeals) directed the Assessing Officer to refund the amount with interest but rejected the claim for interest on interest, citing the Supreme Court decision in CIT v. Gujarat Fluoro Chemicals [2013] 358 ITR 291 (SC).

2. Applicability of the Supreme Court Judgment in CIT v. Narendra Doshi [2002] 254 ITR 606 (SC):
The assessee contended that the judgment in CIT v. Narendra Doshi [2002] 254 ITR 606 (SC) supported their claim for interest on interest. The Tribunal noted that the judgment in Narendra Doshi was based on the principle that the Revenue was liable to pay interest on the amount of interest on advance tax, which it failed to pay. However, the Tribunal found that this judgment did not aid the assessee's claim for interest on interest under the given circumstances.

3. Interpretation of Statutory Provisions Related to Interest on Refunds:
The Tribunal examined the relevant statutory provisions, including sections 240, 243, 244, and 244A of the Income-tax Act. Section 240 mandates the refund of any amount due as a result of an appellate order. Section 243 provides for interest on delayed refunds, and section 244 deals with interest on refunds where no claim is needed. Section 244A, introduced with effect from April 1, 1989, provides for interest on refunds under various contingencies. The Tribunal noted that the assessee was refunded the excess tax paid along with interest under section 244A, and the calculation of interest was not disputed. The Tribunal concluded that the assessee was not entitled to interest on interest, as clarified by the Supreme Court in CIT v. Gujarat Fluoro Chemicals [2013] 358 ITR 291 (SC), which held that only the interest provided for under the statute could be claimed, and no other interest on such statutory interest was payable.

Conclusion:
The Tribunal dismissed the appeal filed by the assessee, upholding the order of the Commissioner of Income-tax (Appeals) and concluding that the assessee was not entitled to interest on interest on the refund. The Tribunal relied on the latest judgment of the Supreme Court in CIT v. Gujarat Fluoro Chemicals [2013] 358 ITR 291 (SC) to support its decision.