2017 (1) TMI 1779 - AT - Income Tax

Interest under section 244A - refund granted on deleted Penalty u/s 271(1)(c) - whether the assessee is entitled to receive interest us 244A of the Act till the date of issuance of refund voucher? - HELD THAT - We find, the Tribunal, Lucknow Bench in assessee s own case 2011 (7) TMI 1322 - ITAT LUCKNOW had decided the issue in favour of the assessee by holding that interest under section 244A of the Act has to be granted till the date of issuance of refund vouchers. In view of the aforesaid, we direct the AO to allow interest on refund under section 244A of the Act till the date of issuance of refund voucher on 20th May 2011. The issue being identical in assessment year 2000 01, our aforesaid order will apply mutatis mutandis to the said assessment year and the Assessing Officer is directed to allow refund of interest accordingly. Grounds no.1 and 2 for both the assessment years are allowed. Interest on delayed payment of interest under section 244A - HELD THAT - As perused the decision of the Hon'ble Supreme Court in Gujarat Fluro Chemicals Ltd. 2013 (10) TMI 117 - SUPREME COURT we have noted that the Hon'ble Supreme Court after interpreting its own decision of Sandvik Asia Ltd. 2006 (1) TMI 55 - SUPREME COURT had observed that the decision to grant interest therein was upon considering the fact that there was inordinate delay on the part of Revenue in refunding certain amounts which included statutory interest. However, Hon'ble Supreme Court held, after insertion of section 244A, which provides for interest on refund under various contingencies, the assessee is entitled to claim interest as provided under section 244A only and no other interest on interest is permissible. In view of the aforesaid decision, we do not find merit in the claim of the assessee. Accordingly, ground no.3, for both the assessment years are dismissed.

Summary

Issues:
1. Claim of interest under section 244A of the Income Tax Act, 1961.
2. Claim of interest on delayed payment of interest under section 244A of the Act.

Issue 1: Claim of interest under section 244A of the Income Tax Act, 1961:
The appeals were against orders passed by the Commissioner (Appeals) for the assessment years 1999-2000 and 2000-01. The common issue was the claim of interest under section 244A of the Act. The Tribunal consolidated the appeals as they involved the same assessee and similar facts. In the assessment year 1999-2000, penalty was imposed under section 271(1)(c) but later deleted by the Tribunal, resulting in a refund to the assessee. The Assessing Officer calculated interest under section 244A till December 2010, but the assessee sought interest till the refund voucher issuance in May 2011. The Tribunal had previously ruled in favor of the assessee in a similar case for the assessment year 1997-98, a decision upheld by the High Court. The Tribunal, in this case, directed the Assessing Officer to allow interest under section 244A till the refund voucher date, applying the same ruling to the assessment year 2000-01.

Issue 2: Claim of interest on delayed payment of interest under section 244A of the Act:
The assessee claimed interest on delayed payment of interest under section 244A for both assessment years. However, the Supreme Court's decision in CIT v/s Gujarat Fluro Chemicals Ltd. held that interest under section 244A is the only interest permissible on refunds, disallowing any interest on interest. The Tribunal, based on this ruling, dismissed the assessee's claim for interest on delayed payment of interest under section 244A for both assessment years. Consequently, the appeals were partly allowed, with the Tribunal ruling in favor of the assessee for the first issue regarding interest under section 244A but dismissing the claim for interest on delayed payment of interest under the same section.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, relevant legal precedents, and the Tribunal's decision on each issue.