2012 (4) TMI 798 - AT - Income Tax

Summary

Issues involved: Appeal against orders of CIT(A) for assessment years 1996-97, 1997-98, and 2002-03 regarding interest u/s 244A on refunds.

Issue 1 - Interest u/s 244A on refunds:
The assessee claimed interest u/s 244A was not allowed till the issue of refund voucher. The ld. CIT(A) rejected the claim stating no provision in the Income-tax Act for such compensation. The assessee relied on Supreme Court decisions and a Tribunal order to support their claim. The ld. D.R. supported the CIT(A)'s decision. The Tribunal noted the A.O. did not grant interest u/s 244A till the refund issue/receipt date. Citing precedents, the Tribunal held the assessee was entitled to interest on the amounts of interest paid under sections 214 and/or 244, as well as interest on the principal amount. Following Supreme Court rulings, the Tribunal directed the A.O. to allow interest u/s 244A in accordance with the decisions. The appeals were allowed based on this reasoning.

This judgment highlights the entitlement of the assessee to interest u/s 244A on refunds, based on legal precedents and authoritative pronouncements, despite the initial rejection by the ld. CIT(A).