2021 (2) TMI 649 - HC - Income Tax

Entitlement to the differential claim of interest u/s 244A on refund - Whether the Tribunal was right in law in not following the judgment of the Hon'ble Supreme Court in the case of CIT Vs. H.E.G. Ltd. 2009 (12) TMI 35 - SUPREME COURT holding that interest component will partake of the character of the amount due u/s 244A of the Act which becomes an integral part of the principal amount and assessee would be entitled to interest after the said amount becomes due and payable? - HELD THAT - Following the judgment made by the Hon'ble Division Bench of this Court in 2012 (6) TMI 902 - ITAT CHENNAI the matter is remitted back to the Income Tax Appellate Tribunal to decide the matter afresh in accordance with law.

Summary

Issues:
1. Entitlement to differential claim of interest under section 244A on refund.
2. Application of judgment of the Hon'ble Supreme Court in CIT Vs. H.E.G. Ltd. (324 ITR 331) regarding interest component under section 244A.

Analysis:
The judgment pertains to an appeal against an order passed by the Income Tax Appellate Tribunal related to the assessment year 2002-03. The appellant, engaged in the business of manufacturing brake assemblies and automobile components, had filed a return of income declaring a total income. The scrutiny assessment was completed, certain disallowances were made, and the total income was revised following appellate orders. The assessment order was set aside to examine a payment made to a company, resulting in a revised total income. The appellant appealed against this order, and interest under Section 244A was granted at a lesser amount than claimed. The appellant contended that interest should be calculated from the date of payment to the date of refund. The CIT (Appeals) and the Appellate Authority partly allowed the appeal, revising the interest amount. However, the appellant sought further interest based on specific provisions. The Tribunal confirmed the order of the CIT (Appeals), leading to the present appeal.

The substantial questions of law admitted for consideration were related to the entitlement of the appellant to the differential claim of interest under section 244A and the applicability of a judgment of the Hon'ble Supreme Court in a similar context. The appellant argued that a previous judgment by the Hon'ble Division Bench of the High Court had remitted a similar matter back to the Tribunal for fresh consideration. Both parties agreed that the present appeal should also be remitted back to the Tribunal in light of the previous judgment.

Considering the submissions and the precedent set by the Hon'ble Division Bench of the High Court, the Court remitted the matter back to the Income Tax Appellate Tribunal for fresh consideration in accordance with the law. The Tax Case Appeal was disposed of with no costs.

In conclusion, the judgment focused on the entitlement to interest under Section 244A on a refund and the application of relevant legal precedents in determining the same. The Court's decision to remit the matter back to the Tribunal for fresh consideration aligns with the principles of justice and adherence to legal procedures.