2021 (3) TMI 731 - AT - Income Tax

Interest under Section 244A - refund being the excess of tax liability on the assessed income over the taxes paid under section 143(1) - CIT(A) expressed the view that interest should be given to the assessee under Section 244A of I.T. Act for the full month even if tax is paid by the assessee on the last day of the month - Revenue is of the view that for constituting part of the month at least one day should have been completed and a few hours of the day do not constitute part of the month - HELD THAT - At the time of hearing before us the representatives of both sides were in agreement that the issue in dispute is covered by the order of Co-ordinate Bench of Income Tax Appellate Tribunal Delhi in assessee s own case 2020 (9) TMI 1045 - ITAT DELHI wherein held having gone through the specific provisions of the Act pertaining to computation of interest u/s 244A(1)(a) and Sec. 244A(1)(b) as well as Sec. 234A Sec. 234B Sec. 234C we hereby hold that the rule of collection of interest on the taxes due from the taxpayer would be applicable in the comparable way while paying interest to taxpayer on the refund. We direct the Assessing Officer to allow interest under Section 244A of I.T. Act to the assessee to the entire month even when payments / adjustments were made on the last day of the month. Accordingly all the three appeals filed by Revenue are dismissed.

Summary

Issues:
1. Dispute regarding interest under Section 244A of the Income Tax Act, 1961 for Assessment Years 1995-96, 1996-97, and 1997-98.

Analysis:

A. Revenue Appeals (ITA Nos. 600/Del/2014, 601/Del/2014, 602/Del/2014):
1. The Revenue disputed the direction of the Ld. CIT(A) to grant interest under Section 244A for the full month even if tax payments were made on the last day of the month. The Revenue contended that for constituting part of the month, at least one full day should be completed, not just a few hours. However, both sides agreed that the issue was decided in favor of the assessee in a Co-ordinate Bench order of ITAT, Delhi, dated 31/08/2020, in a similar case involving Maruti Suzuki India Ltd. The ITAT upheld that interest should be granted for the month even if payments were made on the last day, citing provisions of the Act and analogies from other sections.

2. The ITAT found no material to distinguish the current case from the precedent set in the Maruti Suzuki case. Both the Revenue and the assessee's representatives agreed that the issue had already been decided in favor of the assessee. Consequently, the appeals by the Revenue were dismissed, and the Assessing Officer was directed to allow interest under Section 244A for the entire month, even if payments were made on the last day.

B. Assessee Appeals (ITA Nos. 469/Del/2014, 470/Del/2014, 471/Del/2014):
1. The Assessee sought rectification of errors in computing interest under Section 244A by the Assessing Officer. Both sides agreed during the hearing that the matter should be restored to the Assessing Officer for fresh computation of interest under Section 244A, as allowable to the assessee. The ITAT agreed with this approach and directed the matter to be reconsidered by the Assessing Officer, providing a reasonable opportunity to the assessee for fresh computation.

2. Consequently, the appeals filed by the assessee were disposed of with the direction to reassess the interest computation under Section 244A. For statistical purposes, these appeals were treated as partly allowed.

C. Conclusion:
In conclusion, the appeals filed by the Revenue were dismissed, and those filed by the assessee were partly allowed. The ITAT's order was pronounced orally on 17/03/2021 and signed in writing on 18/03/21.