2022 (1) TMI 1059 - AT - Income Tax

Disallowance of interest u/s. 244A - whether CIT(A) erred in confirming the order of the learned AO in not allowing the interest u/s. 244A upto the date of issue of refund cheque in terms of binding CBDT circular No. 20D (XXII-22) dated 20.08.1968 wherein instructions have been given for calculating interest upto the date of issue of refund voucher - HELD THAT - When we examine the provisions contained under section 244A of the Act, it has a categoric mandate that where refund of any amount becomes due to the assessee, he shall be entitled to receive, in addition to the refund amount, simple interest calculated in the manner prescribed in section 244A of the Act itself. Since the provisions contained under section 244A of the Act has no ambiguity whatsoever the assessee is entitled for the interest on its refund upto the date of issuance of the refund voucher. This issue has already been examined and decided by the coordinate Benches of the Tribunal in favour of the assessee that assessee is entitled for interest on its refund upto the date of issuance of refund voucher in cases cited as Indo Gulf Corporation Ltd 2017 (1) TMI 1779 - ITAT MUMBAI , 2011 (7) TMI 1322 - ITAT LUCKNOW and 2019 (9) TMI 1626 - ITAT MUMBAI and and Grasim Industries Ltd 2022 (1) TMI 955 - ITAT MUMBAI We are of the considered view that Ld. CIT(A) has erred in not granting the interest to the assessee on its refund upto the date of issuance of the refund voucher otherwise admissible as under section 244A of the Act and as such impugned orders under appeals are not sustainable in the eyes of law, hence set aside. AO is directed to compute and grant the interest on the tax refund due to the assessee for A.Y. 2012-13 2013-14 upto the date of issuance of refund voucher in accordance with the provisions contained under section 244A of the Act. Resultantly, both the appeals filed by the assessee are allowed.

Summary

Issues:
- Entitlement to interest u/s 244A of the Act up to the date of issuance of refund voucher.

Analysis:

Issue: Entitlement to interest u/s 244A of the Act up to the date of issuance of refund voucher

The appeals involved the question of whether the assessee was entitled to interest under section 244A of the Income Tax Act up to the date of issuance of the refund voucher. The assessee, a company engaged in various manufacturing activities, had filed returns for two assessment years and claimed interest on refunds up to the date of refund voucher issuance. The Assessing Officer had granted interest only up to the date of signing the notice of demand, leading to the dispute. The Tribunal examined the provisions of section 244A, which clearly stated that the assessee is entitled to interest on the refund amount up to the date of refund voucher issuance. Previous decisions by coordinate Benches of the Tribunal supported this interpretation, emphasizing the entitlement of the assessee to interest on refunds until the issuance of the refund voucher. The Tribunal held that the CIT(A) erred in not granting interest to the assessee up to the date of refund voucher issuance, as mandated by section 244A. Consequently, the impugned orders were set aside, directing the Assessing Officer to compute and grant interest on the tax refund up to the date of refund voucher issuance for the relevant assessment years. As a result, both appeals filed by the assessee were allowed.

In conclusion, the Tribunal's judgment clarified the entitlement of the assessee to interest under section 244A of the Income Tax Act, emphasizing that interest on refunds should be calculated up to the date of issuance of the refund voucher. The decision was based on a clear interpretation of the statutory provisions and supported by previous Tribunal decisions, ensuring the correct application of the law in granting interest on tax refunds.