2022 (6) TMI 747 - AT - Income Tax

Interest on refund u/s.244A of the Act till 11.11.2014 - assessee received refund on 11.01.2014 but it was not provided tax calculation sheet along with the same - HELD THAT - After receipt of refund cheque, assessee made several requests to the AO for copy of tax calculation sheet but however the AO issued only tax computation sheet only on 10.12.2016. From the tax calculation sheet provided by AO, assessee noted that the interest u/s.244A of the Act on refund was computed only up to 06.01.2014, whereas the assessee is eligible to receive interest u/s.244A of the Act up to the date of refund cheque i.e., 11.11.2014. The assessee moved rectification application before AO which was rejected by AO by citing the decision of Rajasthan High Court in the case of Rajasthan State Electricity 2005 (11) TMI 35 - RAJASTHAN HIGH COURT . Aggrieved, assessee preferred appeal before the CIT(A). The CIT(A) stated that the decision of Hon ble Rajasthan High Court in the case of Rajasthan State Electricity supra is in favour of assessee and also cited the Board s instruction No.7 dated 01.08.2002 and directed the AO to grant interest u/s.244A of the Act on the refund amount up to the date of 11.11.2014. Aggrieved, Revenue is in appeal before the Tribunal. CIT(A) has considered the Instruction No7 of 01.08.2002 issued by the Central Board of Direct Taxes and Circular No.11/2016 dated 24.04.2016, Instruction No.7/2013 dated 15.07.2013 and Instruction No.2/2007 dated 28.03.2007 and also the decisions of Hon ble Supreme Court in the cases of Sandvik Asia Ltd 2006 (1) TMI 55 - SUPREME COURT and CIT vs. HEG Ltd. 2009 (12) TMI 35 - SUPREME COURT and noted that the assessee is entitled for interest on refund u/s.244A of the Act up to the date of actual grant of refund i.e., 11.11.2014. Now, the ld. Senior DR could not controvert the order of CIT(A) despite specific query asked by the Bench. The ld.Senior DR however relied on the order of AO rejecting the rectification application by the AO u/s.154 of the Act. We find no infirmity in the order of CIT(A) and hence, the appeal of Revenue is dismissed.

Summary

Issues:
- Appeal against order allowing interest on refund u/s.244A
- Interpretation of tax calculation sheet and interest computation
- Application of Board's instructions and relevant case laws
- AO's rejection of rectification application
- CIT(A)'s decision in favor of the assessee
- Dismissal of Revenue's appeal by the Tribunal

Analysis:
The appeal before the ITAT Chennai revolved around the issue of interest on refund u/s.244A of the Income Tax Act, 1961. The Revenue challenged the CIT(A)'s decision allowing interest on refund till a specified date. The AO had issued the refund along with interest under section 244A on 06-01-2014. However, the CIT(A) erred in not considering the delay in the refund process due to non-service by the Refund Banker, leading to the claim of additional interest till November 2014.

Upon reviewing the facts and contentions, the ITAT noted that the AO had passed an order giving effect in 2013, and the assessee received the refund in 2014 without the tax calculation sheet. Despite multiple requests, the tax computation sheet was only provided in 2016, revealing a discrepancy in interest calculation. The assessee moved a rectification application, citing relevant case law and Board instructions. The CIT(A) relied on the Rajasthan High Court decision and Board's instructions, directing the AO to grant interest on the refund amount up to the specified date.

The CIT(A) considered various instructions issued by the Central Board of Direct Taxes and relevant case laws, affirming the assessee's entitlement to interest on refund u/s.244A until the actual grant of refund. The Senior DR failed to challenge the CIT(A)'s decision, relying on the AO's rejection of the rectification application. Ultimately, the ITAT found no fault in the CIT(A)'s order and dismissed the Revenue's appeal, upholding the decision in favor of the assessee.

In conclusion, the ITAT Chennai upheld the CIT(A)'s decision regarding interest on refund u/s.244A, emphasizing the importance of following Board instructions and relevant case laws in determining the entitlement to interest on refunds. The dismissal of the Revenue's appeal signifies the judicial interpretation favoring the assessee's claim for interest on the refund amount.