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2023 (10) TMI 1225 - AT - Income TaxComputation of the interest on refund u/s 244A - Adjustment of refund already granted first against the interest amount and thereafter adjust the balance against the tax amount refundable to the assessee - HELD THAT - As decided in own case 2019 (6) TMI 1707 - ITAT MUMBAI since the statute itself has already prescribed a particular method of adjustment in explanation to section 140A(1), then justice, fairness, equity and good conscience demands that same method should be followed while making adjustment for refund of taxes, especially when no contrary provision has been provided - we find that the judicial proprietary demands that order of the Tribunal of earlier years must be followed and therefore we direct the AO to re-compute the amount of interest u/s. 244A by first adjusting the amount of refund already granted towards the interest component and balance left if any shall be adjusted towards the tax component. Thus, with these directions, the appeal of the assessee is allowed The assessee would be entitled for interest on the unpaid refunds in accordance with the principle laid out in the aforesaid decision of Union Bank of India 2016 (8) TMI 688 - ITAT MUMBAI AO is hereby directed to compute the interest on refund u/s 244A of the Act as per the plea of the assessee. Accordingly, the grounds raised by the assessee are allowed and that of the revenue are dismissed.
Issues Involved:
1. Adjustment of refund against interest and tax components. 2. Methodology adopted by the Assessing Officer (AO) for calculating the refund and interest under Section 244A of the Income Tax Act, 1961. 3. Consistency with previous tribunal decisions and judicial precedents. Summary of Judgment: 1. Adjustment of Refund Against Interest and Tax Components: The Revenue's appeals concern the decision of the learned Commissioner of Income Tax (Appeals) (Ld. CIT(A)) directing the AO to adjust the refund already granted first against the interest amount and then against the tax amount refundable to the assessee. The Ld. CIT(A) followed the Tribunal's decision in the case of Union Bank of India vs ACIT. 2. Methodology Adopted by the Assessing Officer: The AO initially adjusted the entire refund amount against the tax component, resulting in a lower interest amount under Section 244A. The assessee challenged this methodology, and the Ld. CIT(A) directed the AO to adjust the refund first against the interest portion, following the Tribunal's earlier decisions. 3. Consistency with Previous Tribunal Decisions and Judicial Precedents: The Tribunal noted that an identical issue was previously examined in the assessee's own case and decided in favor of the assessee. The Tribunal cited the decision in Union Bank of India vs ACIT, which emphasized that the refund should first be adjusted towards the interest payable and then towards the tax component. This approach aligns with the principles laid out by the Hon'ble Delhi High Court in India Trade Promotion Organisation v. CIT and the Hon'ble Supreme Court in cases like HEG Ltd. and Tata Chemicals Ltd. The Tribunal reiterated that the AO's methodology was against the spirit of the taxation scheme and directed the AO to compute the interest on refund under Section 244A by first adjusting the refund towards the interest component and then the tax component. Conclusion: The Tribunal upheld the Ld. CIT(A)'s decision and dismissed all the appeals filed by the Revenue, affirming that the assessee is entitled to interest on the unpaid refunds as per the principles laid out in previous judicial decisions. Order pronounced in the open court on 27th June, 2023.
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