2003 (8) TMI 160 - AT - Income Tax

Summary

Issues Involved:
1. Jurisdiction of Dy. CIT(A) regarding appeals under Section 244.
2. Withdrawal of interest under Section 244(1A).
3. General grounds against the orders of Dy. CIT(A) and AO.

Detailed Analysis:

1. Jurisdiction of Dy. CIT(A) Regarding Appeals Under Section 244
The assessee contended that the Dy. CIT(A) was not justified in holding that no appeal can be filed in respect of matters relating to Section 244. The Dy. CIT(A) had observed that no appeal under Section 246 had been provided for matters relating to Section 244, and therefore, the matter could not be agitated in the appeal. However, despite this observation, the Dy. CIT(A) did not dismiss the appeal in limine and decided the issue on merits.

The Tribunal noted that the Hon'ble Calcutta High Court in the case of N. Chakravorti and Co. & Anr. vs. Union of India & Ors. (2002) 257 ITR 10 (Cal) held that the interest claimed under Sections 243 and 244 is a component of the refund under Section 237, and an order under Section 237 is appealable under Section 246(1)(k). Thus, the Dy. CIT(A) had the jurisdiction to dispose of the appeal, and his observation that no appeal under Section 246 had been provided in respect of matters relating to Section 244 was not justified.

2. Withdrawal of Interest Under Section 244(1A)
The assessee argued that the interest under Section 244(1A) could not be withdrawn once granted. The facts showed that the AO had initially granted a refund including interest under Section 244(1A) but later withdrew the interest following subsequent orders.

The Tribunal referred to the provisions of Section 244(1A) and noted that interest is payable when the tax paid by the assessee pursuant to an assessment order is found in appeal to be in excess. However, the interest can be adjusted based on subsequent orders. The Tribunal cited the Hon'ble Supreme Court's decision in Modi Industries Ltd. & Anr. vs. CIT & Anr. (1995) 216 ITR 759 (SC), which stated that with effect from 1st April, 1985, interest payable under Section 214 will increase or decrease in accordance with the variation in the quantum of refund brought about by subsequent orders.

The Tribunal also referred to the Hon'ble Calcutta High Court's decision in ANZ Grindlays Bank Plc. vs. CIT (1999) 157 CTR (Cal) 161, which held that interest under Sections 214 and 244(1A) that was not due could be recovered. Similarly, the Hon'ble Punjab & Haryana High Court in CIT vs. Hansa Agencies (P) Ltd. (1998) 234 ITR 271 (P&H) held that interest is payable after giving effect to the appellate order.

The Tribunal concluded that the AO was justified in withdrawing the interest as it was not due after the final appeal effect. The decision of the Gujarat High Court in CIT vs. Ahmedabad New Cotton Mills Co. Ltd. was not followed as the Hon'ble Supreme Court had granted special leave to appeal against that judgment.

3. General Grounds Against the Orders of Dy. CIT(A) and AO
The fourth ground raised by the assessee was general in nature and did not require any specific comments.

Conclusion
The Tribunal dismissed the appeal of the assessee, affirming the actions of the Dy. CIT(A) and the AO. The Dy. CIT(A) had the jurisdiction to entertain the appeal under Section 244, and the withdrawal of interest under Section 244(1A) was justified based on subsequent appellate orders.