2005 (5) TMI 243 - AT - Income Tax

Summary

Issues:
- Appeal against the order of the CIT(A) for the assessment year 1980-81.
- Withdrawal of interest under sections 244(1A) and 243 of the IT Act by the AO.
- Permissibility of interest on interest under the IT Act.
- Applicability of section 244A introduced in the IT Act.

Analysis:
1. The appeals by the Revenue were against the orders of the CIT(A) for the assessment year 1980-81. The Tribunal heard both appeals together as they involved a common question of law.
2. The assessee filed its return declaring income, and subsequent assessment orders were challenged leading to a refund claim. The Tribunal directed the AO to grant interest under section 244(1A) of the IT Act, which was followed by further interest under section 243. However, the AO later withdrew the interest based on a subsequent High Court order.
3. In one appeal, the Revenue challenged the withdrawal of interest under section 244(1A), while in another appeal, the withdrawal of interest granted on interest under section 243 was contested. The CIT(A) relied on the decision of the Hon'ble Gujarat High Court to set aside the AO's orders.
4. The Departmental Representative argued that the AO was justified in withdrawing the interest under section 154 of the IT Act. However, the counsel for the assessee contended that the AO lacked the authority to withdraw interest once granted, citing relevant case laws.
5. The Tribunal noted that the interest was granted by a final order of the Tribunal and that interest on interest is permissible under the IT Act. The introduction of section 244A for withdrawal of interest was not applicable to the assessment year in question.
6. Considering the absence of a provision for withdrawing interest once granted, the Tribunal upheld the CIT(A)'s decision based on the precedents set by the Hon'ble Gujarat High Court and other relevant authorities. Consequently, both appeals by the Revenue were dismissed.