1990 (2) TMI 108 - AT - Income Tax

Summary

Issues:
1. Interpretation of provisions of s. 214/244(1A) of the IT Act, 1961 regarding interest on refund of advance tax.
2. Application of the judgment in the case of NATIONAL AGRICULTURAL COOPERTIVE MARKETING FEDERATION OF INDIA LTD. vs. UNION OF INDIA & ORS. (1981) 130 ITR 928 (Del) in determining interest on refund.

Analysis:

Issue 1: Interpretation of provisions of s. 214/244(1A) of the IT Act, 1961 regarding interest on refund of advance tax:
The appeal by the assessee was based on the contention that the CIT(A) erred in holding that interest on the refund of advance tax was only applicable up to the date of the original assessment and not the date of the actual grant of refund. The learned counsel for the assessee referred to the judgment of the Delhi High Court in the case of NATIONAL AGRICULTURAL COOPERTIVE MARKETING FEDERATION OF INDIA LTD. vs. UNION OF INDIA & ORS., which supported the assessee's claim for interest on the refund up to the date of the actual refund. The Departmental Representative, however, supported the CIT(A)'s order, citing the Delhi High Court's judgment as binding on all authorities in the Union Territory of Delhi.

Issue 2: Application of the judgment in the case of NATIONAL AGRICULTURAL COOPERTIVE MARKETING FEDERATION OF INDIA LTD. vs. UNION OF INDIA & ORS. (1981) 130 ITR 928 (Del) in determining interest on refund:
The ITAT Delhi, in its judgment, analyzed the conflicting interpretations of the provisions of s. 214(2) of the IT Act, 1961 by the Delhi High Court and the Madras High Court. Despite the Delhi High Court's view limiting interest on refund to the date of the initial assessment, the ITAT Delhi followed the Madras High Court's interpretation, which allowed interest on refund up to the date of the actual refund. The ITAT Delhi cited the principle that when two plausible views exist, the one favoring the assessee should be adopted, referencing the Supreme Court judgment in CIT vs. VEGETABLE PRODUCTS. Consequently, the ITAT Delhi reversed the CIT(A)'s order and directed the ITO to allow interest on the refund up to the date of the actual refund, thereby ruling in favor of the assessee.

In conclusion, the ITAT Delhi allowed the appeal by the assessee, emphasizing the entitlement to interest on the refund under s. 214(2) of the IT Act, 1961 up to the date of the actual refund, based on the interpretation of relevant judgments and legal principles.