1995 (6) TMI 77 - AT - Income Tax

Summary

Issues:
- Interpretation of provisions of the IT Act, 1961 regarding the grant of interest under section 244(1A) on excess TDS amount.
- Application of the decision of the Delhi Bench of the Tribunal in a similar case to the current situation.
- Determination of whether TDS should be treated as sums paid in pursuance of any order of assessment for the purpose of granting interest under section 244(1A).

Analysis:
The appeal before the Appellate Tribunal ITAT Jaipur involved a dispute regarding the grant of interest under section 244(1A) of the IT Act, 1961 on excess TDS amount for the assessment year 1986-87. The Department challenged the order of the learned CIT(A) directing the allowance of interest on the excess TDS amount. The Assessing Officer (AO) had initially granted interest on a portion of the amount but refused it on the remaining sum, contending that TDS does not qualify as an amount paid in pursuance of any order of assessment as required by section 244(1A).

Upon appeal to the CIT(A), the decision was influenced by a previous ruling of the Delhi Bench of the Tribunal in a similar case, which directed the grant of interest on the excess TDS amount. The Appellate Tribunal considered the arguments of both parties, with the Departmental Representative supporting the AO's view and the assessee's counsel defending the CIT(A)'s decision based on legal grounds.

The Appellate Tribunal upheld the CIT(A)'s order, citing the Delhi High Court's decision in a relevant case to support the interpretation that TDS should be treated similarly to advance tax. The Tribunal emphasized that TDS and advance tax are governed by the same provisions under Chapter XVII of the IT Act, and both are considered payments of tax for the assessment year following the financial year in which they were made. Therefore, for the purpose of section 244(1A), TDS should be regarded as a sum paid in pursuance of any order of assessment.

Consequently, the Appellate Tribunal ruled in favor of the assessee, directing the AO to grant interest on the entire TDS amount of Rs. 19,205. The appeal was allowed, affirming the decision of the CIT(A) and providing clarity on the treatment of TDS for the purpose of interest calculation under section 244(1A) of the IT Act, 1961.