2008 (6) TMI 291 - AT - Income Tax

Summary

Issues Involved:
1. Denial of interest on the refund of Rs. 34,74,781, treating it as MAT credit.
2. Delay attributable to the assessee in relation to TDS certificates for Rs. 3,53,516 and its impact on the interest on refund under Section 244A.

Detailed Analysis:

1. Denial of Interest on Refund of Rs. 34,74,781 as MAT Credit:
The assessee contested the denial of interest on the refund amount of Rs. 34,74,781, arguing that it was an excess of tax paid over the tax payable for the year, not merely MAT credit. The AO excluded this amount from the total refund while computing interest under Section 244A, which was challenged by the assessee. The CIT(A) upheld the AO's action, referencing the proviso to Section 115JAA(2) which states that no interest shall be payable on the tax credit allowed under Section 115JAA(1). The assessee argued that the AO had reduced the MAT credit amount twice, which was against the statutory provisions. The Tribunal examined the provisions of Section 115JA and Section 115JAA, concluding that the AO had indeed reduced the MAT credit amount twice, which was not intended by the statute. The Tribunal directed that interest under Section 244A should be computed on the refund amount without the double reduction of the MAT credit.

2. Delay Attributable to the Assessee in Relation to TDS Certificates for Rs. 3,53,516:
The assessee furnished TDS certificates amounting to Rs. 3,53,516 on 26th Dec., 2003, after filing the return on 29th Oct., 2001. The AO granted the TDS claim but reduced this amount while calculating interest under Section 244A, attributing the delay to the assessee. The CIT(A) upheld this decision, citing Section 244A(2), which excludes the period of delay attributable to the assessee from the interest computation period. The Tribunal noted that interest on refund is due on the amount of refund after credit for advance tax and TDS. The Tribunal acknowledged that the delay in furnishing TDS certificates could be due to late deduction by the deductors and not necessarily the assessee's fault. The Tribunal restored this issue to the AO to verify whether the delay was attributable to the assessee or the TDS deductors. If the delay was due to the deductors, the assessee would be entitled to interest under Section 244A.

Conclusion:
The appeal was partly allowed. The Tribunal directed the AO to compute interest under Section 244A on the refund amount without the double reduction of MAT credit and to verify the cause of delay in furnishing TDS certificates to determine the assessee's entitlement to interest under Section 244A.