2005 (5) TMI 35 - HC - Income Tax

Interest u/s 244(1A) - (a) Whether Tribunal was correct in granting the interest under section 244(1A) to the assessee from March 28 1988 to the date of adjustment i.e. July 25 1991 and thereafter again from March 28 1988 to the date of grant of refund on the principal sum? (b) Whether Tribunal has correctly interpreted the provisions of sections 237 240 241 244 and 245? - an assessee would be entitled to refund upon passing of an order of assessment and/or even the order of the appellate authority. - appellate authority while relying upon the judgment of the Supreme Court in Modi Industries Ltd. s case correctly arrived at the conclusion that interest is to be allowed to the assessee u/s 244(1A) on tax refundable as a result of any appeal or any order till the granting of the refund excluding the period of one month. On the facts the findings recorded by the Income-tax Appellate Tribunal are final and in any case they cannot be stated to be perverse on any ground - no question of law much less a substantial question of law arises

Issues:
1. Interpretation of provisions of sections 237, 240, 241, 244, and 245 of the Income-tax Act.
2. Granting of interest under section 244(1A) of the Income-tax Act.
3. Legality and correctness of the order of the Income-tax Appellate Tribunal in granting interest to the assessee.

Analysis:

Issue 1: Interpretation of provisions of sections 237, 240, 241, 244, and 245 of the Income-tax Act:
The case involved a dispute regarding the interpretation of various sections of the Income-tax Act related to the entitlement of an assessee to a refund and the conditions for claiming interest. The court emphasized that the entitlement to a refund is regulated under sections 237, 239, and 240, and is subject to the provisions of section 245 allowing the Assessing Officer to set off the refund against any tax remaining payable. The court highlighted that an assessee can claim interest under section 244 subject to the conditions stipulated therein, even without a fresh assessment order by the Assessing Officer. The judgment relied on the provisions of the Act and previous legal precedents to support the interpretation of the relevant sections.

Issue 2: Granting of interest under section 244(1A) of the Income-tax Act:
The primary contention revolved around the grant of interest under section 244(1A) of the Income-tax Act to the assessee. The court discussed that the interest is justifiable against the demand of the assessee and the principal amount refundable. It was argued that the assessee was entitled to interest as the amount remained with the Revenue for the specified period. The court upheld the decision of the appellate authority to allow interest to the assessee under section 244(1A) based on the principles outlined in previous legal judgments, including the Supreme Court's decision in Modi Industries Ltd.'s case. The court found no infirmity in the concurrent view taken by the appellate authorities regarding the grant of interest.

Issue 3: Legality and correctness of the order of the Income-tax Appellate Tribunal:
The main grievance of the Revenue was that the Income-tax Appellate Tribunal erred in law by awarding interest to the assessee beyond a certain date. The court examined the provisions of section 244A and the restrictions on the payment of interest. It was argued that interest could be claimed by the assessee until the refund was granted, excluding a specific period. The court concluded that the Income-tax Appellate Tribunal's decision to grant interest to the assessee was legally sound and in line with the provisions of the Income-tax Act. The court dismissed the appeals, stating that no substantial question of law arose for consideration based on the facts and legal principles discussed in the judgment.

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