2012 (6) TMI 631 - AT - Income Tax

Whether CIT(A) is right in allowing interest u/s.244A of the Act where refund arose on account of payment of self-assessment tax without appreciating that the words in any other case occurring in section 244A(1)(b) cannot be construed to include in clause (a) of section 244A(1) of the Act Held that - in the case of CIT vs. SIV Industries Ltd. (2007 (2) TMI 130 (HC)) held that self assessment tax paid u/s.140A should also be taken into consideration while determining the interest u/s.244A. order of ld. CIT(A) confirmed. Whether CIT(A) is right in holding that no interest u/s. 234D is chargeable for A.Y. 2001-02 - DR submitted that there was no provision in the Act for allowance of interest on interest Held that - in the case of Sandvik Asia Ltd.( 2006 (1) TMI 55 (SC)) has clearly held that when amounts are wrongfully retained by the Government, then, on general principle, interest has to be paid. AO directed to allow interest on interest in accordance with the decision of Hon ble Supreme Court in the case of Sandvik Asia Ltd. (supra).

Summary

Issues:
1. Allowance of interest u/s.244A on self-assessment tax refund.
2. Chargeability of interest u/s.234D for A.Y. 2001-02.
3. Claim of interest on interest u/s.244A for delayed refund.

Analysis:
1. *Allowance of interest u/s.244A on self-assessment tax refund:*
The case involved a dispute regarding the allowance of interest u/s.244A on self-assessment tax refund. The Revenue contended that interest should not be paid on self-assessment tax, but the CIT(A) allowed it based on precedents. The Tribunal upheld the CIT(A)'s decision, citing judgments from various High Courts and the Mumbai Bench of Tribunal. The Tribunal found the decision in line with previous rulings and dismissed the Revenue's appeal.

2. *Chargeability of interest u/s.234D for A.Y. 2001-02:*
The issue of chargeability of interest u/s.234D for A.Y. 2001-02 was raised. The Tribunal noted that a Special Bench decision had clarified that no interest could be charged u/s.234D for the mentioned assessment year. Relying on this precedent, the Tribunal decided against the Revenue on this issue and dismissed their appeal.

3. *Claim of interest on interest u/s.244A for delayed refund:*
The assessee claimed interest on interest u/s.244A for a delayed refund, citing the Supreme Court's decision in Sandvik Asia Ltd. vs. CIT. The CIT(A) had rejected this claim, stating no provision allowed for such interest. However, the Tribunal sided with the assessee, emphasizing the wrongful retention of the refund by the Revenue. Citing the Sandvik Asia Ltd. case, the Tribunal directed the AO to allow interest on interest, partially allowing the assessee's appeal.

In conclusion, the Tribunal addressed the issues of interest on self-assessment tax refund, interest chargeability u/s.234D, and interest on interest for delayed refunds, providing detailed analysis and legal interpretations to resolve the disputes effectively.