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2024 (6) TMI 882 - ITAT DELHIRe-determination of interest u/s 244A on Refund via rectification u/s 154 - HELD THAT - CIT(A) has fallen in error in making observation that the assessee has sought rectification of the determination of interest under section 244A of the Act while in fact the question was the period for which the interest should have been paid. It was not the question of making a conclusion after a long process so as to be outside the purview of section 154 of the Act. But, merely rectification of a clerical nature arising out of mistake in calculation of period for which interest is payable to assessee. It is settled proposition of law that if interest is reduced by virtue of Sub-section (3) of Section 244A on account of assessment u/s 143(3), the interest granted in earlier year gets substituted and it is the reduced amount of interest that would form part of income of that year. Thus, it would amount to mistake rectifiable under Section 154 of the Act. Reliance can be placed on Avada Trading Co. (P.) Ltd. 2006 (1) TMI 465 - ITAT MUMBAI This certainly leads to conclusion that Section 154 proceedings can be held in matters of calculation of the interest component payable u/s 244A of the Act. Admittedly, in the case in hand the refund has been credited on 25 February 2021 while the refund was determined on 20 February 2009. So assessee was entitled to interest up to 25/02/2021, which should have been rectified by the AO. Therefore we are inclined to allow the grounds raised. Issues Involved:
The appeal involves the determination of interest under section 244A on refund, jurisdiction of assessing officer to re-determine interest, and the maintainability of petition under section 154 of the Income Tax Act, 1961. Issue 1: Determination of Interest under Section 244A on Refund The assessee appealed against the order dismissing the appeal by the CIT-A on the grounds that re-determination of interest under section 244A on refund is beyond the scope of section 154 as it involves investigation of facts. The assessing officer had passed the order under section 154 against the application of the assessee for re-determination of interest under section 244A. The Tribunal found that the refund determined already included interest under section 244A, and the AO should rectify the calculation of interest payable to the assessee. The Tribunal relied on legal precedent to conclude that section 154 proceedings can address matters related to the calculation of interest under section 244A. Consequently, the appeals were allowed, directing the AO to allow interest under section 244A up to the respective dates of credit of refunds in the account of the assessee. Issue 2: Jurisdiction of Assessing Officer to Re-Determine Interest The assessee contended that if the jurisdiction of the assessing officer to re-determine interest under section 244A requires an examination of facts not covered under "mistake apparent from record" under section 154, the assessing officer should be directed to quash the order under section 154 as void ab initio. The Tribunal found that the assessing officer should rectify the calculation of interest payable to the assessee, as the refund already included interest under section 244A. The Tribunal held that the AO was entitled to allow interest under section 244A up to the respective dates of credit of refunds in the account of the assessee. Issue 3: Maintainability of Petition under Section 154 The CIT(A) sustained the order of the AO on the basis that as there was no mistake apparent on record, the petition under section 154 of the Act was not maintainable. However, the Tribunal disagreed with this observation, stating that the question was not about rectifying the determination of interest under section 244A but about the period for which the interest should have been paid. The Tribunal concluded that the matter was within the purview of section 154 for rectification of a clerical nature arising from a mistake in the calculation of the interest payable to the assessee.
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