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TMI Blog2017 (8) TMI 527X X X X Extracts X X X X X X X X Extracts X X X X ..... unds were pure question of law. The Departmental Representative(DR) left the issue to the discretion of the Bench. After going through the additional grounds, we find that same do not require establishing of new facts. Therefore, we admit additional grounds raised by the assessee. 3.Effective ground of appeal is about withdrawal of interest, u/s.244 of the Act, amounting to Rs. 23.91 crores, for the year under consideration. In this case assessment order, u/s.143 (3) was completed on 28/03/1988, whereby the AO determined the total income of the assessee at Rs. 26,49,72,490/-and raised a net additional demand of Rs. 1.48 crores. The order was subject matter of various modifications as under: Sr. No. Nature of A.O.'s order Date of AO's Order 1. 2. 3. 1. Order Giving Effect to CIT(A)'s Order dt.21.02.2003 ("1st Consequential Order') 18.03.2005 2 Order u/s.154 of the I.T. Act, 1961 ("1st Rectification") 11.11.2005 3. Order Giving Effect to ITAT's Order dt.27.02.2009 ("2nd Consequential Order') 26.03.2010 4. Order u/s.154 of the I.T. Act, 1961 ("2nd Rectification") 07.12.2011 By the 2nd consequential order of ITAT the assessee was granted interest u/s.24 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es in its submissions, that same were to be verified from the records. He directed the AO to follow the decision of the Hon'ble Apex Court in the case of HEG Ltd.(supra), and recomputed the excess interest if any. He also issued direction to the AO that while following judgment of Hon'ble Supreme Court and the interest granted u/s.244 along with refunds should not be deducted while computing the principal amount on which the assessee would be entitled to interest for subsequent period. 5. During the course of hearing before us, the AR argued that initiation of proceedings on one ground and conclusion of such proceedings on another ground rendered the conclusion illegal and without jurisdiction, that the rectification order was initiated for withdrawal of interest u/s.244(1A), that the AO withdrew the interest, while passing the order u/s. 154 of the Act u/s.244A(3) of the Act, that the FAA had not passed speaking order with regard to Ground No.1-6, that in all the six grounds different arguments were advanced, that there was no mistake in the order of the AO which could have been rectified invoking the provisions of section 154 i.e. the order granting refund to the assessee, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,97,404. As the amount actually refunded was more, the Income-tax Officer raised a demand for Rs. 4,63,548. On the refundable sum of Rs. 14,33,856, the petitioner was granted Rs. 14,339 as interest under section 214 of the Act. The net sum payable by the petitioner was determined at Rs. 4,49,209. Against the order of assessment dated October 16, 1976, the petitioner preferred an appeal to the Commissioner of Income-tax (Appeals). It was partly allowed. Giving effect to the order of the Commissioner of Income-tax, the Income-tax Officer revised the income of the petitioner by reducing it from Rs. 92,54,730 to Rs. 90,47,200 and granted Rs. 33,124 as interest under section 244(1A). As the petitioner was not granted all the reliefs which he wanted, he preferred an appeal to the Income-tax Appellate Tribunal. The Tribunal, by its order dated August 19, 1980, granted some more reliefs and in pursuance thereof, the Income-tax Officer passed a consequential order on November 26, 1981, determining the revised total income of the petitioner at Rs. 81,33,650. He also granted refund of income-tax of Rs. 5,27,575. 3. As no interest was granted on the said sum, the petitioner made an application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 44(1A), as that is not necessary for the purpose of these cases, Sub-section (1A) was inserted in section 244 by the Taxation Laws (Amendment) Act, 1975, with effect from October 1, 1975. It is submitted that this provision came to be inserted in the Act as the Legislature felt the necessity of making such a provision. It was also aware of section 139(8)(b)(ii), section 244(1A) and section 215(3)(ii), as they stood before they were amended with effect from April 1, 1985. Yet, while inserting sub-section (1A) in section 244, the Legislature did not think it desirable to make a similar provision in section 244 also. Presumably, that was for the purpose of inducing the assessees to pay the assessed tax immediately. 10. It was submitted by learned counsel for the Revenue that liability to pay interest under section 244(1A) does not arise till an order is passed in final appeal or proceeding and, as a result thereof, it is found that the assessee has paid more than the tax payable under the Act. Therefore, interest paid to the assessee under section 244(1A) pending final determination become refundable to the Government, if, as a result of the final order, it is found that the same o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest, penalty, fine or any other sum is payable in consequence of any order passed under the Act, the Assessing Officer shall serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable. The order which is contemplated by that section is the order which the Assessing Officer is competent to pass under the Act. As pointed out earlier, there was no provision in the Act which authorised an Assessing Officer to pass an order directing the assessee to refund interest paid to him under section 244(1A). Therefore, even under this section, the impugned action cannot be justified. 14. Possibly realising this difficulty and also for making the law more complete and clear, the Legislature has now inserted section 244A in the Act with effect from April 1, 1989. For the assessment year commencing from April 1, 1989, and subsequent assessment years, the said provision is now applicable. That is also indicative of the fact that the Legislature, realising the necessity of such a provision in the absence of which interest paid under section 244(1A)could not be recovered, has now made an appropriate provision. One more thing that is required to be stated is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly computed the interest on the amount so reduced. In the original proceeding the Assessing Officer had accepted the claim of the I.T.A. No.5388-5396/Mum/2014 & I.T.A. 5373-5377/Mum/2014 A.Y. 1985-86, 1986-87, 1988-89, 1989-90, 1992-93,1994-95 & 1996-97 assessee that the tax portion of the refund already granted alone should be deducted from the total refund arising upon giving effect to the order passed by Income Tax Appellate Tribunal and accordingly granted interest. However the assessing officer, thereafter, passed the impugned rectifications orders u/s. 154 of the Act and reduced the amount of interest already paid u/s. 244A of the Act from the tax portion of refund due and the same has resulted in reduction of the interest due to the assessee. He submitted that the AO should have deducted only tax portion of refund already granted from the tax portion of total refund due. 6. The learned AR submitted that an identical issue was confirmed by the co-ordinate bench of Tribunal in the case of JCIT Vs. Tata Power Co. Ltd. (ITA No.6863/Mum/11 dated 06.03.2013), wherein the Tribunal had confirmed the order of learned CIT(A) in upholding that the interest element of refund grant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-90, 1992-93,1994-95 & 1996-97 quashed. Accordingly we set aside the order of Ld CIT(A) and quash the impugned rectification orders. 10. Even on merit we notice that claim of the assessee is supported by the decision of Hon'ble Bombay Court rendered in the case of Tata Power Co. Ltd. (Supra). It is also pertinent to note that the decision rendered by the Co-ordinate bench of Tribunal in the case of Tata Power Co. Ltd (supra) was available on the date of passing of impugned rectification orders. Accordingly, we are of the view that the assessee wins on merits also and accordingly we do not find any merit in the appeals filed by the revenue." 6.2. We further find that in case of Tata Power Company. Ltd.(ITA No.1560 of 2013) the Hon'ble Jurisdictional High Court has dealt with the similar issue. The question before the Court was as under :- "A. whether the Tribunal erred in law in holding that interest portion of refund arising out of order giving effect to the Appellate authority has to be ignored for the purposes of calculating interest u/s. 244A to the assessee." 6.3. The Hon'ble Court decided the issue as under :- "5. Being aggrieved, the respondent assessee carr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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