9911796707
TMI Blog2022 (3) TMI 957X X X X Extracts X X X X X X X X Extracts X X X X ..... hargeable to tax. 3. Tersely, the factual panorama of the case is that the assessee was granted refund of Rs. 11,47,73,740/- (inclusive of interest component of Rs. 1,18,37,651/-) pertaining to the assessment year 2012-13 on 12- 03-2014, i.e. within the financial year relevant to the assessment year under consideration. During the course of the assessment proceedings, the AO observed that interest amounting to Rs. 1.18 crore on income tax refund was not offered by the assessee for taxation. On being called upon to explain the reasons for non-inclusion, the assessee submitted that the interest on refund was suo motu adjusted by the Revenue against the demand for the assessment year 2009-10 without any intimation to the assessee and as such, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssuance of notice of demand for Rs. 29.53 crore. Such income-tax computation for the assessment year 2012-13 has been placed at page 120 of the paper book. It is discernible there from that the initial amount of tax and interest payable came at Rs. 26.23 crore. Thereafter, interest earlier paid u/s.244A of the Act amounting to Rs. 1,18,37,651/- was added along with interest u/s.234D at Rs. 2,00,85,405/-, thereby computing total demand at Rs. 29,53,23,650/-. Thus, it is apparent that the amount of interest on income-tax refund, which was granted to the assessee during the financial year relevant to the assessment year under consideration, was eventually recovered by the Revenue when the final assessment u/s.143(3) was completed for the A.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fore the due date specified under sub-section (1) of section 139'. It is pursuant to this provision that the assessee was granted refund of Rs. 1.18 crore during the year under consideration. In principle, interest on income tax refund is chargeable to tax in the year of its receipt. Sub-section (3) of section 244A provides that: `Where, as a result of an order under ..... sub-section (3) of section 143 ...., the amount on which interest was payable under sub-section (1) has been ... reduced, ... , the interest shall be ... reduced accordingly, and in a case where the interest is reduced, the Assessing Officer shall serve on the assessee a notice of demand ....'. Sub-section (3) says that where the amount of refund on which interest was com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssment later on, the assessee becomes liable to pay tax, the amount of refund earlier granted (inclusive of interest) shall be recovered along with interest. It is pursuant to this legal position that the full amount of interest granted earlier became returnable because of the latter assessment u/s 143(3) of the Act and the AO added the amount of interest earlier granted to the amount becoming due from the assessee on regular assessment u/s 143(3) of the Act besides interest u/s 234D computed at Rs. 2.00 crore. It will be a sheer twoway traffic, if, in the first instance, the amount of interest on income tax refund is included because of its receipt in the year and then it is reduced by rectification because of the obliteration of the incom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... receipt, then the amount of interest initially received on processing of return u/s.143(1) during the year under consideration would stand charged to tax twice, which is impermissible under the law. Had it been a case of the assessee receiving refund along with interest on 12.3.2014 simpliciter not followed by any regular assessment u/s.143(3), thereby assigning finality to the processing of return u/s 143(1), the amount of interest on income-tax refund would have merited inclusion in the total income of the year of receipt itself. Considering the totality of the facts and circumstances obtaining in this case, we are satisfied that the ld. CIT(A) was justified in holding that interest on income-tax refund amounting to Rs. 1.18 crore cannot ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
