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TMI Blog2024 (5) TMI 701X X X X Extracts X X X X X X X X Extracts X X X X ..... decided by the Tribunal. We are satisfied that it has not been passed by applying the principles laid down in the case of India Trade Promotion Organisation V/s. [ 2013 (9) TMI 451 - DELHI HIGH COURT] Therefore, we hereby quash and set aside the order dated 26th August 2019. The matter is remanded to an AO, who shall compute interest payable to petitioner u/s 244A of the Income Tax Act, 1961 by strictly applying the principles laid down in India Trade Promotion Organisation [ 2013 (9) TMI 451 - DELHI HIGH COURT] as directed by ITAT and by this Court. Therefore, though one may call it as interest on interest, in reality payment of interest on the unpaid amount occurs because of non-payment of the total amount refundable, which is due and payable to the assessee consisting of the tax, which had to be refunded and the interest accrued on the delayed refund of the tax. The principal amount and the interest due to be added and treated as primary amount and interest becomes due and payable on this primary amount. It will be incorrect to treat it as compounding of interest. If this interpretation or approach is taken it would ensure that the AO/Revenue refund the entire amount, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , he exceeded his brief virtually coming to the conclusion that the Tribunal was not justified in issuing such directions and distinguishing the ratio of the decision of the Delhi High Court in case of India Trade Promotion Organisation (supra). xxxxxxxxxxxxxxxxxx 10. Under the circumstances, impugned order dated 15th November, 2018 is set aside. The Assessing Officer is directed to compute the interest payable to the petitioner under section 244A of the Act by applying the principles laid down by the Delhi High court in case of India Trade Promotion Organisation as directed by the Tribunal. This shall be done within a period of six weeks from the date of copy of the receipt of this order. Before closing we clarify that nothing stated in this order shall prejudice the Department in pursuing to its Income Tax Appeal assessment order passed by the Tribunal and interest which would be paid shall be subject to outcome of such appeal. (emphasis supplied) 2 Having considered the impugned order dated 26th August 2019, we are satisfied that it has not been passed by applying the principles laid down by the Delhi High Court in the case of India Trade Promotion Organisation V/s. Commis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nterest becomes due and payable on this primary amount. In other words, interest stands capitalised. We further note that it is not a case of compounding of interest as understood except once, i.e., on the date when it is quantified, i.e., when part refund payment is made by the Revenue. Therefore, it will be wrong to call it and treat it as compounding of interest. xxxxxxxxxxxxxx 9. The words used in the Section 244A are 'where refund of any amount becomes due and payable to the assessee under the Act', the assessee shall be entitled to receive in addition to the said amount simple interest calculated in the manner stipulated. The Legislature has not used the words 'tax paid' or 'the principal amount of tax paid'. The words used by the Legislature are 'any amount' and 'said amount'. The words are, therefore, much wider and broader than the tax amount, which is to be refunded. The words 'any amount' would include within its scope and ambit the interest element, which has accrued and is payable on the date of the refund. Thus, when the Revenue does not pay full amount of refund but part amount is paid, they will be liable to pay interest on the balance outstanding amount. The ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ude interest due and payable on the amount refunded, the Revenue would be liable to pay interest on the shortfall. This does not amount to payment of interest on interest. An example will clarify the situation and help us to understand what is due and payable under Section 244A of the Act. Suppose Revenue is liable to refund Rs. 1 lac to an assessee with effect from 1st April, 2010, the said amount is refunded along with interest due and payable under Section 244A on 31st March, 2013, then no further interest is payable. However, if only Rs. 1 lac is refunded by the Revenue on 31st March, 2013 and the interest accrued on Rs. 1 lac under Section 244A is not refunded, the Revenue would be liable to pay interest on the amount due and payable but not refunded. Interest will not be due and payable on the amount refunded but only on the amount which remains unpaid, i.e, the interest element, which should have been refunded but is not paid. In another situation where part payment is made, Section 244A would be still applicable in the same manner. For example, if Rs. 60,000/- was paid on 31st March, 2013, Revenue would be liable to pay interest on Rs. 1 lac from 1st April, 2010 till 31st M ..... X X X X Extracts X X X X X X X X Extracts X X X X
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