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TMI Blog2024 (9) TMI 288X X X X Extracts X X X X X X X X Extracts X X X X ..... revision of interest u/s 244A ignoring the fact that the AO has issued notice u/s 154 of the Act giving opportunity to assessee and the assessee had given its NOC before passing rectification order u/s 154 of the Act before revising the interest u/s 244A of the Act ? (ii) Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in allowing the assessee's appeal and allowed the grounds of assessee that the refund arising out of the order giving effect to order of appellate authority shall first be adjusted against interest payable to the assessee and balance, if any, shall be adjusted towards tax payable, for the purpose of calculating interest u/s 244A of the Income tax Act, 1961? (iii) Whether on the facts and circumstances of the case, the Ld. CIT(A) is justified in directing the AO to compute refund and interest u/s 244A as per plea of assessee ignoring the fact that any such calculation of Interest u/s 244A would amount to paying of compound interest Le. interest on interest which is not allowed by the law? law, the learned CIT(A): 2.1. Grounds taken by the assessee in ITA No.3057/Mum/2024 are reproduced as under: "1. Erred in direct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted at Rs. 3,84,53,894/-. 4.1. Thereafter notice u/s 154 dated 21.02.2017 was issued suo motto by the ld. Assessing Officer to the assessee for rectifying a mistake apparent from record wherein the Book Profit u/s 115JA was to be computed at Rs. 104,58,23,825/-instead of Rs 104,28,23,825/- as stated in the order giving effect dated 28.04.2014. Assessee vide letter dated 28.02 2017 submitted a reply stating that it had no objection to the proposed rectification of book profit u/s 115JA. 4.2. Assessee claims that there was no approval given by it towards rectification of interest u/s 244A, which was carried out unilaterally by the AO without giving any notice/opportunity as per the provisions of Section 154(3) of the Act. Ld. Assessing Officer in his order u/s 154 dated 28.05 2018 has rectified the book profit u/s 115JA and computed the same at Rs 104,58,23,825/-. However, further to the aforesaid rectification, ld. AO also reduced interest u/s 244A to Rs. 3,08,72,267/- instead of Rs. 3,84,53,894/- computed in the earlier order dated 28.04.2014. Thus the AO withdrew interest u/s 244A of Rs 75,81,627 (3,84,53,894 -3,08,72,267) which according to the assessee is without giving any no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to do so and the assessee had been allowed a reasonable opportunity of being heard. 6.2. In the present case, before us, as observed in the above paragraphs, there is no whisper about the proposition for amendment to interest due to the assessee u/s. 244A which has been reduced by the ld. Assessing Officer. According to us, such an amendment to interest u/s. 244A is without giving an opportunity to the assessee. In this connection, it is submitted that the impugned order u/s 154 specifically mentions the below: "4. Further, on perusal of record it is also seen that while computing the tax liability on income as per order giving effect to the order of ITAT dated 28.04.2014, interest u/s 244A of the Act was excess granted by Rs. 73,98,822/-. As the mistake is apparent from record, the same is hereby rectified u/s 154 of the Act." 6.3. From the above para, it is clear that the rectification of interest u/s 244A is qua the order giving effect to the order of ITAT order dated 28.04.2014 and not the impugned order u/s 154 dated 28.05.2018 and thus it is not mere recalculation of interest due to change in total income as contended by the ld. Sr.DR. 7. On the contention of the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. 7.1. Based on the above working and submission, assessee contended that adjustment of refund first towards interest payable and balance towards principal portion of tax, if any, does not tantamount to paying of compound interest, as alleged by the Revenue. On principles of equity, assessee drew analogy from the provision contained in explanation to section 140A(1) to fortify its contention u/s. 244A. It was submitted that interest payable under Section 234B and 234C become part of the demand notice, issued under Section 156 and it is on this amount, i.e., the tax payable plus interest payable under Sections 234B and 234C that interest under Section 220(2) is calculated from the date mentioned in the notice of demand till the date of actual payment. Under Explanation to Section 140A(1), it is stipulated where the amount paid by an assessee under self-assessment falls short of the aggregate amount of tax and interest aforesaid, the amount paid shall first be adjusted towards the interest payable and the balance, if any, shall be adjusted towards the tax payable. 7.2. Thus, from the above, it was submitted that where the amount of tax demanded is paid by the assessee, then it sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is aggrieved by delayed payment can legitimately claim interest under the statute and that no other interest on such statutory interest is payable. 9. We have heard the rival contentions and perused the material placed on record. We have also gone through the written submissions placed by both the parties before us including the detailed working of computation of interest u/s. 244A, both as contented by the assessee and as by the Revenue. We find that assessee has raised the ground before us stating that refund granted to the assessee is to be first adjusted against the correct amount of interest due on that day and thereafter the leftover portion should be adjusted with the balance tax. This is more so when the refunds were issued to the assessee in parts. According to the assessee, ld. Assessing Officer has reduced the interest only to the extent it was determined at the point of issuance of the earlier refunds, thus leading to larger adjustment of the refund towards the tax component as against the interest component. 9.1. We also take note of the analogy drawn by the assessee in terms of explanation to section 140A(1). We note that there is no such specific provision u/s. 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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