9911796707
TMI Blog2001 (10) TMI 254X X X X Extracts X X X X X X X X Extracts X X X X ..... ir proper perspective. 2. (a) The learned Commissioner of Income-tax (Appeals) erred in confirming addition of Rs. 46,785, Rs. 44,025 and Rs. 15,630 in respective cases being interest granted to the appellant under section 244A as income of the appellant on receipt basis as against accrual method of accounting followed by the appellant. (b) The learned Commissioner of Income-tax (Appeals) failed to appreciate that interest granted along with intimation under section 143(1)(a) is subject to withdrawal when the case is selected for scrutiny and accordingly the recipient has no indefeasible right over the said income. (c) The learned Commissioner of Income-tax (Appeals) further failed to appreciate that the interest amounting to Rs. 46,785, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se to the interest income, where regular assessment is pending, the interest thereon cannot be termed to have accrued or arisen to the company. Accordingly the issues on which the refunds have resulted are pending for regular assessment, the interest on such refund cannot be taken as accrued. It is merely provisional receipt as regular assessment may result into withdrawal of the refund and related interest granted under section 244(1A). In all such cases, there is no absolute right to receive the amount at this stage. This treatment of recognising income only when it has finally accrued or arisen is also in conformity with the Accounting Standard issued by the Institute of Chartered Accountants of India." It was further claimed that the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sees. The assessees were following mercantile system of accounting. The arguments of the assessees were-(1) that no income accrued to the assessee in respect of interest under section 244A; (2) that no real income arose in the hands of the assessee; (3) that there was no perfection of the right to income represented by the interest under section 244A; (4) that even though the interest was received, it was accompanied by an obligation to refund it thus making it defeasible; and (5) that the ratio of the Syndicate Bank judgment is not applicable to the facts of the present case. The CIT(A) relied on Karnataka High Court in the case of CIT v. Syndicate Bank [1986] 159 ITR 464 holding that a receipt which is of revenue character must remain so ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he shall be entitled to the refund of the excess. The Assessing Officer by statutory powers conferred by the Income-tax Act is empowered to grant refund while processing return under section 143(1)(a). Having granted the refund, the provisions of section 244A(1)(b) becomp, automatically and mechanically applicable and the interest is to be worked and granted to the assessee. There is no provision in the Act which says that the interest granted is contingent. There is no provision that every section 143(1)(a) processing will be subject to scrutiny assessment under section 143(3). Consequently, the proceedings under section 143(1)(a) are separate and distinct statutory functions coupled with statutory obligations and entitlements. The assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer has to perform a statutory duty in processing the return under section 143(1)(a) as per the provisions of the Act. As a natural corollary, the tax is to be computed and the amount of refund has to be ascertained and as per the provisions applicable, the interest to which the assessee is entitled to the refund has to be granted. The processing of the return under section 143(1)(a) and granting of interest are distinct statutory functions which are unfettered and not based on any contingencies in the context of section 143(3) which may or may not be taken. Consequently the arguments of the assessee amount to conjectures and probabilities as against legal provisions. The case laws relied on by the learned counsel for the assessee are bas ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
