2017 (1) TMI 1779 - AT - Income Tax

Tribunal Allows Interest Claim Under Section 244A for Assessments; Dismisses Delayed Payment Interest

Indo Gulf Corporation Ltd. (Since Amalgamated with Hindalco Industries Ltd.) Versus Asstt. Commissioner of Income Tax Range–3, Lucknow, Presently assessed with DCIT, Mumbia

Indo Gulf Corporation Ltd. (Since Amalgamated with Hindalco Industries Ltd.) Versus Asstt. Commissioner of Income Tax Range–3, Lucknow, Presently assessed ... Issues:1. Claim of interest under section 244A of the Income Tax Act, 1961.2. Claim of interest on delayed payment of interest under section 244A of the Act.Issue 1: Claim of interest under section 244A of the Income Tax Act, 1961:The appeals were against orders passed by the Commissioner (Appeals) for the assessment years 1999-2000 and 2000-01. The common issue was the claim of interest under section 244A of the Act. The Tribunal consolidated the appeals as they involved the same assessee and similar facts. In the assessment year 1999-2000, penalty was imposed under section 271(1)(c) but later deleted by the Tribunal, resulting in a refund to the assessee. The Assessing Officer calculated interest under section 244A till December 2010, but the assessee sought interest till the refund voucher issuance in May 2011. The Tribunal had previously ruled in favor of the assessee in a similar case for the assessment year 1997-98, a decision upheld by the High Court. The Tribunal, in this case, directed the Assessing Officer to allow interest under section 244A till the refund voucher date, applying the same ruling to the assessment year 2000-01.Issue 2: Claim of interest on delayed payment of interest under section 244A of the Act:The assessee claimed interest on delayed payment of interest under section 244A for both assessment years. However, the Supreme Court's decision in CIT v/s Gujarat Fluro Chemicals Ltd. held that interest under section 244A is the only interest permissible on refunds, disallowing any interest on interest. The Tribunal, based on this ruling, dismissed the assessee's claim for interest on delayed payment of interest under section 244A for both assessment years. Consequently, the appeals were partly allowed, with the Tribunal ruling in favor of the assessee for the first issue regarding interest under section 244A but dismissing the claim for interest on delayed payment of interest under the same section.This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, relevant legal precedents, and the Tribunal's decision on each issue.