2022 (6) TMI 836 - AT - Income Tax

Tax Tribunal Upholds Order Adjusting Refunds, Emphasizes Correct Computation

The Tribunal dismissed the Revenue's appeals challenging the Commissioner's order to adjust refunds first against the interest component and then towards ... Computation of refund and interest thereon under section 244A - HELD THAT:- We find that the Hon'ble Supreme Court in Gujarat Fluoro Chemicals [2013 (10) TMI 117 - SUPREME COURT] was considering the correctness or otherwise of the decision of the Hon'ble Supreme Court in Sandvik Asia Ltd. [2006 (1) TMI 55 - SUPREME COURT] - The Hon'ble Supreme Court, while clarifying, held that under section 244A of the Act, interest provided for under the statute can only be claimed by the assessee from the Revenue and no other interest on such statutory interest is payable. Also see M/S. GRASIM INDUSTRIES LTD. VERSUS DCIT CEN CIR 1 (4) , MUMBAI AND (VICE-VERSA) [2021 (2) TMI 526 - ITAT MUMBAI] AND UNION BANK OF INDIA VERSUS ACIT LTU, MUMBAI [2016 (8) TMI 688 - ITAT MUMBAI] The present case is not a case where interest on interest due was claimed by the assessee. The issue arising in the present case is regarding correct computation of refund. As per the Revenue, while computing the refund and interest thereon under section 244A of the Act, the refund already granted to the assessee should be adjusted against the tax component. However, as per the assessee, the refund already granted to the assessee should be first adjusted against the interest component and balance, if any, towards the tax component of the refund due. We find no infirmity in the directions issued by the learned CIT(A). Accordingly, grounds raised by the Revenue, which are common in all the years under consideration, are dismissed. Issues:Challenge to the order passed under section 250 of the Income Tax Act, 1961 for assessment years. Adjustment of refunds towards interest and tax components. Correct computation of interest and refund.Analysis:The appeals filed by the Revenue challenge the order passed by the Commissioner of Income Tax (Appeals) for assessment years. The appeals involve common grounds related to the adjustment of refunds towards interest and tax components. The Revenue contests the direction given by the Commissioner to adjust refunds first against the interest component and then towards the tax component. The Revenue argues that this method results in interest on interest, contrary to the decision of the Supreme Court in a specific case.In a previous round of proceedings, relief was granted to the assessee by the Tribunal, and the Assessing Officer determined the refund payable. The Commissioner directed the Officer to re-compute the interest granted under section 244A by adjusting the refunds already granted against the interest component. The Revenue challenges this direction, claiming it leads to interest on interest.During the hearing, the Revenue argued that the direction results in interest on interest, contrary to a Supreme Court decision. The assessee's representative contended that the direction aligns with previous Tribunal decisions favoring taxpayers. The Tribunal analyzed the Supreme Court decision and previous Tribunal judgments, emphasizing the correct computation of refunds. It referred to cases where refunds were to be adjusted against interest due first, then towards the tax component, not leading to interest on interest.The Tribunal cited precedents where refunds were to be first adjusted against interest due, then towards tax, without resulting in interest on interest. It directed the Assessing Officer to compute the correct interest payable to the assessee and adjust refunds accordingly. The Tribunal found no issue with the Commissioner's direction based on settled precedents in favor of the assessee. Consequently, the Revenue's appeals were dismissed.