Delay in claiming subsidy affects interest calculation; Tribunal directs interest payment from ground raised to CIT(A) decision.

The Tribunal held that the delay in claiming the TUFS subsidy as a capital receipt was attributable to the assessee. Consequently, the period from the start of the assessment year to the date the additional ground was raised before the CIT(A) was excluded from interest calculation. The assessee was entitled to interest from the date the additional ground was raised to the date of the CIT(A)'s order, and the AO was directed to allow interest for this period. The Revenue's appeal was partly allowed based on these findings.

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Issues Involved:
1. Entitlement to interest under Section 244A on refund due to TUFS subsidy treated as capital receipt.
2. Attribution of delay in refund to the assessee.
3. Applicability of Section 244A(2) in excluding the period for interest calculation.

Issue-wise Detailed Analysis:

1. Entitlement to Interest under Section 244A:
The primary issue was whether the assessee is entitled to interest under Section 244A on the refund arising from the TUFS subsidy, which was treated as a capital receipt for the first time at the appellate level. The Tribunal noted that the TUFS subsidy was claimed as exempt during the appellate proceedings and not during the initial return filing or assessment proceedings. The Ld. CIT(A) had directed that the TUFS subsidy received from the Ministry of Textiles be treated as a capital receipt, which was upheld by the Tribunal in a previous order.

2. Attribution of Delay in Refund to the Assessee:
The Revenue argued that the delay in issuing the refund was attributable to the assessee because the claim regarding the TUFS subsidy was not made in the original return or during assessment proceedings but was introduced as an additional ground during the appeal. The AO had allowed interest on the refund only from the date of the CIT(A)'s order to the date of the actual refund, excluding the period from the start of the assessment year to the CIT(A)'s order, attributing this delay to the assessee.

3. Applicability of Section 244A(2):
The Tribunal discussed whether the delay in proceedings resulting in the refund was attributable to the assessee under Section 244A(2). The Tribunal referred to various High Court decisions, including the Hon'ble Gauhati High Court in CIT vs. Assam Roofing Ltd. and the Hon'ble Punjab & Haryana High Court in National Horticulture Board vs. Union of India, which supported the view that if the delay is attributable to the assessee, the period should be excluded from interest calculation. However, the Tribunal also considered decisions from other High Courts that favored the assessee, such as the Hon'ble Gujarat High Court in Ajanta Manufacturing Ltd. vs. DCIT and the Hon'ble Bombay High Court in CIT vs. Melstar Information Technology Ltd., which held that the mere act of making a claim at a later stage does not constitute a delay attributable to the assessee.

Conclusion:
The Tribunal, bound by the jurisdictional High Court's decision, followed the Hon'ble Punjab & Haryana High Court's ruling in National Horticulture Board vs. Union of India. It concluded that the delay in claiming the TUFS subsidy as a capital receipt was attributable to the assessee and thus excluded the period from the start of the assessment year to the date the additional ground was raised before the CIT(A) from the interest calculation. Consequently, the assessee was entitled to interest from the date the additional ground was raised (04/10/2016) to the date of the CIT(A)'s order (18/01/2019), and the AO was directed to allow interest for this period. The appeal of the Revenue was partly allowed in light of these directions.

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