2023 (8) TMI 1070 - AT - Income Tax

Assessee wins interest on refund under Income-tax Act as Tribunal dismisses AO's appeal

DCIT, Circle 3 (3) (1) Office of the Dy. Commissioner of Income Tax-Circle 3 (3) (1), Mumbai Versus M/s Small Industries Development Bank of India SME development Centre

The Tribunal upheld the decision of the CIT (A) and ruled in favor of the assessee, directing the Assessing Officer to grant interest under section 244A ... Computation of Interest u/s 244A - Interest to be allowed up to which date? - HELD THAT:- When the refund is issued to the assessee, the interest u/s 244A is required to be computed up to the date on which the refund order is received by the assessee. This is the mandate of case of PFIZER LIMITED [1991 (3) TMI 121 - BOMBAY HIGH COURT] . Therefore, this issue is squarely covered in favour of the assessee. Issues involved:The judgment deals with the issue of granting interest to the assessee under section 244A of the Income-tax Act, 1961, specifically focusing on the period for which interest should be calculated, i.e., up to the date of receipt of the refund order by the assessee.Details of the judgment:Issue 1: Calculation of interest under section 244A of the ActThe Deputy Commissioner of Income tax, Circle 3 (3) (1), Mumbai filed an appeal against the appellate order passed by the National faceless appeal Centre Delhi, where the appeal filed by the assessee against the order passed under section 154 of the Act was allowed. The Assessing Officer was aggrieved by the direction to grant interest to the assessee under section 244A of the Act for the period from January 2019 to May 2019. The Assessing Officer contended that interest should be granted only up to the date of the grant of refund and not up to the date of actual receipt by the assessee. The assessee, on the other hand, argued that interest should be calculated up to the date of receipt of the refund order. The learned CIT (A) supported the assessee's claim based on legal precedents and directed the Assessing Officer to grant interest up to the date of receipt of the refund order.Issue 2: Legal interpretation and application of precedentsThe Assessing Officer, citing the provisions of section 244A of the Act, argued that interest should be granted only up to the date of the refund grant and not the date of receipt of the refund order. Conversely, the Authorized Representative highlighted that the CIT (A) decision was in line with the judgments of the Hon'ble Bombay High Court. The Tribunal considered the contentions of both parties and examined the orders of the lower authorities. It was observed that legal precedents, including the decisions of the Hon'ble Bombay High Court and previous cases involving the same assessee, supported the assessee's entitlement to interest under section 244A of the Act up to the date of receipt of the refund order. Consequently, the Tribunal dismissed the grounds of appeal raised by the Assessing Officer and upheld the CIT (A) decision to grant interest to the assessee up to the date of receipt of the refund order.Conclusion:The Tribunal ruled in favor of the assessee, affirming the direction of the CIT (A) to grant interest under section 244A of the Act up to the date of receipt of the refund order. The appeal of the Assessing Officer was dismissed, and the decision was pronounced in the open court on 22.08.2023.