1989 (8) TMI 101 - AT - Income Tax

Interest Refunds Excluded from Section 244(1A) - Appeals Dismissed

The Tribunal held that interest under section 244(1A) is not applicable to interest refunds, only to tax or penalty refunds. Therefore, the appeals ... Accumulated Profits, Assessment Year, Capital Gains, Deemed Dividend, Failure To Disclose Issues:- Entitlement to interest under section 244(1A) on refunded amounts paid as interest under sections 215, 217(1A), and 220(2).Detailed Analysis:1. The appeals consolidated and heard together were against the orders of the Commissioner of Income-tax (CIT) under section 263 regarding the entitlement of interest under section 244(1A) on refunded amounts paid as interest under sections 215, 217(1A), and 220(2).2. The question revolved around whether the assessee was entitled to interest under section 244(1A) on amounts refunded after paying interest under sections 215, 217(1A), and 220(2) due to subsequent reductions in assessed income.3. The provisions of section 244 allow interest on refunds due to the assessee, with sub-section (1A) specifying interest on amounts paid in excess of tax or penalty found to be refundable, effective from 1-10-1975.4. The Tribunal considered precedents but emphasized that interest under section 244(1A) applies only to refunds of tax or penalty paid in excess, not to interest amounts paid by the assessee.5. The Tribunal differentiated between sub-sections (1) and (1A) of section 244, highlighting that interest under (1A) is limited to tax or penalty refunds, not interest payments.6. Citing the decision of the Kerala High Court, the Tribunal reiterated that interest under (1A) is specific to tax or penalty refunds, not applicable to interest refunds like those paid under sections 215, 217(1A), and 220(2).7. The Tribunal concluded that interest under section 244(1A) is not applicable to interest refunds, leading to the dismissal of the assessee's appeals challenging the CIT's orders under section 263.8. The Tribunal upheld the CIT's decision to withdraw the interest allowed by the Income Tax Officer (ITO) under section 244(1A) on the refunded interest amounts paid under sections 215, 217(1A), and 220(2) due to being prejudicial to the revenue's interests.