1985 (1) TMI 124 - AT - Income Tax

Tribunal grants interest to appellant company on refund appeal, emphasizing legal principles

The Tribunal allowed the appeal, directing the payment of interest to the appellant company for the refund. The decision emphasized the significance of ... Assessee's Appeal, Interest On Refund, Tribunal's Order Issues:Appeal against rejection of interest claim under section 244(1A) of the Income-tax Act, 1961.Detailed Analysis:1. The appeal was directed against the Commissioner (Appeals) order regarding the assessment year 1975-76, specifically challenging the rejection of the assessee's claim for interest payable by the Government under section 244(1A) of the Income-tax Act, 1961. The IAC's decision was contested due to the lack of appeal provision under section 246(1)(c) of the Act.2. The assessee raised three contentions in the appeal before the Commissioner (Appeals), including the denial of deduction for entertainment expenses, the interest claim under section 244(1A), and the credit for tax deducted at source. The Commissioner (Appeals) allowed the deduction for entertainment expenses and directed examination of the tax deducted at source claim.3. The rejection of the interest claim for the refund was based on the Commissioner (Appeals)'s interpretation that there was no provision for appeal against the IAC's decision on interest under section 244(1A). The authorized representative argued citing the judgment in CIT v. Mahabir Parshad & Sons that the rejection was erroneous.4. The principle established in Mahabir Parshad & Sons' case clarified that appeals under section 246(c) are not limited to specific grounds but can contest any findings in the assessment order. Section 246(2) extends the right to appeal before the Commissioner (Appeals) against specified orders made by the IAC.5. The judgment emphasized that the Commissioner (Appeals) erred in rejecting the interest claim ground solely based on the absence of a specific appeal provision under section 246(2). The assessee had a valid appeal, and the rejection was deemed incorrect.6. The appellant's representative also referred to other judgments to support the contention that the interest claim should not have been rejected. However, the Tribunal decided to follow the binding authority of Mahabir Parshad & Sons' case and directed the IAC/Assessing Officer to pay interest to the appellant company for the refund in question.7. Ultimately, the Tribunal allowed the appeal, overturning the Commissioner (Appeals) decision and ruling in favor of the assessee regarding the payment of interest on the refund. The judgment highlighted the importance of following established legal principles and binding authorities in making decisions.Conclusion:The Tribunal allowed the appeal, directing the payment of interest to the appellant company for the refund, emphasizing the importance of adhering to legal principles established by binding authorities.