1990 (5) TMI 78 - AT - Income Tax

ITAT Hyderabad-B: Interest under Section 214 granted on refund post-appellate recomputation

The Appellate Tribunal ITAT Hyderabad-B held that interest under section 214 could be granted on a refund resulting from a recomputation of income ... Revision, Refund Of Advance Tax, Powers Of Commissioner Issues:1. Whether interest under section 214 can be granted on a refund arising from a recomputation of income due to an appellate order.2. Whether the Commissioner's order setting aside the interest granted by the Income-tax Officer was justified.3. Whether the order of the Income-tax Officer was prejudicial to the revenue and required reconsideration.Detailed Analysis:1. The appeal before the Appellate Tribunal ITAT Hyderabad-B involved the question of whether interest under section 214 of the Income-tax Act, 1961 could be granted on a refund resulting from a recomputation of income following an appellate order. The Commissioner of Income-tax contended that interest under section 214 was only applicable to refunds arising from regular assessments, not recomputations due to appellate orders. The Commissioner relied on a decision of the Andhra Pradesh High Court to support this position. However, the assessee argued that the interest should be granted under section 244(1A) of the Act, which was overlooked by the Commissioner. The Tribunal noted the conflict and observed that the Income-tax Officer might have granted interest under the correct section, even if not explicitly stated in the order.2. The Tribunal considered the arguments presented by both parties regarding the justification of the Commissioner's order setting aside the interest granted by the Income-tax Officer. The revenue contended that the Income-tax Officer's order was erroneous and not in line with the High Court decision, justifying the Commissioner's intervention. However, the Tribunal emphasized that an order should not only be erroneous but also prejudicial to the revenue to warrant interference under section 263 of the Act. The Tribunal found that the question of whether the Income-tax Officer's order was prejudicial to the revenue had not been adequately addressed by the Commissioner, especially in light of the assessee's entitlement to interest under a different section of the Act. Therefore, the Tribunal set aside the Commissioner's order and remitted the matter for reconsideration.3. In conclusion, the Tribunal allowed the appeal for statistical purposes and directed a reconsideration of the issue by the Commissioner in light of the observations made. The Tribunal highlighted the importance of ensuring that orders are given effect promptly and in accordance with the relevant provisions of the Act, emphasizing the need for a thorough assessment of whether an order is prejudicial to the revenue before intervention under section 263.