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<h1>Interest Recalculation on Tax Refunds: remand for fresh adjudication, recalculation using extant law and specified timelines.</h1> The note addresses rectification of tax-orders where a subsequent Supreme Court decision reversed earlier precedent; it prescribes remand for fresh ... Additional interest u/s 244(1A) - application u/s 154 rejected -adjudication in view of the subsequent decision of the Supreme Court - High court decision overturned by Supreme court - HELD THAT: - Reasoning of impugned order rejecting the petitioner’s application for interest was based upon the judgment of Bombay High Court rendered in the case of Sandvik Asia Ltd [2004 (1) TMI 45 - BOMBAY HIGH COURT] which judgment and the same has been reversed by Hon’ble the Supreme Court [2006 (1) TMI 55 - SUPREME COURT] Final Conclusion: Writ petition allowed - order dismissing the Section 154 application for additional interest under Section 244(1A) is quashed and the matter is remitted to the competent authority to pass a fresh order within three months, applying the law as clarified by the Supreme Court and taking into account extant interest provisions and rate. Issues: Whether the order dated 20.01.2005 dismissing the petitioner's application under Section 154 of the Income-tax Act, 1961 for additional interest under Section 244(1A) of the Income-tax Act, 1961 should be quashed and remanded for fresh adjudication in view of the subsequent decision of the Supreme Court in Sandvik Asia Ltd.Analysis: The Court examined the impugned order rejecting the rectification application for additional interest and considered that the order was founded on a High Court decision which has since been reversed by the Supreme Court. The Court directed that on remand the competent authority shall pass a fresh order within three months after receipt of a certified/web copy of this order. While recalculating interest the competent authority or Assessing Officer must apply the extant legal provisions, including the applicable rate of interest from time to time. For the assessment year in question, the Court provided an operable timeline and specified a contingency interest rate if compliance is delayed.Conclusion: The impugned order dated 20.01.2005 is quashed and the matter is remanded to the competent authority for fresh disposal in favour of the assessee; the competent authority is directed to pass a fresh order within three months and to take into account applicable provisions and rates while calculating interest; in case of non-compliance the order shall carry interest as directed by the Court.
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