AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2015 (5) TMI 781
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....d wrongly withheld interest and accordingly the appellant is entitled for interest on interest. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (A) erred in ignoring the fact that the refund granted by department from time to time should be adjusted with interest due on date of grant of refund instead of same being adjusted with principal refund due. Interest under the act be computed and allowed accordingly. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (A) erred in affirming the decision of the AO for levying interest u/s 220(2) amounting to Rs. 19,17,846/-. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (A) erred in contending that no appeal under the IT Act can arise out of the order levying interest u/s 220(2)." 3. Besides this, the assessee has raised following as additional ground:- "On the facts and circumstances the department has erred in adjusting various refunds granted from time to time against the principal tax to be refunded at that time instead of adjusting it with interest outstanding and payable to appellant at the time of ....
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....te of the refund. Thus, when the Revenue does not pay full amount of refund but part amount is paid, they will be liable to pay interest on the balance outstanding amount. The balance outstanding amount may consist of the tax paid or the interest, which is payable till the payment of the part amount and interest payable on the principal amount, which remained outstanding thereafter......... 15 A reading of the aforesaid passage from the decision of the Supreme Court in R.E.G. Ltd. (supra) indicates that it would be incorrect and improper to regard payment of interest when part payment is made as interest on interest. What has been elucidated and clarified by the Supreme Court is that when refund order is issued, the same should include the interest payable on the amount, which is refunded. If the refund does not include interest due and payable on the amount refunded, the Revenue would be liable to pay interest on the shortfall. This does not amount to payment of interest on interest. An example will clarify the situation and help us to understand what is due and payable under section 244A of the Act. Suppose the Revenue is liable to refund Rs. 1 lakh to an assessee with effect fr....
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....ng Officer/Revenue can be made liable to pay interest when part payment is made and the entire amount, which is refundable is not paid to the asses- see. Otherwise the Assessing Officer/Revenue can refund the principal amount and not pay the interest component under section 244A for an unlimited period with impunity and without any sanction, which would amount to granting premium to a non-compliance with law." Thus, respectively following the aforesaid principle we direct the AO to adjust the refund in line of the principle laid down by the Hon'ble Delhi High Court. Accordingly, assessee's ground no. 3 and additional ground is treated as partly allowed for statistical purpose. 10. In Ground no. 4 and 5 the assessee has challenged the levy of interest u/s 220(2). Learned counsel submitted that the Ld.CIT(A) has not decided the issue on merits and as held that assessee had no right to prefer an appeal from the order levying interest u/s 220(2). He submitted that here-in-this case, the assessing officer while giving effect to the appellant order has charged interest u/s 220(2) as per the original demand notice even when the assessee had paid the entire taxes and interest. The said dem....
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....le. Nevertheless, in the case of CIT v. Chika Overseas (P.) Ltd. [2012] 209 Taxman 456/23 taxmann.com 315, Bombay High Court had considered a tax-appeal assailing levy of interest under Section 220(2) of the Act. Since there are conflicting decisions on this issue, we are of the opinion that CIT(Appeals) ought have considered the appeals of the assessee and disposed them of on merits, especially so, since assessee appear to be supported by the Circular No.334 dated 3.4.1982 of CBDT. We, therefore, set aside the orders of CIT(Appeals) and remit the issue of levy of interest under Section 220(2) of the Act back to his file for consideration afresh, in accordance with law." Accordingly, we set aside this issue to the file of the Ld.CIT(A), to decide this issue on merits and in accordance with the provisions of law. Accordingly, the appeal of the assessee is treated as partly allowed for statistical purpose. 12. Now, we will take up the appeal for A.Y. 2000-01, ITA No. 342/Mum/2013, wherein following grounds have been raised:- "On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (A) has grossly erred in confirming the order u/s 154 passed by A....
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....e Ruling of Hon'ble Apex Court in CIT vs. Tulsyan NEC Ltd. [237 CTR 105] & Hon'ble Jurisdictional High Court in Apar Industries Limited [231 ITR 313] that MAT credit was available for adjustment on the first day of assessment year and after the adjustment, refund if any arises, is entirely on account of excess TDS/ Advance Tax, for which the assessee is legally entitled to interest u/s 244A. 3. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (A) has grossly erred in fact in stating [in para 7] that appellant was granted interest u/s 244A completely ignoring the fact that no interest u/s 244A was granted to the appellant by the AO. 4. On the facts and circumstances of the case and in law, the learned Commissioner of Income Tax (A) has grossly erred in ignoring that your appellant was legally entitled for interest u/s 244A of Rs. 862,69,794/- on 25.09.2009 (which the department had wrongly withheld) and hence eligible for interest on interest wrongly withheld since 25.09.2009 on the sum of Rs. 8,62,69,794/- till the date the interest is actually granted." Besides this following additional ground has also raised:- "On the facts and circ....