TaxTMI 
TaxTMI 
2022 (12) TMI 1083
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....ferred to as "the Act") relevant to the Assessment Year 1984-1985. 2. The assessee has raised the following grounds of appeal: 1. In law and in facts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in points of law and facts. 2. In law and in facts and circumstances of the Appellant's case, the learned CIT(A) has grossly erred in dismissing the ground regarding error in calculating refund amount. The Ld. AO has erred in segregating the refund issued into tax refund and interest refund. He ought to have adjusted the refund granted first against the interest refund due and thereafter against the tax refund due. 3. Your appellant reserves the right to add, alter, amend all o....
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.... observing as under: DECISION:- The order u/s 143(3), statement of facts and the submission furnished by the appellant have been considered. The assessee has claimed for additional compensation of interest on refund issued u/s 244A of I.T. Act. The case of the appellant is that the refund receivable is to be calculated by determining the refund receivable including interest on refund as reduced by the refund already issued. The balance amount derived will be the net refund receivable. On this balance amount, interest receivable will be calculated. The same should be continued till total taxes paid as well as total refund issued are considered. As there is no specific provision in the I.T. Act for granting additional compen....
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....t payable on the refund to the assessee under the provisions of section 244A of the Act. Thus, as per the learned AR, the amount of refund for Rs. 76,876/- should be attributable to the amount of interest received from the income tax Department and the balance amount of Rs. 32,538/- should be adjusted against the principal amount. However, the AO made the adjustment of refund amount in proportion of Rs. 76,920/- towards principal and Rs. 32,490/- towards interest by appreciating incorrect provisions of law. 6.1 On the other hand, the learned DR contended that the AO has rightly attributed the amount of refund granted to the assessee under section 244A of the Act towards the principal and interest amount for Rs. 76,920/- and Rs. 32,490/- ....
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..../- was treated as the recovery against the principal amount of Rs. 1,71,780/- only, thus leaving the principal amount due at Rs. 1,39,242/- only. As per the assessee, the interest should be calculated on this amount till the date of issuance of second instalment of refund. 7.3 On the contrary, the revenue was of the view that the amount of refund for Rs. 76,920/- should be treated as adjustment against the principal amount and the balance amount of Rs. 32,490/- should be adjusted against the interest of Rs. 76,872/- only. Thus, the issue arises whether the assessee can claim the recovery of the interest amount out of the refund granted by the revenue or first the principal amount should be adjusted against the refund granted by the reven....
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.... of refund already granted towards the interest component and balance left if any shall be adjusted towards the tax component. Thus, with these directions, the appeal of the assessee is allowed." 7.4 In view of the above we hold that the amount of refund granted to the assessee, first, has to be adjusted against the interest payable to the assessee in the given facts and circumstances. 7.5 We are also conscious to the fact that the AO has made a reference in his order to the judgment of the Hon'ble Supreme Court in the case of Gujarat Flouro chemicals reported 24 taxmann.com 338 wherein the issue was different than the case on hand. The Hon'ble Supreme Court has directed as under: 8. The argument in Sandvik Asia Ltd. (supra) ....