TaxTMI 
TaxTMI 
2023 (10) TMI 1225
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....ome Tax Act, 1961 (in short 'the Act') initially. Subsequently, upon passing of appellate order by ITAT, the assessee came to be entitled for additional refund. The refund earlier granted to the assessee consisted of tax portion and interest granted under Section 244A of the Act. While working out the refund payable to the assessee after giving effect to the order passed by the ITAT, the Assessing Officer reduced the entire amount of refund granted earlier against the tax component and accordingly worked out the additional interest payable under Section 244A of the Act, i.e. the Assessing Officer adjusted the refund already granted, first against the tax portion of the refund, which resulted in granting of lower amount of interest under Section 244A of the Act. Assessee challenged the above said methodology adopted by the Assessing Officer in all the years by filing appeals before the Ld. CIT(A) and the First Appellate Authority directed the Assessing Officer to adjust the refund earlier granted first against the interest portion of the refund due and then the principal portion of the refund due. In this regard, the Ld. CIT(A) followed the decision rendered by the Tribunal in the c....
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....n Bank of India vs ACIT reported in (2016) 72 taxmann.com 348 dated 11.8.2016 wherein the solitary ground taken up by the assessee before this tribunal was with regard to granting lesser amount of interest u/s 244A of the Act by the Id AO while computing refund arising as a result of passing impugned order for giving effect to CIT(A)'s order (i.e appeal effect order) for Rs 64.53 crores as against correct amount of Rs 65.73 crores as claimed by the assessee. We find that the issue before us is exactly similar to the question raised before this tribunal in the case of Union Bank of India supra except with variance in figures and dates. Hence the decision rendered in the case of Union Bank of India supra would apply with equal force for the assessee before us. The relevant operative portion of the decision in the case of Union Bank of India are reproduced below:- 3.2 During the course of hearing before us, Ld. Counsel strongly relied upon the orders of the Tribunal in assessee's own case for A.Y. 1988-89 (ITA No. 571/Mum/2013) and A.Y. 2001-02 (ITA NO. 574/Mum/2013) disposed by the order dated 23.06.2014 and also upon the order dated 22.07.2015 in ITA No. 918/Mum/201....
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....nd discuss the reasoning given by the Tribunal in earlier years. The relevant part of order dated 23.06.2014 is reproduced hereunder for the sake of ready reference: "4. Undisputedly for A.Y. 1988-89 the assessee is entitled to refund of Rs. 14.07 crores as per assessment order and interest payable thereon works out to Rs. 1.58 crores; thus total refund due is Rs. 15.65 crores. The Assessing Officer granted refund of Rs. 12.03 crores. The dispute between the Assessing Officer and the assessee is with regard to adjustment of refund; according to the assessee refund should first be adjusted against interest payable and only the balance amount shall be adjusted against tax refundable and in this process the balance refund due would work out to Rs. 3,52,28.442/- on which the assessee is entitled to interest u/s. 244A of the Act whereas the Assessing Officer calculated the balance refund clue at Rs. 2,03,99,541/- (tax component) and Rs. 1,58,28,901/- (interest component). Reason for such calculation was that according to the Assessing Officer no interest is payable on interest due in which event, even if there is substantial delay in interest payable, the assessee can be made t....
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....n'ble Delhi High Court in the case of India Trade Promotion Organisation (supra), wherein it was inter-alia held that in a situation where only part amount is refunded by the department, then payment of interest on the balance amount due from the department to the assessee, on a particular date, does not amount to payment of interest on interest. Their lordships, taking support from the judgment of Hon'ble Supreme Court in the case of CIT v. HEG Ltd. [2010] 324 ITR 331/189 Taxman 335, observed as under: '14. Matter was taken by the Revenue before the Supreme Court in the case of HEG Limited and the SLP was granted and civil appeal was registered. The Supreme Court thereupon answered the question against the Revenue in the following words:- Therefore, this is not a case where the assessee is claiming compound interest or interest on interest as is sought to be made out in the civil appeals filed by the Department. The next question which we are required to answer is - what is the meaning of the words "refund of any amount becomes due to the assessee" in Section 244A? In the present case, as stated above, there are two components of the tax paid by the a....
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....e interest element, which should have been refunded but is not paid. In another situation where part payment is made, Section 244A would be still applicable in the same manner. For example, if Rs. 60,000/- was paid on 31^st March, 2013, Revenue would be liable to pay interest on Rs. 1 lac from 1^st April, 2010 till 31^st March, 2013 and thereafter on Rs. 40,000/-. Further, interest payable on Rs. 60,000/-, which stands paid, will be quantified on 31^st March, 2013 and on this amount, i.e., interest amount quantified, Revenue would be liable to pay interest under Section 244A till payment is made. . . . . . . . . . ' 3.6 The facts of the case before us are similar in the sense that here also only part amount was refunded in the first phase by the department and when the balance amount was paid by the department in the second phase, the assessee was entitled for interest on the balance amount of refund due. Thus, from the aforesaid observations of Hon'ble Delhi High Court, we can say that it is not a case of payment of interest on interest. Thus, in view of these facts and aforesaid judgments, Ld Counsel contended that Ld. CIT (A) had wrongly applied the judgment of ....
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....us Ld. CIT (A) committed an error in not following the decisions of the Tribunal of earlier years in assessee's own case as well as judgment of Hon'ble High Court in the case of India Trade Promotion Organisation (supra). 3.9 Before parting with, we are reminded of a recent judgment of Hon'ble Supreme Court in the case of Union of India v. Tata Chemicals Ltd. [2014] 363 ITR 658/822 Taxman 225/43 taxmann.com 240 wherein Hon'ble Supreme Court has discussed at length about moral and legal obligation of the department to refund the amount of tax collected from the tax payers which was more than the amount actually due as per law, along with interest. Some of the useful observations are reproduced hereunder for the sake of better clarity in deciding the issue before us: '37. A "tax refund" is a refund of taxes when the tax liability is less than the tax paid. As per the old section an assessee was entitled for payment of interest on the amount of taxes refunded pursuant to an order passed under the Act, including the order passed in an appeal. In the present fact scenario, the deductor/assessee had paid taxes pursuant to a special order passed by th....
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.... noted from the observations of the Hon'ble Supreme Court that it has been observed that whatever money has been received by the department, it ought to be refunded ex aequo et bono. It is a Latin phrase which means 'what is just and fair' or 'according to equity and good conscience'. Something to be decided ex aequo et bono is something that is to be decided by principles of what is fair and just. A decision-maker who is authorized to decide ex aequo et bono is not bound by legal rules but may take account of what is just and fair. Thus, if we decide the issue before us ex aequo et bono, then it would be decided by the principles of what is fair and just and not necessarily as per strict rule of law. Thus, since the statute itself has already prescribed a particular method of adjustment in explanation to section 140A(1), then justice, fairness, equity and good conscience demands that same method should be followed while making adjustment for refund of taxes, especially when no contrary provision has been provided. Under these circumstances and aforesaid discussion, we find that the judicial proprietary demands that order of the Tribunal of earlier years must be....