2024 (9) TMI 483

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....d to as the "CIT(A)"] u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as "Act"], wherein learned CIT(A) has partly allowed assessee's appeals. 2. The brief facts under appeal state that the respondent assessee is a bank. Consequent upon the order dated 03.09.2019 passed by this Tribunal in ITA No. 3426/MUM/2018 and 4043/MUM/2018, learned assessing officer, in order to give effect to this order, passed revised assessment order dated 30.09.2021 and granted interest to assessee bank u/s. 244A at 20.17 crores as against the assessee's claim of Rs. 22.07 crores. 3. Assessee, being aggrieved by the revised order passed by the assessing officer for the reason that the difference of short grant of interest has resulted on account of learned assessing officer not granting interest on the amount of refund due, after adjusting the amount of refund already granted by segregating the refund due, into interest and tax and not granting interest on the total amount of balance refund due of tax. After adjusting the refund granted as against the specific provisions of Section 244A of the Act. 4. Being aggrieved by the impugned order passed by learned CIT(A), department of revenue ha....

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....g officer to allow the short grant of interest u/s. 244A(1) of the Act? b. Whether learned CIT(A) is justified in allowing the assessee's ground whereby it was suggested that for calculating interest u/s. 244A(1), the refund earlier granted should be adjusted against the interest component and balance if any, should be adjusted against the principal refund amount without any methodology? 8. Both the points under determination are interrelated, hence these are being determined together. 9. The learned departmental representative reiterated the grounds of appeal and submitted that the learned CIT(A) is incorrect in directing the learned assessing officer to grant interest under section 244A (1) of the Act. 10. The learned representative for the assessee has vehemently supported the order of the learned CIT(A) and submitted that there is no such methodology laid down under the Act but the guidance may be taken from section 140-A of the Act. Explanation to that section provides that whenever a taxes, fees and interest is payable by the assessee, the amount so paid shall first be adjusted towards the fee, thereafter towards the interest and thereafter should be adjusted towards the....

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....t 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 Revenue is liable to refund Rs. 1 lac to an assessee with effect from 1st April, 2010, the said amount is refunded along with interest due and payable under Section 244A on 31st March, 2013, then no further interest is payable. However, if only Rs. 1 lac is refunded by the Revenue on 31st March, 2013 and the interest accrued on Rs. 1 lac under Section 244A is not refunded, the Revenue would be liable to pay interest on the amount due and payable but not refunded. Interest will not be due and payable on the amount refunded but only on the amount which remains unpaid, i.e., t....

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....he above decision has been considered by the coordinate bench in case of bank of Baroda in ITA number 1646/M/2017 dated 20/12/2018 in paragraph number 5 and further relying on the decision of the coordinate bench in Union Bank of India versus ACIT (2016) 72 taxmann.com 348 has also held that the assessee would be entitled for interest on the unpaid refunds in accordance with the principle laid down in the decision of Union Bank of India. The principle that emerges is that in absence of any specific provision of priority of setting of tax refund due and interest refund due out of the total refund when part of the refund is granted to the assessee, it should be treated in a similar manner in which the outstanding tax and interest is to be adjusted when assessee pays part payment of such outstanding sum. 011. The learned AO has raised that Supreme Court in CIT versus Gujarat Flora chemicals (2013) 358 ITR 291 has categorically held that it is only that interest provided for under the statute which may be claimed by the assessee from the revenue and no other interest on such statutory interest is payable. On careful consideration of the above argument we find that it is not the case ....