AI Drafter 
TaxTMI 
TaxTMI 
2024 (11) TMI 498
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.... the balance deficit of principal/tax refund of 781,99,98,897/- [1885,99,74,347(-)1803,99,75,450)(entitling the assessee of the same along with further interest u/s. 244A thereon from October 2022 onwards till the actual date of granting/crediting the refund of 881,99,98,897/- to the assessee on a future date. (b) The Ld. CIT(A)-NFAC grossly failed to appreciate that the rule of adjustment of interest component first in collection of taxes by revenue should apply evenly at the time of release of refund to the assessee as well and that there cannot be two different set of rules, one for revenue and another for the assessee which is devoid the principles of fairness and justice. (c) The Ld. CIT(A)-NFAC erred in facts and law in attributing some delay even on part of the appellant in the process of issuance of refund by the ld. Assessing Officer and wrongly applied the decision of the Hon'ble Apex Court in the case of UOI v. Tata Chemicals Ltd., (2014) 363 ITR 658 (SC)." 3. The issue arising in present appeal pertains to method of calculation of refund due to the assessee after adjusting the refund already granted. 4. The brief facts of the case pertaining to t....
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....eafter by adjustment of principal from the refund already granted, so that the remaining/deficit amount of refund due is treated as principal due on which interest under section 244A is calculated till the date of grant of such refund. Being aggrieved, the assessee is in appeal before us. 6. During the hearing, the learned Authorized Representative ("learned AR") by placing reliance upon various judicial pronouncements submitted that in case part refund is issued to the assessee then the same should be firstly adjusted against the interest component and the balance, if any, towards the tax component and the principal amount remaining due thereafter be treated as principal due on which interest under section 244A of the Act be computed till the date of grant of further refund. 7. On the other hand, the learned Departmental Representative ("learned DR") submitted that there is no express provision in section 244A of the Act for adjustment of partly issued refunds and therefore, the refund should be firstly adjusted against the outstanding principal amount of the taxes due to be refunded and then against the interest component receivable by the assessee. The learned DR further s....
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....the aforesaid interest component of Rs.245,99,96,654/- be adjusted against the refund of Rs.1803,99,75,540/- and thereafter, the balance be adjusted against the principal/tax component, which comes to Rs.1557,99,78,796/-. Therefore, as per the assessee by adopting the aforesaid computation methodology, the assessee would be left with the deficit principal/tax component of refund to the tune of Rs.81,99,98,897/- on which further interest under section 244A would be eligible from October 2022 onwards till the date of actual granting/crediting of refund to the assessee. The computation mechanism as pleaded by the assessee is summarized as under: - Particulars Principal Component Interest Component Total Refund Due as on September 2022 (As shown above) 1639,99,77,693 245,99,96,654 1885,99,74,347 Less : Refund Issued on 27.09.2022 (1557,99,78,796) (245,99,96,654) (1803,99,75,450) Deficit/Balance Principal after issue of refund 81,99,98,897 81,99,98,897 10. We find that the Co-ordinate Bench of the Tribunal in Union Bank of India vs. ACIT, reported in (2017) 162 ITD 142 (Mum.), after considering the decision of the Hon'ble Supreme....
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....m Industries Ltd. vs. CIT reported in (2021) 23 taxmann.com 31 (Mum.) rendered similar findings and held that the refund granted be first adjusted against the interest component and consequently shortfall of refund be regarded as shortfall of tax and that shortfall should then be considered for the purposes of computing further interest payable to the assessee under section 244A of the Act till the date of grant of such refund. From a careful perusal of the afore-noted decision, we further find that the Co-ordinate Bench rejected the argument of the Revenue that the afore-stated methodology will result in awarding interest on interest. The relevant findings of the Co-ordinate Bench, in afore-noted decision, are reproduced as follows: - "6. We find that assessee has raised ground before us stating that refund granted to the assessee is to be first adjusted against the correct amount of interest due on that date and thereafter, the left over portion should be adjusted with the balance tax. We find that in the instant case refund was granted to the assessee vide refund order in October 2013 and it was pleaded by the assessee that the said refund is to be adjusted against the ....