AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 795
X X X X Extracts X X X X
X X X X Extracts X X X X
....rest on the assessee as well as nowhere the powers give rights to the Assessing Officer to give interest on unpaid interest to the assessee. 4. Facts in brief are that the Assessing Officer passed the order u/s. 154/251/254/143(3) of the Act vide order dated 21.11.2011 wherein the ld. Assessing Officer held that the interest u/s. 244A of the Act calculated and allowed for a period mentioning from 01.03.1993 to 27.03.2007 instead of period from 01.01.1993 to 27.03.1997. Accordingly, a suo moto rectification u/s.154 of the Act was undertaken by issuing notice u/s.154 of the Act to the assessee. The assessee appeared before the Assessing Officer and case was discussed and finally the said order was passed. The Assessing Officer determined the refund to be payable to the assessee at Rs. 4,77,21,440/-. 5. In the appellate proceedings, the assessee challenged the order passed by the Assessing Officer on the ground that the assessee is entitled to interest on unpaid interest. It was the submission before the ld. CIT(A) that the Assessing Officer has grossly erred while computing the interest u/s.244A of the Act in the impugned assessment year by submitting that the Assessing Officer....
X X X X Extracts X X X X
X X X X Extracts X X X X
....2. Thus when the full amount of refund due is not paid but a part amount is paid, the assessee is entitled to interest u/s. 244A on the balance outstanding amount which partake the character of 'amount due' under the provisions of section 244A of the IT Act. The above method of calculation of interest u/s. 244A of the IT Act, which is to be followed by the Ld. AO Officer, is elaborated by an illustration as below: Rs. Tax Refundable for AY 1992-93 A 100 Add: Interest u/s. 244A [say @1% from 1st April, 1992 to 31 March, 1993 i.e. for 12 months] B 12 Refundable C=(A+B) 112 Less: Refund issued/ adjustment on 31 March, 1993 D Balance Refundable E = (C-D) 3. In the above example, the interest of Rs. 12 arrived in (B) above is to be considered having been issued and included in the refund amount of Rs. 90 worked out in (D) above. The amount of Rs. 22 in (E) would be construed as 'amount due' under section 244A of the Act and interest thereon u/s. 244A would be computed on the entire amount due till it is granted. Any further adjustment before the refund is granted is to be calculate....
X X X X Extracts X X X X
X X X X Extracts X X X X
....), 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 Lad. [2010] 324 ITR 331/189 Taxman 335, observed as under: 14. Matter wax token 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 assessee for which the assessee was granted refund, namely TDS of Rs. 45,73,528 and....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ion where part payment is made, Section 244A would be still applicable in the same manner. For example, if Rs. 60,000/- was paid on 31st March, 2013, Revenue would be liable to pay interest on Rs. 1 lac from 1st April, 2010 till 31st March, 2013 and thereafter on Rs. 40,000/-. Further, interest payable on Rs. 60.000/-, which stands paid, will he quantified on 31st March, 2013 and on this amount, ie., 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 Hon'ble Supreme Court in the case of Gujarat Fluoro Chemicals (supra), since it was not applicable on the fac....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 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: 137. 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 the assessing officer/Income Tax Officer. In the appeal filed against the said order the assessee has succeeded and a dir....