Case Law Details
ITC Infotech India Limited Vs DCIT (ITAT Kolkata)
The appeal before the Income Tax Appellate Tribunal (ITAT), Kolkata Bench, arose from the order dated 03.10.2025 passed by the Commissioner of Income Tax (Appeals)-Addl./JCIT(A), Kochi, for Assessment Year 2014-15. The sole issue involved in the appeal was whether the Commissioner (Appeals) erred in not issuing a specific direction to the Assessing Officer to grant additional interest under Section 244A(1A) of the Income-tax Act.
The assessment under Section 143(3) had originally been completed by an order dated 23.01.2018. According to the assessment order, the amount refundable to the assessee exceeded 10% of the net tax liability. Consequently, the assessee became entitled to interest under Section 244A(1) of the Act and received the same.
Subsequently, an appellate order was passed in favour of the assessee. However, while giving effect to that appellate order, the Assessing Officer issued the appeal effect order only on 02.02.2023. The assessee contended that there had been a delay of approximately four and a half years in granting the appeal effect, beyond the timeline prescribed under Section 153(5) of the Act. Therefore, it claimed entitlement to additional interest at the rate of 3% per annum under Section 244A(1A).
The assessee submitted before the Commissioner (Appeals) that while passing the appeal effect order dated 02.02.2023, the Assessing Officer had failed to grant additional interest under Section 244A(1A). The assessee requested the appellate authority to direct the Assessing Officer to allow such interest. However, the Commissioner (Appeals) merely directed the Assessing Officer to verify the claim of interest, without issuing any specific direction for granting the same. Aggrieved by this limited direction, the assessee preferred an appeal before the Tribunal.
The Tribunal examined and verified the calculations placed before it by the assessee. It observed that under Section 153(5), the Assessing Officer was required to pass an order giving effect to the appellate order within the prescribed period. The Tribunal noted that the appeal effect order dated 02.02.2023 had not been passed within the period contemplated by the statute. Consequently, the assessee became eligible for additional interest under Section 244A(1A).
The Tribunal held that the assessee was entitled to receive additional interest under Section 244A(1A) for the period commencing from 1 November 2018, being the date immediately following the expiry of the period allowed under Section 153(5), until the date on which the refund was actually granted. The Tribunal found merit in the assessee’s contention that the Assessing Officer had failed to pass the appeal effect order within the statutory time limit of three months from the end of the month in which the appellate order had been received.
Accordingly, the Tribunal directed the Assessing Officer to grant additional interest under Section 244A(1A) in accordance with the calculations furnished by the assessee, after verifying the same. It held that the assessee was entitled to interest at the rate of 3% per annum because of the delay in giving effect to the appellate order.
In arriving at its conclusion, the Tribunal relied upon judicial precedents, including the decisions of the Karnataka High Court in Wipro Ltd. v. JCIT and the Gujarat High Court in Nima Specific Family Trust v. ACIT. The Tribunal referred to the observations of the Gujarat High Court regarding the legislative intent behind Sections 153(5) and 244A(1A).
The Gujarat High Court had observed that prior to the introduction of these provisions, there was no prescribed time limit for passing orders giving effect to appellate or revisional orders. It further noted that the insertion of Section 153(5) introduced graded timelines within which such orders were required to be passed. To ensure compliance with these timelines, Section 244A(1A) provided for payment of additional interest at the rate of 3% per annum where the Assessing Officer failed to act within the prescribed period.
FULL TEXT OF THE ORDER OF ITAT KOLKATA
This is an appeal preferred by the assessee against the order of the Ld. Commissioner of Income Tax (Appeals)- Addl/JCIT(A)-Kochi (hereinafter referred to as the “Ld. CIT(A)”] dated 03.10.2025 for the AY 2014-15.
2. The only issue raised by the assessee is against the order of Ld. CIT(A) not giving specific direction the AO to allow interest u/s 244A(1A) of the Act.
3. Facts in brief are that the assessment u/s 143(3) of the Act was framed vide order dated 23.01.2018. As per the assessment order, the amount refundable to the assessee worked out to more than 10% of the net Tax liability and the assessee thus received interest u/s 244A(1) of the Act. Further on account of delay in giving appeal effect to the order of Ld. CIT(A) beyond the timeline as mandated in Section 153(5) of the Act which is approximately 4.5 years, the assessee is also eligible for receiving additional interest @3% per annum u/s 244A(1A) of the Act. The computation of tax payable / refundable calculation of interest u/s 244A(1) and interest u/s 244A(1A) are extracted below:
4. We note that the assessee submitted before the Ld. CIT(A) that the interest u/s 244A(1A) of the Act has not been considered by the AO/DCIT, Circle-1(1), Kolkata in the appeal effect order dated 2.2.2023 while giving effect to the appellate order dated 08.06.2018 and requested to direct the AO to grant the same. The Ld. CIT(A) simply directed the AO to verify the claim of interest and hence the assessee is in appeal before us challenging the said finding of Ld. CIT(A). We have examined and verified the calculation furnished before us as extracted above. We are of the view that the assessee is entitled to the interest u/s 244A(1A) of the Act for the period commencing from 1st November, 2018 being the date following the expiry of the time allowed u/s 153(5) of the Act till the date of actual grant of refund. Thus, we find merit in the contention of the assessee and , consequently, we direct the AO to grant interest to the assessee as per the calculation given above as the AO has failed to pass order giving effect within the period of three months from the end of month in which the appellate order is received. We note that the order giving effect dated 2.2.2023 which is not passed within the timeline as per Section 153(5) of the Act and therefore the assessee is entitled to receive interest @3% per annum. Therefore, we direct the AO to verify the calculation of interest u/s 244A(1A) of the Act and grant the same to the assessee. The case of the assessee finds support from the decision of Hon’ble Karnataka High Court in the case of Wipro Ltd. vs. JCIT, Special Range-7, Bangalore reported in [2021] 130 taxmann.com 84 (Karnataka) and the decision of Hon’ble Gujarat High Court in the case of Nima Specific Family Trust vs. ACIT, Circle-5(2) reported in [2018] 100 taxmann.com 262 (Gujarat) wherein the same ratio has been laid by the Hon’ble Karnataka High Court. The operative part of the case of Nima Specific Family Trust (supra) is extracted below:
24. We have noticed that prior to the relevant amendments made in the Act and introduced wef 1st June 2016. there was neither a limit prescription for passing orders giving effect to appellate or revisional orders in which relief – partially or fully may have been given to the assessee nor was there any adverse impact on the revenueif such action was delayed, except for paying statutory interest under sub-sec. [1] of Section 244A of the Act. Sub-section [5] of Section 153 introduced time limits for passing such orders. Such time limits were also prescribed in graded manner. Ordinarily, the Assessing Officer would have three months to pass orders giving effect to appellate or revisional orders. If the Commissioner was satisfied that it was not possible for the Assessing Officer to do so within such time, he could extend the time by further six months but no more. In cases where the order required verification of any issue by way of submission of document by the assessee or any other person, or where an opportunity of being heard is to be provided to an assessee, the time limit from the outset would be longer. This laying down of the time limit per se would be of no consequence unless non adherence to the time would result into some adverse consequences to the Revenue. It is therefore that sub-section [IA] of Section 244A provides for additional interest at the rate of three per cent per annum upon the Assessing Officer failing to pass an order giving effect to the appellate or revisional order withing the time frame.
25. These provisions thus are in the nature of deterrence to the Assessing Officer’s inaction. Simultaneously, the assessee would be compensated for delay by way of additional interest.
26. These provisions are thus remedial in nature and meant to address the issue of inordinate delay in giving effect to the appellate or revisional orders made in favour of the assesses. However, minute examination of these provisions would show that the same were not meant to have retrospective effect. The computation provision for granting such interest provides for two terminal points the beginning point is the end of the period beginning from the date following the date of expiry of time allowed under section (5) of Section 153 and the end point of computing the interest would be the date on which refund is granted. Applying such provisions for the past period would immediately throw a question as to from which date such interest liability would arise. For the past period, there being no provision in sub-section (5) of Section 153 laying time limits, the computation of beginning of the period for granting interest would be unworkable. Claim of interest for the past period cannot be accepted for want of any machinery provided by the legislature to calculate such interest. The legislature therefore by necessary implications did not desire to give any retrospective effect to these provisions. The claim for additional interest therefore cannot be granted for the periods when the provision so Section 244A(1A) and 153(3) as they now were not in statute book at all.
27. There would however be a caveat to this proposition and it is this. There may be cases where the appellate or revisional order may have been passed long before 1st June 2016. Till the relevant provisions of Section 244 [IA] and 153 [5] were added by the legislature on 1st June 2016, the Assessing Officer may not have passed the consequential order. Even after such amendments, he may not have passed the order within the time provided in such amendments. Even in such a case, if the amended provision of sub-section [IA] of Section 244 of the Act is not applied for the period past 1st June 2016, the same would give rise to two class of cases [i] where the appellate or revisional order is passed after 1st June 2016 and the other where such order is passed before such date. In the former, all the provisions of subsection [IA] of Section 244A as well as sub-section (5) of Section 153 of the Act would apply. In the latter, if harmonious construction approach is not adopted, the Assessing Officer could contend that he is under no obligation to pass order giving effect to the appellate or revisional order, nor would the revenue be liable to pay additional interest even after the time available to the Assessing Officer for passing such order has expired. The legislature could not be expected to have brought about such a situation. Any such interpretation would also restrict the prospective effect of these provisions. In such circumstances, the harmonious construction of the statutory provisions would require that if any order giving effect to the appellate or the revisional order is not passed by the Assessing Officer within the time permitted under section 153 [5], after the amendments were made in the statute book, even though the appellate or revisional order was passed before 1st June 2016, the liability to pay additional interest under sub-section [IA] of Section 244A would arise upon completion of such period as if the starting point for computing such period for passing the order was 1st June 2016. To this limited extent, the petitioner would be entitled to additional interest for limited period, but not for the entire period starting from the original order of Commissioner dated 5th March 2009.”
We therefore respectfully following the order of Hon’ble Gujarat High Court direct the AO to grant interest u/s 244A(1A) of the Act.
6. In the result, the appeal of the assessee is allowed.
Order is pronounced in the open court on 20th May, 2026
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