ACIT Vs Development Board (ITAT Ahmedabad)
The central question involved in the present appeal is whether the expression ‘in any other case’ occurring in section 244A(1)(b) of the Act would include interest on an amount of refund resulted from reversal of excess interest charged under s.234B of the Act. As per Income Tax computation form prepared by AO, interest under s.234B was originally computed at ₹4,09,36,700 which was reduced to ₹1,41,03,094 due to reversal of certain additions in the second round of appeal before the CIT(A).
This resulted in reduction of interest chargeable to the assessee by ₹2,68,33,606. Consequently, this has resulted in enhancement of refund amount. The AO while giving effect to order of CIT(A) in second round of proceedings, omitted to calculate interest under s.244A of the Act on the aforesaid excess interest charged earlier under s.234B and which led to reduction of the principal amount of tax refund to the extent of excess interest.
The principal sum of refund stood enhanced on the reduction of aforesaid interest under 234B wrongly charged earlier. The assessee seeks claim of interest under s.244A on the enhanced principal amount of refund on applying revised and correct liability under s.234B of the Act.
We find that the CIT(A) has dealt with the issue threadbare as noted above and applied correct legal principles while granting relief to the assessee. We do not consider it necessary to reiterate the similar finding and adopt the findings of the CIT(A) in toto. Suffice it to say, the tax liability including interest is required to be determined on the correct assessed income.
The assessee, in consequence, is entitled to interest on excess tax paid beginning from date of payment of tax to the date on which refund is granted as contemplated under s.244A of the Act. The transient error in the intervening period which resulted in excess tax paid stood corrected at a later point of time. Thus, the assessee would be entitled the claim under s.244A from the original date.
FULL TEXT OF THE ITAT ORDER IS AS FOLLOWS:-
The captioned appeal is directed by the Revenue against the order of the Commissioner of Income Tax(Appeals)-I, Baroda [CIT(A) in short] dated 14/02/20 14 for the Assessment Year (AY) 2007-08.
2. The grounds of appeal raised by the Revenue read as under:-
1. On the facts of the case and on the circumstances and in law, the CIT(A)-IV Baroda has erred in granting an amount of ₹33,54,201, being interest u/s.244A of the Act on the interest u/s.234B of ₹ 2,68,33,606 ignoring the fact that there is no provision u/s.244A r.w.s.2(43) of the Act to pay interest on interest.
2. On the facts of the case and on the circumstances and in law, the CIT(A)-IV Baroda has erred in granting interest of ₹33,54,201 u/s.244A of the Act on the interest u/s.234B of ₹2,68,33,606 relying on the decision of ITAT Ahmedabad ‘C’ bench in the case of Alembic Glass Industries Ltd. dated 10.11.2006, brushing aside the ratio laid down by Hon ’ble Supreme Court in the case of CIT Gujarat v/s. Gujarat Fluoro Chemicals dated 18.09.2013 that the revenue has not to pay interest on interest.
3. Briefly stated, the assessee came into existence by an Act of Parliament called National Dairy Development Board Act, 1987. The assessment of the assessee for AY 2007-08 under consideration was completed under s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) vide order dated 30/09/2010 after making certain additions. The assessee preferred appeal before the CIT(A) against the aforesaid assessment order. The CIT(A) confirmed certain additions made by the Assessing Officer (AO) and granted relief in respect of some other additions. The AO passed an order dated 05/01/2011 giving appeal effect to the order of the CIT(A). It is the claim of the assessee that while giving appeal effect, the AO misinterpreted the directions of the CIT(A) in respect of issue of Write back of provisions and denied relief claimed by Assessee. The assessee went in appeal before the CIT(A) once again who vide order dated 29/02/20 12 decided the issue in favour of assessee. The AO passed another order dated 19/03/2012 giving effect to the order of the CIT(A) which resulted into refund of ₹17,56,65,904 excluding interest payable to assessee on excess tax deposited as per s.244A of the Act. The AO computed interest of ₹1,05,01,836 under s.244A of the Act on principal amount of refund of ₹17,56,65,904. However, as per the assessee, the correct interest under s.244A entitled to assessee was worked out to ₹1,38,56,037. Accordingly, the assessee carried the matter before the CIT(A) assailing wrong calculation of interest by the AO under s.244A owing to which interest has been short granted to the extent of ₹33,54,201.
4. The CIT(A) revisited the issue and found merit in the case of the assessee. The relevant paras of the order of the CIT(A) dealing with the issue is reproduced hereunder for ready reference:-
“2. Again during the course of appellate proceedings $hri Yogesh Shah, CA attended and filed submission dated 11/02/2014 on behalf of the appellant and the same is also reproduced hereunder for reference:
“The assessment for the year under consideration was completed under section 143(3) of the Act after making various additions. The appellant had preferred appeal to the CIT(A) against the order of the AO. The CIT(A) had confirmed certain additions made by the AO vide his order dated 30/09/2010 and deleted certain additions. AO passed an order dated 05/01/2011 giving effect to the directions of CIT(A) but erred in giving effect to the issue of write back of provision created in earlier years. AO erroneously misinterpreted the direction of CIT(A) and gave exactly opposite effect thereof. Against the said order of AO, appellant preferred an appeal to CIT(A) who wide his order dated 29/02/2012 decided in favour of the appellant. AO has now passed an order dated 19/03/2012 giving effect to the same which resulted into refund of Rs.17,56,65,904/- excluding interest u/s 244A. The AO has granted interest of Rs. 1,05,01,836/-.
Ground no. 1 General
Ground no.2 Interest under section 244A not properly granted
The appellant submits that the interest granted by the AO under section 244A is not properly granted and on proper working the interest would work out to be Rs. 1,38,56,037/- as against Rs. 1,05,01,836/-.
The appellant gives below comparison of the working of interest under section 244A as made by the AO and as per appellant:
