Case Law Details
DCIT Vs IDBI Bank Ltd. (ITAT Mumbai)
ITAT Mumbai held that the amount of interest u/s. 244A of the Income Tax Act is to be calculated by first adjusting the amount of refund already granted towards the interest component and balance left if any shall be adjusted towards the tax component.
Facts- The case was selected for scrutiny and the assessment u/s. 143(3) was completed assessing the income of the assessee at Rs.13216,623,26,540/-. Aggrieved, the assessee preferred an appeal, whereby, the Tribunal granted relief to the assessee on three grounds and remanded two of grounds back to AO. AO passed an order u/s. 143(3) r.w.s.254 dated 29.07.2021 giving effect to the order of the Tribunal whereby the assessed income was revised to Rs.921, 37,88,870. The assessee filed an appeal before the CIT(A) against the said order of the assessing officer stating that AO in the order giving effect had not correctly granted interest u/s. 244A.
CIT(A) held that the method of computation for granting interest u/s. 244A for the refund due to the assessee is not in accordance with the prevailing jurisprudence of the issue, directed AO to examine the computation of refund in accordance with the directions given by the co-ordinate bench in the case of Bank of Baroda. The revenue is in appeal before the Tribunal against the order of the CIT(A).
Conclusion- Held that the amount of interest u/s. 244A is to be calculated by first adjusting the amount of refund already granted towards the interest component and balance left if any shall be adjusted towards the tax component. Accordingly we hold that the manner in which AO has adjusted the refund is not correct and that the assessee would be entitled to interest on the unpaid refunds in accordance with the principle laid out in the aforesaid decision of the Tribunal. Thus, the AO was directed to compute interest under Section 244A of the Income Tax Act as per the claim of the assessee after giving a proper opportunity to be heard.
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