Tata Sons Pvt. Ltd. Vs DCIT (ITAT Mumbai)
In the case of Tata Sons Pvt. Ltd. Vs DCIT, the Income Tax Appellate Tribunal (ITAT) Mumbai addressed the issue of incorrect interest calculation on refunds for the assessment year 1993-94. Tata Sons, the appellant, challenged the method applied by the Assessing Officer (AO) for adjusting refunds issued after relief granted by earlier Tribunal orders. The company argued that the AO had incorrectly prioritized principal tax adjustments over interest components, leading to short interest credits. The ITAT upheld Tata Sons’ claims, directing the AO to follow the proper method of adjusting refunds—first against the interest component and then the tax—while calculating interest under Section 244A. Additionally, the ITAT allowed Tata Sons’ claim for further interest, including under Section 244A(1A), due to the delay in receiving the refund. ITAT’s ruling mandates the AO to recompute interest, considering both the refund and additional interest up to the date of actual receipt of the refund.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
This appeal is against the order of the Commissioner of Income Tax (Appeals), / National Faceless Appeal Centre dated 04.05.2023 for the AY 199394. The assessee raised the following grounds:
“1) On the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have held that the Id. Assessing Officer erred in not granting interest on refund from the date on which the order giving effect to the ITAT order was passed determining the refund to the date on which the actual refund was credited to the Appellant’s bank account.
2) On the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have held that the Ld. Assessing Officer erred in not adjusting the total refund, first towards the interest component under section 244A(1) and the balance towards the principal tax component.
3) On the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have held that the Ld. Assessing Officer erred in calculating the refund by appropriating the earlier refunds granted towards the interest as calculated then (i.e., at the time of earlier refunds issued) as against the revised interests computed at the time of granting the latest refund.
4) On the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have held that the Id. Assessing Officer erred in not granting interest under section 244A(1A) of the Act.
5) On the facts and circumstances of the case and in law, the Ld. CIT(A) ought to have held that the Appellant should have been granted interest on interest in view of the inordinate delay in granting of refund.
6) Without prejudice to the above, the Ld. CIT(A) erred in remanding the matter to the Assessing Officer which is violative of section 251 of the Act.
2. The assessee is the principal investment holding company and promoter of Tata companies. The return of income for AY 1993-94 was filed on 31.12.1993 returning NIL income. The return was subject to assessment / reassessment and rectification over a period of time. The coordinate bench of the Tribunal through orders dated 04.02.2015 and 01.01.2016 gave relief to the assessee. The learned Deputy Commissioner of Income Tax 2(3)(1), Mumbai (“learned AO”) passed an order giving effect (OGE) dated 08.03.2016 grating the refund of Rs. 30,45,62,594 and the assessee received the said refund on 18.08.2022. The grievance of the assessee with regard to the short credit of interest is threefold as listed below
(i) The AO has incorrectly adjusted the earlier refunds – Interest short credited Rs 9,93,09,258/- (Ground No.2 & 3)
(ii) The AO has not calculate the interest for the interim period from when the OGE was passed on 08.03.2016 and the actual receipt of refund i.e. 18.08.2022 – Interest short credited Rs. 11,27,21,927/- (Ground No.1)
(iii) The AO has not calculated the interest under section 244A(1A) of the Act – Interest short credited – Rs.7,09,13,871/- (Ground No.4)
3. With regard to issue of incorrect adjustment of refund for arriving at interest the ld AR submitted that where the refunds have been issued in parts, the AO while adjusting the refund issued earlier has erred in apportioning amount of earlier refund towards the principal and interest component determined then i.e. without considering the present relief. The AO has reduced interest only to the extent it was determined at the point of issuance of the earlier refunds, thus, leading to larger adjustment of the refund towards the tax component as against the interest component which is further summarised in the table given below:
