Voltas Limited Vs ACIT (ITAT Mumbai)
Summary: ITAT Mumbai held that Voltas Limited was entitled to statutory interest under Section 244A(1)(a) on a refund of ₹5,39,84,057 and additional interest under Section 244A(1A) on a separate refund of ₹90,94,381. The dispute arose after the assessee had originally offered capital gains from sale of 19 flats at 30%, treating them as short-term capital gains by virtue of Section 50, but subsequently claimed during assessment that the assets were long-term capital assets and the gains should be taxed at 20% under Section 112. The claim was ultimately accepted in appellate proceedings. The AO, while giving effect to the appellate order, nevertheless denied Section 244A interest on the resulting refund because the assessee itself had originally offered the gains at the higher rate and had not corrected the position through a revised return. The Tribunal rejected this reasoning. It held that Section 244A creates a statutory entitlement to interest once a refund becomes due and that an error in the return does not, by itself, constitute delay attributable to the assessee. Section 244A(2) permits exclusion only of an identifiable period during which proceedings resulting in the refund were actually delayed for reasons attributable to the assessee. There was no finding that Voltas had withheld information, failed to comply with notices, sought unwarranted adjournments, pursued frivolous proceedings or otherwise delayed the assessment or appellate process. The Tribunal accordingly directed interest on ₹5,39,84,057 from 01.04.2012 until the actual grant of refund, subject only to arithmetical verification and adjustment of interest already granted, if any. It further held that the separate refund of ₹90,94,381 arising from the appellate order dated 05.09.2018 attracted additional interest under Section 244A(1A), because the ordinary period under Section 153(5) expired on 31.01.2019 whereas the refund was actually paid only on 02.03.2021. Additional interest at 3% per annum was therefore directed from 01.02.2019 until the date of actual refund. The appeal was allowed.
