Gujarat State Police Housing Corporation Limited Vs DCIT (ITAT Ahmedabad)
The Income Tax Appellate Tribunal (ITAT), Ahmedabad Bench, has ruled that interest received by an assessee under Section 244A of the Income Tax Act, 1961, on an income tax refund is indeed taxable as “income from other sources.” The Tribunal dismissed a rectification application filed by Gujarat State Police Housing Corporation Limited, a wholly-owned Government of Gujarat entity, asserting that the taxability of such interest is not a “mistake apparent from the record” and therefore cannot be rectified under Section 154 of the Act.
Case Overview
The case involved Gujarat State Police Housing Corporation Limited (the assessee), which had filed a “Nil” income return for Assessment Year 2015-16. The case was selected for complete scrutiny, and during the assessment, the Assessing Officer (AO) discovered that the assessee had received interest of Rs. 27,67,422/- under Section 244A of the Act. This interest was paid on January 11, 2015, in respect of a refund for Assessment Year 2010-11. However, the assessee had not disclosed this interest in its profit and loss accounts nor offered it to tax.
The assessee explained that the refund was adjusted against outstanding demands for Assessment Years 2011-12 and 2012-13, and thus the interest amount was not “actually received.” The AO disagreed with this explanation and added the Rs. 27.67 lakh interest to the assessee’s income.
