The Andhra Pradesh HC has held in the case Shri M. Jaffer Saheb (Decd.) Vs. CIT that interest granted under Section 244A of the Act on income tax refund is chargeable to tax on accrual basis and has to be spread over the respective years for which interest is being granted. Accordingly, the entire interest on income tax refund cannot be taxed in the year in which order of the ITAT is passed.
High Court of Andhra Pradesh
Shri M. Jaffer Saheb (Decd.)
Versus
Commissioner of Income-Tax
R.C. No.127 OF 1997
Date – 19th December, 2013
ORDER:- (per Hon’ble Sri Justice Challa Kodanda Ram)
At the instance of the Assessee, the Income Tax Appellate Tribunal, Hyderabad Bench “A”, had referred two questions of law as arising from the order of the Income Tax Appellate Tribunal in I.T.A. No.751/Hyd/94 for the assessment year 1990-1991. The questions are as follows:
1) “Whether on the facts and in the circumstances of the case, is the Appellate Tribunal correct in law in holding that interest U/s.244(1A) of the Income-Tax Act on the refund due accrues on the date when the Appellate Tribunal passed order and did not accrue on any day anterior to the date of the Tribunal order?”
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