DCIT-2(1)(1) Vs Bank of Baroda (ITAT Mumbai)
Summary: The Mumbai Bench of the Income Tax Appellate Tribunal dismissed the Revenue’s appeals concerning the manner in which refunds payable to M/s. Bank of Baroda were required to be adjusted between the interest component and the principal tax component. The consolidated order covered AYs 2003-04, 2007-08, 2008-09, 2009-10, 2016-17 and 2005-06, with ITA No.5707/Mum/2025 for AY 2003-04 taken as the lead case.
The Revenue challenged the order of the CIT(A), NFAC, contending that where a refund comprised both tax and interest under section 244A, any refund payment should first be appropriated towards the principal tax component rather than the interest component. According to the Revenue, section 244A contained no express provision prescribing that interest should be adjusted first. It was also argued that adjusting the refund against interest would result in further interest liability on the unpaid tax component and would effectively amount to charging interest on interest.
The assessee contended that the issue had already been settled by various judicial decisions and by decisions of the Tribunal in its own case. It relied on the principle of consistency and submitted that, in the absence of any change in facts or circumstances, the earlier view should be followed. The assessee also relied upon decisions concerning Deposit Insurance and Credit Guarantee Corporation, Bank of India, IDBI Bank, Reliance Industries Limited, State Bank of India and Tata Sons Limited, among others.
