ACIT(OSD), RANGE-10, ITO vs. JINDAL POLY FILMS LTD., BULAND SAHAR

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH ‘H’, NEW DELHI

BEFORE SH. SATBEER SINGH GODARA, JUDICIAL MEMBER & SH. KRINWANT SAHAY, ACCOUNTANT MEMBER

ITA No.1259 & 1260/Del/2026 Assessment Year: 20008-09 & 2009-10 ACIT (OSD) Jindal Poly Films Pvt. Ltd. 19th K.M., Range- 10 Vs Hapur Hapurbulandshahr Road Gulavathi, Rural Nthugari Gulaothi S.O. Bulandshahr, Uttar Pradesh, (APPELLANT) (RESPONDENT)

Appellant by Sh. Bhopal Singh, CIT DR Respondent by Sh. Rohit Jain, Advocate Sh. Deepashree Rao, Advocate Ms. Ayushi Iragya, Advocate

Date of hearing: 08/07/2026 Date of Pronouncement: 22/09/2026

ORDER PER KRINWANT SAHAY AM Appeal in these two cases have been filed by the Revenue against the order dated 11.11.2025 passed by the Ld. CIT(A)/NFAC, Delhi for the A.Y. 2008-09 and 2009-10.

2 That the Id CTTA erred in law and on facts in not appreciating that WHARE a refund arises pursuant to an additional claim raised for the first time at the appellate stage, înterest under section 244A of the Act is not admissible for the period of delay attributable to the assessee, in view of the binding precedent of the Honble ITAT, Delhi Bench in ACTT v. Samast Vikas Ltd. 2025 175 faxmann.com 145 Delhi Trib.

5 That the order of the Ld CTTA, to the extent it directs grant of interest under section 244A1 from 01.04.2008, is erroneous,

contrary to the facts of the case, and unsustainable in law and, therefore, liable to be set aside 6 That the appellant craves leave to add, amend, alter OR withdraw any of the above grounds of appeal at OR before the time of hearing

filed brief synopsis on this issue which is reproduced as under :-

“5.1.2 The AO, as mentioned in the assessment order reproduced above, restricted the interest u/s 244A from the date of the order the Hon’ble ITAT dated 04.06.2024 to the dated of order giving effect i.e. 12.03.2025. 5.1.3 The appellant in its submission has vehemently contested the action of the AO in limiting the period of interest u/s 244A. The appellant has contended the interest should have been worked out from the first year of the assessment year upto the date of grant of refund. The appellant has contended that the provisions of section 244A(1)(a) are applicable in the case of the appellant and not the provisions of 244A(2). The appellant has also contended that the refund in the appellant’s case is out of advance tax and TDS/TCS hence the refund is to be computed from the first day of the April of the assessment year.

5.1.4 The appellant has relied upon the decision of the Coordinate Bench of Chandigarh Tribunal in case of M/s Vardhman Textiles Ltd. Vs. DCIT (ITA No. 1264 to 1267/CHD/2019 & 103-106/CHD/2020 dated 30.07.2021). The appellant has further relied upon the decision of the Hon’ble Gujarat High Court in case of Ajanta Manufacturing Ltd. Vs. DCIT (2017) 391 ITR 33 (Guj). The appellant has also relied upon the decision of the Hon’ble Bombay High Court in cases of CIT Vs. Melstar Information Technology Ltd. (2019) 265 Taxman 50 (Bom). 5.1.5 In addition to above the appellant has relied upon the following judicial pronouncements: i. Hon’ble Bombay High Court in cases of State Bank of India in ITA No. 1218 of 2016 ii. Hon’ble Kerela High Court in case of CIT vs South Indian Bank Ltd (2012) 340 ITR 574 (Ker) Page 29 of 36 AAACJ7650E- JINDAL POLY FILMS LIMITED A.Y. 2008-09 ITBA/NFAC/S/250/2025- 26/1082506363(1) 5.1.6 I have considered the submissions of the appellant as well as the arguments of the AO in the order u/s 254/250/153A while giving effect to the direction of the Hon’ble ITAT. It is noted that the AO held that the claim of subsidy as capital receipt was made first time before ld CIT(A) and has been allowed by Hon’ble ITAT vide order dated 04.06.2024 hence the interest u/s 244A is to be allowed w.e.f 04.06.2024. 5.1.7 To adjudicate the matter, it is pertinent to refer to the provisions of section 244A which are reproduced as under: Interest on refunds. 244A. (1) Where refund of any amount becomes due to the assessee under this Act, he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated in the following manner, namely:— (a) where the refund is out of any tax collected at source under section 206C or paid by way of advance tax or treated as paid under section 199, during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of one-half per cent for every month or part of a month comprised in the period,— (i) from the 1st day of April of the assessment year to the date on which the refund is granted, if the return of income has been furnished on or before the due date specified under sub-section (1) of section 139; or (ii) from the date of furnishing of return of income to the date on which the refund is granted, in a case not covered under sub- clause (i): 50[Provided that where refund arises as a result of an order passed by the Assessing Officer in consequence of an

application made by the assessee under sub-section (20) of section 155, such interest shall be calculated at the rate of one- half per cent for every month or part of a month comprised in the period from the date of such application to the date on which the refund is granted;] Page 30 of 36 AAACJ7650E- JINDAL POLY FILMS LIMITED A.Y. 2008-09 ITBA/NFAC/S/250/2025- 26/1082506363(1) (aa) where the refund is out of any tax paid under section 140A, such interest shall be calculated at the rate of one-half per cent for every month or part of a month comprised in the period, from the date of furnishing of return of income or payment of tax, whichever is later, to the date on which the refund is granted: Provided that no interest under clause (a) or clause (aa) shall be payable, if the amount of refund is less than ten per cent of the tax as determined under sub-section (1) of section 143 or on regular assessment; (b) in any other case, such interest shall be calculated at the rate of one-half per cent for every month or part of a month comprised in the period or periods from the date or, as the case may be, dates of payment of the tax or penalty to the date on which the refund is granted. Explanation.—For the purposes of this clause, "date of payment of tax or penalty" means the date on and from which the amount of tax or penalty specified in the notice of demand issued under section 156 is paid in excess of such demand. (1A) In a case where a refund arises as a result of giving effect to an order under section 250 or section 254 or section 260 or section 262 or section 263 or section 264 , wholly or partly, otherwise than by making a fresh assessment or reassessment, the assessee shall be entitled to receive, in addition to the interest payable under subsection (1), an additional interest on such amount of refund calculated at the rate of three per cent per annum, for the period beginning from the date following the date of expiry of the time allowed under sub-section (5) of section 153 to the date on which the refund is granted: 51[Provided that where proceedings for assessment or reassessment are pending in respect of an assessee, in computing the period for determining the additional interest payable to such assessee under this sub-section, the period beginning from the date on which such refund is withheld by the Assessing Officer in accordance with and subject to provisions of sub-section (2) of section 245 and ending 52[with the date up to which such refund is withheld], shall be excluded.] (1B) Where refund of any amount becomes due to the deductor in respect of any amount paid to the credit of the Central Government under Chapter XVII-B, such deductor shall be entitled to receive, in addition to the said amount, simple interest thereon calculated at the rate of one-half per cent for every month or part of a month comprised in the period, from the date on

which— (a) claim for refund is made in the prescribed form; or Page 31 of 36 AAACJ7650E- JINDAL POLY FILMS LIMITED A.Y. 2008-09 ITBA/NFAC/S/250/2025-26/1082506363(1) (b) tax is paid, where refund arises on account of giving effect to an order under section 250 or section 254 or section 260 or section 262, to the date on which the refund is granted. (2) If the proceedings resulting in the refund are delayed for reasons attributable to the assessee or the deductor, as the case may be, whether wholly or in part, the period of the delay so attributable to him shall be excluded from the period for which interest is payable under sub- section (1) or (1A) or (1B), and where any question arises as to the period to be excluded, it shall be decided by the Principal Chief Commissioner or Chief Commissioner or Principal Commissioner or Commissioner whose decision thereon shall be final. (3) Where, as a result of an order under sub-section (3) of section 115WE or section 115WF or section 115WG or sub- section (3) of section 143 or section 144 or section 147 or section 154 or section 155 or section 250 or section 254 or section 260 or section 262 or section 263 or section 264 or an order of the Settlement Commission under sub-section (4) of section 245D, the amount on which interest was payable under sub-section (1) has been increased or reduced, as the case may be, the interest shall be increased or reduced accordingly, and in a case where the interest is reduced, the Assessing Officer shall serve on the assessee a notice of demand in the prescribed form specifying the amount of the excess interest paid and requiring him to pay such amount; and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly. (4) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989, and subsequent assessment years: Provided that in respect of assessment of fringe benefits, the provisions of this subsection shall have effect as if for the figures "1989", the figures "2006" had been substituted. 5.1.8 The provisions of section 244A(1) clearly layout that whenever the assessee is entiltled for any refund arising out of TCS/advance tax then the interest shall be calculated for the period starting from the first day of April of the assessment year. The provisions of secton 244A(2) provide that if the proceedings resulting in the refund are delayed for reason attributable to assessee then such period shall be excluded which is attributable to the assessee and in case of despute the same shall be decided by Pr.CCIT/CCIT/Pr. CIT/CIT. The appellant’s contention is that merely “making a claim at a later stage” was not equivalent to delay in the proceedings of refund and making a claim at a later stage did not tantamount to delay in the

proceedings of refund. Page 32 of 36 AAACJ7650E- JINDAL POLY FILMS LIMITED A.Y. 2008-09 ITBA/NFAC/S/250/2025- 26/1082506363(1) 5.1.9 It is noted that in the instant matter the refund arose to the assessee on account of acceptance of a claim of non- taxability of a receipt in appellate proceedings, which receipt was originally returned by it as taxable and the claim was made for the first time only before the first appellate authority. It is also noted that the AO in the impugned order dated 13.03.2025 has not laidout any reasoning why the provisions of section 244A(1) are not applicable and why the provisions of section 244A(2) are being invoked. 5.1.10 The provisions for entitlement to interest on refund is laid down in subsection (1) , a bare perusal of which reveals that any refund due to an assessee is to be compensated with interest for the entire period for which the surplus amount remains with the State/Government . The Section is very clear and there is no ambiguity in the same. All refunds of advance payments of taxes in the form of TDS, TCS and advances taxes paid, are to be compensated for the period from the first day of assessment year to the grant of refund. While all self assessment taxes or other taxes paid are to be compensated for the periods from the date of filing of return of income or the date of payment of taxes whichever is later, to the grant of refund. The only caveat or exception is provided in subsection (2) , that where any proceedings of refund are delayed by the assessee, this period is to be excluded from the period for which interest is to be paid. Further it is only the Pr.CCIT/CCIT/Pr.CIT/CIT who is empowered to decide the period of delay. 5.1.11 Hence, it can be concluded that interest on refunds granted is compensatory in nature. The Hon’ble Apex Court has held in the case of Union of India vs Tata Chemicals Ltd(2014) 43 taxmann.com 240 as under: “37.A “tax refund” is a refund of taxes when the tax liability is less than the tax paid. As per the old section an assessee was entitled for payment of interest on the amount of taxes refunded pursuant to an order passed under the Act, including the order passed in an appeal. In the present fact scenario, the deductor/assessee had paid taxes pursuant to a special order passed by the assessing officer/Income Tax Officer. In the appeal filed against the said order the assessee has succeeded and a direction is issued by the appellate authority to refund the tax paid. The amount paid by the resident/ deductor was retained by the Government till a direction was issued by the

appellate authority to refund the same. When the said amount is refunded it should carry interest in the matter of course. As held by the Courts while awarding interest, it is a kind of compensation of use and retention of the money collected unauthorizedly by the Department. When the collection is illegal, there is corresponding obligation on the revenue to refund such amount with interest in as much as they have retained and enjoyed the money deposited. Even the Department has understood the object behind insertion of Section 244A, as that, an assessee is entitled to payment of interest for money remaining with the Government which would be refunded. There is no reason to restrict the same to an assessee only without extending the similar Page 33 of 36 AAACJ7650E- JINDAL POLY FILMS LIMITED A.Y. 2008-09 ITBA/NFAC/S/250/2025- 26/1082506363(1) benefit to a resident/ deductor who has deducted tax at source and deposited the same before remitting the amount payable to a non-resident/ foreign company.” 5.1.12 The moot issue to decide in the instant appeal is whether or not the act of making a claim belatedly by the assessee resulting in refund tantamounts to “delay in proceedings resulting in refund” as mentioned in section 244A(2) of the Act. In my view, any claim of the assessee allowed at any stage resulting in refund whether in the first appellate stage, the second appellate stage or even before the Hon'ble High Court or Hon'ble Supreme Court, only recognises the position that the assessee was never required to pay taxes on that portion of the income. The entire process envisaged under law, of assessments and appeals is a continuous process of assessing true and correct income of the assessee, beginning with the assessee himself disclosing the same in his return of income and the same thereafter being scrutinized in assessment and thereafter any adverse conclusion drawn thereon being challenged before the appellate authorities and higher judicial authority. The entire process, therefore, of assessment and appeals culminates in the determination of true and correct income on which the assessee was required to pay its taxes. Any claim allowed to the assessee at any stage whether made for the first time or whether taken up in appeal only underlines the position that no taxes were required to be paid by the assessee on the said claim at all. Therefore, in such circumstances, the refund generated on account of the same, having been retained by the State unlawfully is entitled to be compensated with interest for the entire period for which it is so retained.

5.1.13 The esential ingredient of sub-section (2) of Section 244A is that the proceedings resulting into refund should have been delayed for the reasons attributable to the assessee, whether wholly or in part. If such requirement is satisfied, to the extent of the period of delay so attributable to the assessee, he would be disentitled to claim interest on refund. The act of revising a return or raising a claim during the course of the assessment proceedings cannot be said to be the reasons for delaying the proceedings which can be attributable to the assessee. Mere fact that the claim came to be granted by the Hon’ble ITAT, would not change this position. The decision of the Hon’ble ITAT actully means that it was to allow a claim which in law, in their opinion, was allowable by the Assessing Officer. 5.1.14 The AO in the order dated 13.03.2025 has not madeout a case that the appellant had needlessly or frivolously delayed the assessment proceedings at the original or appellate stage. In absence of any such foundation, mere fact that the assessee made a claim during the first appellate proceedings which was allowed at the second appellate stage would not imply that the assessee was responsible for causing the delay in the proceedings resulting into refund. It just means that the Page 34 of 36 AAACJ7650E- JINDAL POLY FILMS LIMITED A.Y. 2008-09 ITBA/NFAC/S/250/2025-26/1082506363(1) appellant was entitled for a claim at the level of AO onwards. 5.1.15 In the case of Chetan N. Shah vs. M.K. Moghe Commissioner of Income Tax (2015) 53 taxmann.com 18, the Hon’ble Bombay high court held that there is no provision for rejecting the claim of interest on account of a mistake by the assessee. That such a proposition would render the section otiose since excess taxes paid originate on account of some mistake either on fact or law on the part of the assessee. That it is only delay in disposal of proceedings resulting in refund attributable to the assessee which are not to be compensated with interest. The relevant findings are as under: “13. The Assessing Officer has been given no discretion in the matter of granting interest. The amount of interest has to be paid to an assessee in terms of Section 244A of the Act. The only limitation provided therein under Section 244A of the Act is under sub- section 2 thereof which mandates that where any refund results to an assessee, while computing the interest payable thereon, the delay which is attributable to the assessee, in obtaining the refund would be excluded. The Act itself does not provide for

rejecting the claim for interest on account of a mistake committed by an assessee. If such a proposition is to be accepted then all excess amounts of tax paid by the assessee on account of a mistake would stand rejected rendering Section 244A of the Act otiose. Section 244A of the Act provides for interest on refunds in respect of any amount which has been paid in excess to that otherwise payable under the law. In most cases the excess amount paid as tax would originate on account of some mistake either on fact or of law on the part of the assessee. Advisedly the Act does not empower the authorities to reject a claim for interest on account of a mistake committed by the assessee.” 5.1.16 The delayed claim of the appellant therefore cannot be said to tantamount to delay in proceedings resulting in refund attributable to the appellant. Hence, in view of the above discussion, facts of the case and the judicial pronouncements on the issue, it is held that the appellant is entitled to interest on the refund u/s 244A w.e.f first April of the assessment year i.e. 01.04.2008 to 12.03.2025 instead of 04.06.2024 to 12.03.2025 as adopted by the AO vide order dated 13.03.2025. 5.1.17 In effect the appellant succeeds on ground No.1 and the AO is directed to compute the interest on the refund as per para 5.1.16 above. The ground No.1 is hereby allowed.

Sd/- Sd/-

[SATBEER SINGH GODARA] [KRINWANT SAHAY] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated: 22.09.2026 Neha, Sr. PS Copy forwarded to: 1. Appellant 2. Respondent 3. PCIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, New Delhi