VIACOM 18 MEDIA PRIVATE LIMITED ,MUMBAI vs. ASSISTANT COMMISSIONER OF INCOME TAX 16(1), MUMBAI

The Ld.AR at the outset submitted that, the only issue that is to be considered is in respect of the method adopted by the Ld.AO to compute the interest u/s.244A of the Act. 4.1. The Ld.AR submitted that, assessing officer incorrectly computed the interest by first adjusting the amount of refund already granted towards the principle, and thereafter if any outstanding was adjusted towards the interest.It is submitted A.Y. 2012-13 Viacom 18 Media Private Limited that, such method of computation is not in accordance with the provisions of the Act.He submitted that refund already granted should be first adjusted against the interest component due to the assessee, and any balance left out should be adjusted towards the principle component. 4.2. The Ld.AR further submitted that, this view is supported by following decision of the Coordinate Bench of this Tribunal in case of Tata Sons Pvt.Ltd. vs. DCIT reported in 2023157 taxmann.com 329. 4.3. On the contrary, the Ld.DR relied on the orders passed by the authorities below. We have perused the submissions advance by both sides in the light of record placed before us 5. It is admitted position that, no specific provision is brought on the statute concerning the adjustment of refund issued earlier for computing the amount of interest payable by the revenue to the assessee on the amount of refund due. The Ld.AR also placed reliance on provision of section 140A of the Act r.w.s. 220(2) of the Act to support its contention.It is submitted that,when the assessee defaultstowards payment of interest on anon payment of advance tax, interest is payable u/s.234B and C. The provision is clear to the extent that the amount paid shall first be adjusted towards the interest payable and the balance if any shall be adjusted towards the tax payable. Similar view was expressed by Coordinate Bench of this Tribunalin case of Union Bank of India vs. ACIT reported in (2016) 72 taxmann.com 348. The relevant extract of this decision is under: “"3.8 Thus, from the perusal of the above, it is clear that where the amount of tax demanded is paid by the assessee then it shall first be A.Y. 2012-13 Viacom 18 Media Private Limited adjusted towards interest payable and balance if any whatever tax payable. Now, if we go through section 244A, we find that no specific provision has been brought on the statute with respect to adjustment of refund issued earlier for computing the amount of interest payable by the revenue to the assessee on the amount of refund due to the assessee. Thus, the law is silent on this issue. Under these circumstances, fairness and justice demands that same principle should be applied while granting the refund as has been applied while collecting amount of tax. The Revenue is not expected to follow double standards while dealing with the tax payers. The fundamental principle of fiscal legislation in any civilised society should be that the state should treat its citizens, (i.e, taxpayers in this case) with the same respect, honesty and faimess as it expects from its citizens. It is further noted by us that the hon'ble Delhi High Court has already decided this issue in clear words which has been followed by the Tribunal in assessee's own case in the earlier years. It is further noted by us that assessee is not asking for payment for interest on interest. It is simply requesting for proper method of adjustment of refund and for following the same method which was followed by the Department while making collection of taxes. Under these circumstances, we find that judgment of the hon'ble Supreme Court in the case of Gujarat Fluoro Chemicals (supra) is not applicable on the facts of the case before us and thus the learned Commissioner of Income-tax (Appeals) committed an error in not following the decisions of the Tribunal of earlier years in the assessee's own case as well as the judgment of the hon'ble High Court in the case of India Trade Promotion Organisation (supra)”

On the issue of grant of refund till the date of issue of refund, the Id AR submitted that the issue is squarely covered in favour of the assessee vide the decisions of Hon'ble Bombay High Court in case of CIT v. Pfizer Ltd. [1991] 191 ITR 626 and also of City bank NA v. CIT [IT Appeal No. 6 of 2001] as well as the decision of CIT v. K.E.C International [IT Appeal No. 1038 of 2000). Respectfully following the aforesaid precedents, in our considered view, the assessee is justified in seeking interest u/s 244A of the Act upto the date of receipt of the refund order, ie. 18-8-2022. Accordingly the AO is directed to re- calculate the interest up to the date of actual receipt of refund by the assessee. It is ordered accordingly.”

As consequence of the above computation, the additional interest u/s.244A(1A) of the Act willalso under go change. The Ld.AO is directed to compute the interest u/s.244A(1A) of the Act in accordance with law. Accordingly the grounds raised by the assessee stands allowed for statistical purposes.