ASSISTANT COMMISSIONER OF INCOME TAX 3(4),MUMBAI, MUMBAI vs. IDBI BANK LTD, PISTON COMPOUND TOAP

IN THE INCOME TAX APPELLATE TRIBUNAL “C’ BENCH

MUMBAI

BEFORE SHRI SANDEEP GOSAIN, JUDICIAL MEMBER
&
SHRI PRABHASH SHANKAR, ACCOUNTANT MEMBER
आयकर अपील सं./ITA No.5957/MUM/2024
(निर्धारण वर्ा / Assessment Year :1997-98)

Assistant Commissioner of Income Tax -3(4),
स्थायी लेखा सं./PAN No. : AABCI8842G
(अपीलधर्थी /Appellant)
..
(प्रत्यर्थी / Respondent)

निर्ाारिती की ओर से /Assessee by : Shri C. Naresh, AR
रधजस्व की ओर से /Revenue by : Shri R.A.Dhyani, CIT,DR

सुिवधई की तधरीख / Date of Hearing
:
17.02.2025
घोर्णध की तधरीख/Date of Pronouncement
:
24.02.2025

आदेश / O R D E R

Per Prabhash Shankar, AM:

This appeal preferred by the Revenue emanates from the order of the National Faceless Appeal Centre, Delhi, dated 18.09.2024 for A.Y.1997-98 passed u/s 250 of the Income Tax Act,1961 (henceforth ‘the Act’) as per the following grounds of appeal :- i "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is right in holding that refund shall first be adjusted against interest payable and balance, if any, shall be adjusted towards tax refundable relying upon the decision in the case of Bank of Baroda ignoring the fact that department had not accepted the aforesaid decision and had contested this issue before the Hon'ble High Court?"

ii. "Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is right in holding that the principal component of the refund issued earlier has to be ignored for the purpose of calculating interest u/s 244A of the Income tax Act,
1961, payable to the assessee, ignoring the fact that the working
IDBI Bank Ltd., AY 1997-98

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of interest u/s 244A in such manner amounts to interest on interest which is not permissible as per law?".
2. Brief facts of the case are that the assessee is engaged in banking business. The only issue in this case pertains to interest payable to the assessee u/s 244A of the Act.Before the ld.CIT(A),the assessee agitated granting of less refund allowed by the ld.AO as against its claim. It was stated that this difference had resulted on account of the AO not granting interest on the amount of refund due after adjusting the refund already granted by segregating the refund due into interest and tax and not granting interest on the total amount of balance refund due of tax after adjusting the refund granted as against the specific provisions of section 244A of the Act.
3. Originally, the ld.CIT(A) vide his order dated 03.04.2023
allowed the claim of the assessee directing the AO to examine the computation of refund including interest u/s 244A of the Act in accordance with the direction given by Hon'ble Juri ictional ITAT,
Mumbai in the case of Bank of Baroda in ITA no. 1646 and 2565/Mum/2017 dated 20.12. 2018.However,the AO while giving effect to the said appellate order vide Order Giving Effect dated
10.08.2023 did not grant the interest u/s 244A of the Act in accordance with the direction given. A fresh appeal was filed by the assessee before the ld.CIT(A) who allowed the appeal giving the directions again to the AO.Relevant paras of the order are extracted for ready reference:
IDBI Bank Ltd., AY 1997-98

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“4.1 I have carefully perused the grounds of appeal, facts of the case, written submission uploaded oral contentions of the appellant as well as order of the Ld. CIT,
NFAC for the year under consideration. It was specifically mentioned in the order passed by the Ld. CIT, NFAC vide order ITBA/NFAC/S/250/2023- 24/1051849594(1) dated 03.04.2023 on the issue that A.O. is directed to examine the computation of refund including interest u/s 244A of the Act in accordance with the direction given by Hon'ble Juri ictional ITAT Mumbai in the case of Bank of Baroda in ITA no. 1646 and 2565/Mum/2017 dated 20.12. 2018. However, from perusal of the Order Giving Effect passed by the AO on 10.08.2023 against which the present appeal has been filed, it seems that AO has not calculated/granted the interest u/s 244A of the Act as per the direction given in the order and has also not followed the direction given in the order of Hon'ble ITAT Mumbai in the case of Bank of Baroda in ITA no. 1646, 2565/Mum/2017
with regard to computation of interest u/s 244A. During the course of video conferencing, appellant has also pointed out the decisions of the Hon’ble Juri ictional
ITAT “C” Bench, Mumbai on the issue for the year under consideration on the appeal filed against the order of Ld. CIT, NFAC for A.Y. 1997-98 by the department. The relevant portion of the decision of the Hon’ble ITAT on the issue is reproduced as under:-
“10. The ratio laid down is that the amount of interest u/s. 244A is to be calculated by first adjusting the amount of refund already granted towards the interest component and balance left if any shall be adjusted towards the tax component. Accordingly we hold that the manner in which the assessing officer has adjusted the refund is not correct and that the assessee would be entitled for interest on the unpaid refunds in accordance with the principle laid out in the aforesaid decision of Tribunal. The assessing officer is directed to compute interest under section 244A as per the claim of the assessee after giving a proper opportunity of being heard.”

In view of the above decision of the Hon’ble ITAT on the issue for the year under consideration, AO is directed to compute/grant the interest u/s 244A as per the decision of Coordinate Bench of Hon’ble Juri ictional ITAT Mumbai in the case of Bank of Baroda cited(supra) as per the claim of the appellant after giving proper opportunity of being heard. Thus, Ground no. 1.1 and 1.2 of the appeal raised by the appellant are partly allowed.”

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ld.CIT(A) has once again given a direction to comply as stated above. The ld.CIT(DR) could not point out any infirmity in the direction given.
5. In view of the above facts, we do not find any infirmity in the order of the ld. CIT(A) in directing the Assessing Officer to compute the interest after verification considering the above decisions. Accordingly, the appeal is dismissed.

Order pronounced in the open court on 24.02.2025. (SANDEEP GOSAIN) (PRABHASH SHANKAR)
न्यायिक सदस्य / JUDICIAL MEMBER
लेखाकार सदस्य/ACCOUNTANT MEMBER

म ुंबई/Mumbai; ददिधंक Dated 24/02/2025
आदेश की प्रनतनलनप अग्रेनर्त/Copy of the Order forwarded to :

आदेशधिुसधर/ BY ORDER,

(