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Facts
The assessee, The South Indian Bank Ltd., filed its return of income for AY 2007-08. The assessment order was later modified by the ITAT, but the AO did not grant interest under Section 244A(1A) while passing the consequential order.
Held
The Tribunal held that Section 244A(1A) of the Income Tax Act, which governs the grant of interest on refunds, came into effect on 01/06/2016. Since the consequential order was passed after this date, the assessee is entitled to interest.
Key Issues
Whether the assessee is entitled to interest under Section 244A(1A) on a refund determined by a consequential order passed after the insertion of the said section.
Sections Cited
143(3), 244A, 244A(1A)
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Income Tax Appellate Tribunal, COCHIN BENCH
Before: SHRI INTURI RAMA RAO, AM & SHRI SONJOY SARMA, JM
Appellant by: Shri Naresh C, CA Respondent by: Smt. Veni Raj, CIT-DR Date of Hearing: 12.06.2025 Date of Pronouncement: 06.08.2025 O R D E R Per: Inturi Rama Rao, AM This appeal filed by the assessee is directed against the order of the ADDL/JCIT-1, Noida [CIT(A)] dated 15.01.2025 for Assessment Year (AY) 2007-08.
Brief facts of the case are that the assessee is a private scheduled bank, engaged in the business of banking. The return of income for the A.Y. 2007-08 was filed on 12/11/2007 declaring The South Indian Bank Ltd.. income of Rs. 2,65,00,020/-. Subsequently, the same was revised on 25/09/2008 declaring total income of Rs. 5,06,00,592/-. Against the said return of income, the assessment was completed by the Addl. CIT, Range-1, Trichur(for short, 'AO')vide order dated 29/09/2008 passed u/s. 143(3) of the Income Tax Act, 1961 (for short, 'the Act') at a total income of Rs. 211,21,24,830/- after making certain disallowances. On appeal before CIT(A)vide order dated 04/12/2013 granted partial relief. On further appeal to the ITAT in dt. 24/12/2014, the assessment order was modified at a total income of Rs. 144,91,03,583/-. While passing modification order vide order dated 06/07/2020, the AO had not granted interest u/s. 244A(1A) of the Act.
Being aggrieved, the appellant-bank filed an appeal before the CIT(A), who vide impugned order dismissed the appeal by holding that the provisions of section 244A(1A) are not retrospective and are effective only w.e.f. 01/06/2016. Accordingly, appeal was dismissed.
Being aggrieved, the appellant-bank is in appeal before this tribunal in the present appeal.
We have heard the rival contentions and perused the material available on record. The issue that arises for our determination is with regard to computation of amount of eligible interest on refund due to the appellant bank. The amount of refund was determined The South Indian Bank Ltd.. pursuant to the consequential order passed to the order of ITAT. While determining the amount of refund, it appears that the AO had not granted interest u/s. 244A. Section (1A) was inserted by the Parliament by Finance Act, 2016 w.e.f. 01.06.2016 governing grant of interest in such situations. Undisputedly, the consequential order to the ITAT order was passed on 06/07/2020after the provisions of section 244A(1A) came into effect w.e.f. 01/06/2016. The CBDT has clarified that the consequential order giving effect to the appellate order passed after 01/06/2016 interest u/s. 244A is allowable and also reference can be made to the decision of Nima Specific Family Trust vs. ACIT(12 ITR-OL 566). Therefore, in view of this legal position, we are of the considered opinion, the appellant is entitled for interest us/ 244A(1A) of the Act. Accordingly, the matter is restored to the file of AO to grant interest on the refund determined on the consequential order after affording a reasonable opportunity of hearing.
In the result, the appeal of the assessee stands partly allowed for statistical purposes. Order pronounced on 06th August, 2025 under Rule 34 of The Income Tax (Appellate Tribunal) Rules, 1963 Sd/- Sd/- (SONJOY SARMA) (INTURI RAMA RAO) JUDICIAL MEMBER ACCOUNTANT MEMBER Cochin, Dated: 06th August, 2025