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Income Tax Appellate Tribunal, “B” BENCH, MUMBAI
This appeal by the Revenue is arising out of the order of Commissioner of Income Tax (Appeals)-2, Mumbai [in short CIT(A)], in appeal No. CIT(A)-2/IT/172/2014-15, dated 28.12.2016. The rectification order under section 154 of the Act passed by the Dy. Commissioner of Income Tax, Circle 1(2), Mumbai (in short ‘DCIT’/ AO) for the A.Y. 1986- 87 vide order dated 30.06.2014.
The only issue in this appeal of Revenue is against the order of CIT(A) in directing the AO to allow interest on refund as per section 244(1A) of the Act instead of allowed by AO under section 244A of the Act. For this Revenue has raised the following ground: -
“Whether on the facts and in the circumstances of the case and in law, the ld. CIT(A) was right in directing the AO to allow interest on refund to the assessee as per section 244(1A) without appreciating the legal position that at the time of determination of refund i.e, on 26.5.1989, section2 44A had come in force and hence assessee was entitled to refund only according to the law prevailing at the time of determination of refund?”
We have heard the rival contentions and gone through the facts and circumstances of the case. We find that the CIT(A) has directed the AO to allow interest under section 244(1A) of the Act by observing in Para 3.2 as under: -
“3.2. I have gone through the order u/s. 154 dated 30.06.2014 giving effect to ITAT's order, the AU has mentioned that rectification to be given after due verification as per section 244A/244(IA) interest. While giving refund the AU has taken interest as per provision of section 244A i.e. introduced w.e.f. 01.04.1989 whereas the appellant's case falls under 1986-87. Section 244 may not be applicable in this case but section 244(1A) interest has to be granted for which the appellant filed the appeal with this office for which I had discussed with the AR of the appellant. So it is acceptable for AY 1986-87 the AO has to follow the provision of sec. 244(1A) for the purpose of providing interest and refund and so accordingly I direct the AO to give necessary interest as per provision of sec. 244(1A) i.e. prior to 01.04.1989. This ground is allowed.”
Now before us, the learned Counsel for the assessee Ms. Arati Vissanji took us through the provisions of section 244(1A) of the Act, which is applicable for AY 1986-87 and she further drew our attention to the provisions of section 244A(4) of the Act and argued that the provisions of section 244A of the Act, in view of sub-section 4 of this section, shall be applicable for assessment years commencing on the 1st day of April 1989 and subsequent assessment years. According to her, 244(1A) will apply to the present case and present assessment year under consideration is AY 1986-87. According to her, the CIT(A) has rightly directed the AO to compute the interest accordingly. The learned Sr. Departmental Representative relied on the rectification order passed by AO under section 154 of the Act.
We have gone through the provisions of section 244(1A) of the Act and also 244A of the Act and noticed that the provisions of section 244A will apply for and from AY 01.04.1989 i.e. AY 1989-90 and subsequent assessment years. The present assessment year before us is 1986-87 and the provisions of section 244(1A) of the Act will apply. The scope of relevant provisions 244(1A) of the Act is explained in circular No. 209, dated 11.01.1977. We find that Taxation Laws (Amendment) Act, 1975 has inserted a new sub-section (1A) in section 244 with effect from October 1, 1975 providing that where any amount has been paid by the assessee in pursuance of any order of assessment or penalty and the assessee becomes entitled to a refund in respect of such amount or any part thereof, as a result of an appellate order or other proceedings under the Act, the Central Government shall pay interest on the amount so refundable from the date on which the disputed amount was originally paid to the date on which the refund is granted. This provision will be applicable only if the refund is arising out of orders in appeal or other proceedings passed on or after October 1, 1975 and the payment has been made after March 31, 1975. We find no infirmity in the order of CIT(A) and hence, the same is confirmed. 6. In the result, the appeal of the Revenue is dismissed. Order pronounced in the open court on 28-08-2018.