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Income Tax Appellate Tribunal, “E”, BENCH MUMBAI
Before: SHRI R.C.SHARMA, AM & SHRI AMARJIT SINGH, JM
O R D E R PER R.C.SHARMA (A.M): These are the appeals filed by the assessee against the order of CIT(A), Mumbai, for the assessment years 1984-85 to 1988-89.
Rival contentions have been heard and record perused.
The facts of the case are that following ITAT's order in appeal no 9254 & 9255/Bom/1990 dated 22.08.2006, the appeal effects were given vide order u/s 143(3)/254 dated 19.12.2007 in assessee's case for AYs 1984- 85, 1985-86, 1987-88 & 1988-89 and refund together with interest thereon was granted to the assessee in all those assessment years. Thereafter a notice u/s 154 was issued on 28.03.2012 for rectifying the amount of 2 State Bank of India interest payable/ paid to the assessee on the refund granted to it in all these four assessment years. The AO passed orders u/s 154 dated 31.03.2012 in all these years separately and raised the demand on account of excess payment made to it.
By the impugned order CIT(A) confirmed the action of the AO against which assessee is in further appeal before us.
Grievance of assessee in the assessment year 1984-85 pertains to granting of interest u/s.244(1A) on the account of refund. It was contention of assessee that AO has not granted correct amount of interest on the refund. Further contention of learned AR was that interest has not been granted on the interest that became due to the assessee on account of adjusting the refunds granted first against the tax refunds due against the correct procedure of adjusting the same first against interest refunds due and thereafter, against the tax refunds due.
All the grounds raised
by the assessee relates to the withdrawal of interest payable to it [on the refund] by way of passing the rectification order u/s 154. The assessee has challenged it on legality of these orders too. The issues are basically computation of interest payable to it u/s 214, 244 & 244A of the IT Act.
7. We have considered rival contentions and found that as against AO’s action for computation interest u/s.244A(1)(b). Contention of assessee was that provisions of Section 244A is applicable from assessment year 1989-90. The CIT(A) has directed the AO as under:-
3 State Bank of India 4.2.1 It is noted that the AO has computed interest u/s 244A(1 )(b) for part of the period [w.e.f 01.01.1994]. The provision of section 244A is applicable w.e.f. AY 1989-90 only. The relevant assessment years are 1984-85, 1985-86, 1987-88 & AY 1988- 89. The provisions applicable for these assessment years are sections 214 & 244 [and not 244A]. The AO is therefore directed to re-compute the interest payable to the assessee [ u/s 214 & 244 only] and revise the ITNS-150A. 4.2.2 While computing interest under section 214, care need to be taken for the amendments made in that provision. As per sub- section(1), the interest is payable on the advance tax that exceeds 'the assessed tax' for the period 1st April (next following the financial year in which advance tax was paid) to the date of regular assessment. Further Sub-section (1A) allows the reduction/ increase into such interest on account of appeal effect for relief I enhancement, as the case may be, on addition to the total income. But this subsection (1A) has been inserted w.e.f. 01.04.1985 and applicable for AY 1985-86 and onwards (till AY 1988-89). Prior to 01.04.1985, sub-section (1A) was all together different and as such reduction / increase of interest payable under sub section (.1) was not possible. For ready reference, the section 214 as it existed w.e.f. 01.04.1985 and prior to that are reproduced hereunder:
Since the relevant assessment under consideration is assessment year 1984-85, we do not find any infirmity in the order of CIT(A) for directing the AO to compute interest u/s.214 and 244 and not u/s.244A of the IT Act. Accordingly, we confirm the action of the CIT(A) in this regard.
The grievance of the assessee in the A.Y.1984-85 pertains to applicability of provisions of Section 214(1A) for allowing interest on refunds. AO declined interest u/s.214(1A) on the plea that amendment was brought w.e.f. A.Y 1985-86, therefore, no interest was to be allowed in the A.Y.1984-85. CIT(A) confirmed the order of AO and assessee is in further appeal before us.