TOLANI EDUCATION FOUNDATION,MUMBAI vs. ACIT CENTRAL CIRCLE 17 & 28, MUMBAI

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ITA 6508/MUM/2013Status: DisposedITAT Mumbai16 October 2015AY 2002-034 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that interest on refund must be granted up to the date of issuing the refund voucher. The lower authorities' interpretation that the date of the order is the cut-off point was disagreed with.

What were the facts?

The assessee claimed interest on refund up to the date of issuing the refund voucher, which was denied by the lower authorities. The assessee argued that interest should be paid until the refund is actually received.

What were the issues?

Whether interest on refund is payable up to the date of the refund voucher or the date of the order granting the refund.

Which sections of the Income-tax Act were involved?

Section 244A

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “E” BENCH, MUMBAI

Before: SHRI N.K. BILLAIYA & SHRI SANJAY GARG

For Respondent: Ms. Surabhi Sharma
Hearing: 05.10.2015Pronounced: 16.10.2015

आदेश / O R D E R

PER N.K. BILLAIYA, AM: These three appeal by the assessee are directed against three separate orders of the Ld. CIT(A)-1, Mumbai pertaining to Assessment years 2002-03, 2003-04 and 2006-07. In all these appeals, the grievance of the assessee is same and which is denial of interest on refund upto the date of issuing the refund voucher as per the provisions of the law.

2.

The grievance of the assessee relates to the order giving effect to the Appellate order because of which the assessee was entitled for refund though the refund was granted but according to the assessee proper interest as per the provisions of the law have not been given to the assessee upto the date of issuing the refund voucher.

3.

The claim of the assessee was denied by the Ld. CIT(A) for A.Y. 2002-03 holding as under:

1.

“ I have carefully considered the facts of the case and submissions of the appellant which are primarily in the nature of claim of interest to the date of delivery of refund cheque in the hands of appellant. The submissions and claim made by the appellant are baseless, vague and general in nature without any supporting law and rules in this behalf. I would further observe that the interest payable to assessee u/s 244A and its calculation is also provided under Rule- 119A r.w.s. 244A where the word appearing is 'refund granted' which clearly means the determination of the quantums and interest through the relevant order in this behalf, thereby making the date of such order the cut-off point for this purpose. However, it can also be seen that the grounds of appeal raised by the appellant are not covered under the provisions of section 246A which could be subject matter of appeal before me. Looking at the nature of grounds of appeal it can be seen that same are beyond the purview of law and rules under the Income Tax in this behalf and can be brought to the notice of higher authorities as grievance of administrative nature. In view of the above discussions and for the reasons therein, grounds of appeal no. 1, 2 and 3 are dismissed.”

4. We have carefully gone through the findings of the Ld. CIT(A) and we do not agree with the same. It is a settled proposition of law that interest on refund has to be granted upto the date of issue of the refund voucher. The Tribunal Mumbai Bench had the occasion to consider a similar situation in the case of Jay Bros Investment and Trading Co. (P) Ltd Vs DCIT 74 TTJ 748 wherein the Tribunal has held as under:

“We have carefully considered the rival submissions and perused the record. In our view, the plea of the assessee deserves favourable consideration. In several cases, where a refund has to be granted to the assessee, the Revenue officials used to take longer time in clearing such refunds resulting in considerable hardship to the assessee and with a view to expedite grant of refund, a uniform period of three months has been specified in ss. 243 and 244 by Taxation Laws (Amendment) Act, 1970. If there is delay beyond the period of three months, IT Act provided for payment of interest to the assessee by the Central Government. While implementing the provisions of s. 243 of the Act, it was again found that the AO gave a different interpretation of the said section which is not intended by the Government. With a view to clarify the issue, the CBDT issued a circular (extracted above). It may also be noted that s. 243 is operative upto asst. yr. 1988-89 only whereas s. 244A comes into effect from 1st April, 1989 in lieu of ss. 214, 243 and 244 as clarified by the CBDT in its Circular No. 549 dt. 31st Oct., 1989, [published at (1990) 82 CTR (St) 1]. Therefore, it is clear that the circular issued in connection with s. 243 of the IT Act equally applies to s. 244A. It also appeals to logic that interest has to be paid till the date of preparation of cheque as otherwise the purpose of granting interest would be defeated because in the Government departments there may be long gap between the formal order and the date of preparation of cheques. The CBDT categorically stated that interest has to be granted upto the date of refund voucher. In fact, the cheque issued by the Government is known as "Income Tax Refund Order". Therefore, it is proper to assume that the words "on which the refund is granted" in s. 244A mean the date of signing the Income-tax Refund Order i.e., the refund voucher. We, therefore, direct the AO to calculate interest payable to the assessee from first day of April of the assessment year to the date on which the refund voucher is signed. Considering the circumstances of the case, we are also of the view that it is a fit case for awarding costs to the assessee under s. 255(2B) of the Act. In our view, awarding cost of Rs. 3,000 would meet the ends of justice and we hereby direct the respondent to deposit the cost with the Dy. Registrar, Tribunal (Mumbai Zone) within one month from the date of receipt of the order and the Registry is further directed to collect the cost and pay the same to the assessee upon presenting an application to that effect.”

Respectfully following the findings of the Co-ordinate Bench, we direct the AO to calculate interest as per the provisions of the law upto the date on which the refund voucher is signed.

5.

As mentioned elsewhere, the facts of all the impugned assessment years are same, therefore all the appeals are allowed accordingly.

6.

In the result, all the appeals filed by the assessee are allowed.

Order pronounced in the open court on 16th October, 2015

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