THE DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE-1, UDUPI., UDUPI vs. M/S SYNDICATE BANK, UDUPI

C.O. No.01/PAN/2023 आदेश / ORDER

PER INTURI RAMA RAO, AM:

nos.1 to 5 challenges the finding of the ld. CIT(A) in directing the Assessing Officer to allow interest of refund u/s 244A of the Act, as the issue is covered by the decision of the Hon’ble Karnataka High Court in assessee’s own case, 428 ITR 372 (Kar.), wherein, the Hon’ble High Court held that the payment of interest of refund does not amount to payment of interest on interest. The relevant paragraphs of the order of the Hon’ble Karnataka High Court (supra) reads as under :-

8. A three Judge Bench of the Supreme Court in Narendra Doshi (supra) upheld the decisions rendered by Gujarat High Court, which held that the revenue is liable to pay interest on the amount of interest and upheld the order of the High Court, which had answered the substantial question of law framed in favour of the assessee. Thereafter, a three judge bench of the Supreme Court in H.E.G. Ltd. (supra) while dealing with the expression 'refund of any amount becomes due to the assessee', held that the interest component will partake the character of amount due under section 244A of the Act. When an order of refund is issued, the same should include interest payable on the amount, which is refunded. If the refund does not include interest due payable on the amount refunded, the revenue would be liable to pay interest on the short fall. This does not amount to payment of interest on interest. In view of aforesaid enunciation of C.O. No.01/PAN/2023 law by a three judge bench of the Supreme Court, which is binding on us, it is not necessary for us to deal with the decision of the Supreme Court in Sandvik Asia Ltd. which has been rendered by a two judge bench of the Supreme Court and which has been subsequently clarified in Gujarat Fluoro Chemicals (supra). It is pertinent to mention here that if the interest has to be computed after 1-4-1989, the same has to be computed in accordance with section 244A of the Act only and the assessee is entitled to interest in terms of section 244A of the Act only.”

nos.1 to 5 filed by the Revenue stands dismissed.

8. Ground of appeal nos.6 to 9 challenges the decision of the ld. CIT(A) to delete the provision for bad and doubtful debts from book profits for the purpose of computing the tax liability u/s 115JB of the Act. Admittedly, the assessee is engaged in the business of banking, whose accounts were prepared in conformity with Bank Regulations Act, 1939 and, therefore, not liable to tax under the provisions of section 115JB of the Act as held by the Hon’ble Supreme Court in the case of CIT vs. Vijaya Bank, 126 taxmann.com 167 (SC). Thus, the ground of appeal nos.6 to 9 filed by the Revenue stands dismissed.