The Chennai Bench of the Income Tax Appellate Tribunal (ITAT) recently allowed interest on refund under Section 244A of the Finance Act 2016 as a matter of fairness and equity.
Upon perusal of the order passed under Section 154, it could be seen that an assessment was framed against the assessee Nachimuthu Palaniswamy under Section 153A read with Section 143(3) of the Income Tax. The same resulted in a refund of Rs.1002.26 Lacs. The order was rectified on 08.09.2015 revising the refund to Rs.1002.95 Lakhs. After adjusting outstanding demands, a refund of Rs.562.67 Lacs was issued to the assessee.
Another rectification order was passed under Section 154 on 20.02.2018 which resulted in an additional refund of Rs.39.41 Lacs. The assessee filed another rectification on 24.08.2021 demanding a refund under Section 244A relying on the provisions of Section 244(1)(aa) of the Income Tax Act.
However, the Assessing Officer rejected the same on the ground that the above provision was inserted by the Finance Act, 2016 with effect of 01-07-2016 and therefore, the assessee was not eligible for further interest.
The Assessee approached the first appellate authority and the CIT (A) held as the amendment of Section 244A of the Finance Act 2016, was brought in the statute only in the interest of fairness and equity and the appellant was entitled to interest under Section 244A on the refund of self-assessment tax paid under Section 140A from the date of payment till the date of grant of refund. The Assessing Officer was directed to grant interest accordingly. Aggrieved Revenue filed an appeal before the tribunal.
The Bench of Vice President, Mahavir Singh and Accountant Member Manoj Kumar Aggarwal observed that the amendment had been carried out in the interest of fairness and equity.
It was noted that “The same provides that the assessee should be eligible to interest on refund of self-assessment tax for the period beginning from the date of payment of tax or filing of a return, whichever was later, to the date on which the refund is granted. No contrary decision has been shown to us.”
Therefore, as no fault could be found in the impugned order, the tribunal bench allowed interest on refund to the assessee.
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