Non-Disclosure of ₹27.67 Lakh Interest Received u/s 244A: ITAT Holds It Taxable and Rejects Rectification Plea
The tribunal further noted that since taxation of such interest required application of mind, the issue could not be treated as a mistake apparent from record under section 154.
The Ahmedabad Bench of Income Tax Appellate Tribunal ( ITAT ) held that ₹27.67 lakh received as interest under section 244A of Income Tax Act,1961, was taxable as “income from other sources” and dismissed the taxpayer’s rectification plea.
Gujarat State Police Housing Corporation Limited,appellant-assessee, had filed its return of income for AY 2015-16 declaring “Nil” income. The case was taken up for scrutiny, and a notice under section 143(2) was issued.
Affective Ways Of Tax Planning for HUF, Partnership Firm and Will - Click Here
During assessment, the Assessing Officer (AO) noted that the assessee had received interest of ₹27,67,422 under section 244A for AY 2010-11, but had neither shown it in the profit and loss account nor offered it to tax. The assessee explained that the refund was adjusted against outstanding demands for AYs 2011-12 and 2012-13 and the interest was not actually received. The AO rejected this explanation and added the amount to the total income.
The assessee later filed a rectification application under section 154, seeking correction of the addition, but the AO rejected it. The appeal before the Commissioner of Income Tax (Appeals) [CIT(A)]was also dismissed. The assessee then filed a second appeal before the tribunal.
The two member bench comprising Suchitra Kamble ( Judicial Member) and Narendra Prasad Sinha ( Accountant Member) noted that the assessee had received interest of ₹27,67,422 under section 244A during the year, which was taxable as “income from other sources” and should have been disclosed in the return for AY 2015-16. It held that the adjustment of the refund against outstanding demands for earlier years did not justify non-disclosure of the interest income.
The appellate tribunal rejected the assessee’s reliance on earlier rulings related to interest on temporary deposits of government grants, stating that the interest under section 244A was linked to excess tax paid by the appellant and clearly belonged to it, not the Government of Gujarat.
Know Practical Aspects of Tax Planning, Click Here
Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
