Section 244A(2) of ITA, 1961 – Interest on delayed refund – Where issue of refund order was not delayed for any period attributable to assessee, Tribunal was correct in allowing interest to assessee in terms of section 244A(1)(a) – Just because the assessee had raised a belated claim during the course of the assessment proceedings which resulted in delay in granting of refund, it couldn’t be said that refund had been delayed for the reasons attributable to the assessee and assessee wasn’t entitled to interest for the entire period from the first date of assessment year till the order giving effect to the appellate order was passed

Section 244A(2) of ITA, 1961 – Interest on delayed
refund – Where issue of refund order was not delayed for any period
attributable to assessee, Tribunal was correct in allowing interest to assessee
in terms of section 244A(1)(a) – Just because the assessee had raised a belated
claim during the course of the assessment proceedings which resulted in delay
in granting of refund, it couldn’t be said that refund had been delayed for the
reasons attributable to the assessee and assessee wasn’t entitled to interest
for the entire period from the first date of assessment year till the order
giving effect to the appellate order was passed

The
assessee had not claimed certain expenditure before the AO but eventually
raised such a claim before the Tribunal upon which the Tribunal remanded the proceedings
to the CIT (A). The additional benefit claimed by the assessee was granted.
This resulted in refund and the question of payment of interest on such refund
u/s. 244A of the Income-tax Act, 1961.

The
Tribunal came to the conclusion that the delay could not be attributed to the
assessee and therefore, directed payment of interest.

On
appeal by the Revenue, the Bombay High Court upheld the decision of the
Tribunal and held as under:

“i)   As is well
known, in case of refunds payable to the assessee, interest in terms of
sub-section (1) of section 244A would be payable. Sub-section (2) of section
244A, however, provides that if the proceedings resulting in the refund are
delayed for reasons attributable to the assessee whether wholly or in part, the
period of delay so attributable, would be excluded from the period for which
interest is payable under sub-section (1) of section 244A of the Act.

ii)   The Revenue does not dispute either the
assessee’s claim of refund or that ordinarily under sub-section (1) of section
244A of the Act such refund would carry interest at statutorily prescribed
rate. However, according to the Revenue, by virtue of sub-section (2) of
section 244A of the Act, since the delay in the proceedings resulting in the
refund was attributable to the assessee, the assessee would not be entitled to
such interest.

iii)   Sub-section
(2) of section 244A of the Act refers to the proceedings resulting in the
refund which are delayed for the reasons attributable to the assessee. There is
no allegation or material on record to suggest that any of the proceedings hit
the assessee’s appeal before the Tribunal or remanded the proceedings before
the CIT (A) whether in any manner delayed on account of the reasons
attributable to the assessee. The Tribunal, was, therefore correct in allowing
the interest to the assessee.”