January 2023
No adjustment can be made u/s 115JB in respect of interest on income-tax refund, which as per consistent practice, was not credited to the profit & loss account but was reduced from advance income-tax paid under ‘loans and advances’
46. Reliance Industries Ltd. vs. ACIT
[2022] 143 taxmann.com 194 (Mumbai - Trib.)
A.Y.: 2016-17
Date of order: 14th October, 2022
Sections: 244A, 115JB
No adjustment can be made u/s 115JB in respect of interest on income-tax refund, which as per consistent practice, was not credited to the profit & loss account but was reduced from advance income-tax paid under 'loans and advances'.
FACTSFor the year under consideration, the assessee, in its return, offered interest income on an income tax refund of Rs. 266,45,06,765, following the Special Bench decision in
Avada Trading Company (Pvt) Ltd vs. ACIT (100 ITD 131). The interest income on the income tax refund was revised to Rs. 265,38,24,122 due to orders passed subsequently.
During the assessment proceedings, the assessee was asked to show cause as to why interest on income tax refund ought not to be added to book profit u/s 115JB of the Act. In reply, the assessee submitted that there was no certainty with the quantum of interest on income tax refund, as the assessee as well as the Department are in appeal on multiple issues before the appellate forums. Thus, no finality has been reached with respect to the assessment. Therefore, interest on the income tax refund was not credited to the profit and loss account as per the policy consistently followed by the assessee. The assessee further submitted that, once the financial statements have been
