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2019 (6) TMI 1707 - AT - Income TaxComputation of the interest on refund u/s 244A - Adjustment of part of the refunds granted, first against tax portion of the refund due and then against the interest portion of the refund due, reducing the eligibility of the assessee to claim further interest on the left over portion of the tax refund due - HELD THAT:- There is no need to segregate the refunds granted into tax portion and interest portion and subsequently reduce the tax portion of the refund alone from the refund originally granted for calculation of interest u/s 244A of the Act for the period subsequent to 4.7.1997. This action of the ld AO in our considered opinion, is against the spirit of the provisions of the scheme of taxation. The provisions of section 140A of the Act specifically provides that any part payment of self assessment tax paid by the assessee would first be appropriated towards the interest portion thereon and thereafter remaining would get adjusted towards the tax portion, meaning thereby, the exchequer should never be deprived of its legitimate dues payable by the assessee in time. The same analogy would equally apply when the refund is to be granted to the assessee with interest u/s 244A / In the instant case, the entire confusion had arose due to the fact that the full amount of refund as determined by the ld AO was not actually granted to the assessee, thereby making the assessee eligible for further interest for the future periods As decided in Union Bank of India .[2016 (8) TMI 688 - ITAT MUMBAI] wherein held that since the statute itself has already prescribed a particular method of adjustment in explanation to section 140A(1), then justice, fairness, equity and good conscience demands that same method should be followed while making adjustment for refund of taxes, especially when no contrary provision has been provided - direct the AO to re-compute the amount of interest u/s. 244A by first adjusting the amount of refund already granted towards the interest component and balance left if any shall be adjusted towards the tax component. Decided in favour of assessee.
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