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2023 (12) TMI 875 - AT - Income TaxAdjustment of refund for arriving at interest - calculation of interest u/s 244A is the way in which the AO has adjusted the refunds issued - AR submitted that where the refunds have been issued in parts, the AO while adjusting the refund issued earlier has erred in apportioning amount of earlier refund towards the principal and interest component determined then i.e. without considering the present relief - AO has reduced interest only to the extent it was determined at the point of issuance of the earlier refunds, thus, leading to larger adjustment of the refund towards the tax component as against the interest component - HELD THAT:- Amount of interest u/s. 244A is to be calculated 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. Therefore we hold that the manner in which the assessing officer has adjusted the refund is not correct and that the assessee would be entitled for interest on the unpaid refunds in accordance with the principle laid out in the aforesaid decision of Tribunal. AR during the course of hearing submitted a detailed working of the manner in which the AO has calculated the interest and also the correct way in which the same is to be calculated - Accordingly the assessing officer is directed to compute interest u/s 244A as per the claim of the assessee after giving a proper opportunity of being heard. Thus as relying on Pfizer Limited [1991 (3) TMI 121 - BOMBAY HIGH COURT] as well as the decision of CIT vs. K.E.C International [2005 (7) TMI 733 - BOMBAY HIGH COURT] assessee is justified in seeking interest u/s 244A of the Act upto the date of receipt of the refund order, i.e. 18.08.2022. Accordingly the AO is directed to re-calculate the interest up to the date of actual receipt of refund by the assessee. Interest calculation is that additional interest u/s. 244A(1A) to be calculated on the total amount of refund including Interest - The provisions of sub-section (1A) to section 244A are inserted by the Finance Act, 2016 as a remedial measure to compensate the assessee in cases where there are delays in granting refunds due on account of delay in passing order giving effect to appellate or revisional orders. Applying the ratio laid down in the case of Bharat Petroleum Corporation Ltd [2021 (7) TMI 215 - ITAT MUMBAI] we are of the considered view that the provisions of section 244A(1A) would be applicable in assessee's case from 01.06.2016 till the date of actual receipt of refund and accordingly we remit the issue back to the AO to examine the issue afresh and calculate the additional interest under section 244A(1A) in accordance with law.
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