1987 (6) TMI 84 - AT - Income Tax

Additional Tax Appellate Assistant Commissioner Assessment Order Interest On Delayed Refund

Summary

Issues:
1. Refund of additional tax imposed under section 104 of the Income-tax Act, 1961.
2. Entitlement to interest under section 244(1A) of the Act.
3. Appeal against the order of the ITO refusing to grant interest under section 244(1A).
4. Jurisdiction of the CIT (Appeals) to admit an appeal against the order of the ITO.
5. Correctness of the direction by the CIT (Appeals) that the assessee was entitled to interest under section 244(1A).

Analysis:

1. The assessee, a limited company, had income from capital gains and other sources. The Income-tax Officer imposed additional tax under section 104 of the Income-tax Act, 1961. The Commissioner of Income-tax (Appeals) later held that section 104 was not applicable to the assessee, leading to the vacating of the demand payable by the assessee.

2. The assessee requested the ITO for a refund order and interest under section 244(1A) of the Act. The ITO denied the interest, stating that the order under section 104 did not qualify as an assessment or penalty order.

3. The CIT (Appeals) considered the appeal and directed the ITO to grant interest under section 244(1A) based on previous judicial interpretations, including a Supreme Court decision regarding supplementary assessment orders.

4. The department appealed the CIT (Appeals) decision, questioning the jurisdiction of the CIT (Appeals) to admit an appeal against the ITO's refusal to grant interest under section 244(1A) and the correctness of allowing interest to the assessee.

5. The department argued that the order under section 104 was not appealable and that it did not qualify as an assessment or penalty order for interest under section 244(1A). The assessee contended that the order was appealable and relied on legal precedents to support the grant of interest.

6. The Tribunal considered the arguments and upheld the decision of the CIT (Appeals) based on the latest Supreme Court decision, which clarified that certain orders, like the one under section 104, could be considered supplementary assessment orders, warranting the grant of interest under section 244(1A).

7. Ultimately, the Tribunal dismissed the departmental appeal, affirming the CIT (Appeals) decision to grant interest under section 244(1A) to the assessee, based on the interpretation of relevant legal provisions and judicial precedents.