2017 (10) TMI 1534 - AT - Income Tax

Interest on the statutory interest in case of delay in the payment u/s 244A - HELD THAT - The facts as well as issue involved in these appeals are identical to that of the case of M/S AMBUJA DARLA KASHLOG MANGOO TRANSPORT COOPERAT IVE SOCIETY LTD. VERSUS THE DCIT CIRCLE PARWANOO 2017 (11) TMI 988 - ITAT CHANDIGARH where it was held that the assessee is otherwise entitled for the compensation from the Revenue for inordinate delay in the payment of interest. Therefore following the decision rendered in the case all these appeals of the assessees stands allowed on the same terms and the Revenue is directed to pay compensation in the shape of simple interest on the amount due at the rate at which the assessees herein otherwise would have been entitled to on the delayed payment of excess tax paid. Appeal allowed - decided in favor of assessee.

Summary

Issues:
- Condonation of delay in filing appeals
- Interpretation of Section 244A of the Income Tax Act for interest on refunds
- Entitlement to compensation for delayed payment of interest

Condonation of Delay:
The appeals were filed by the assessee against the common order of the Commissioner of Income Tax (Appeals) for different assessment years, but they were found to be barred by limitation for a period of 18 to 23 days. Separate applications for condonation of delay were filed, and considering the shortness of the delay and submissions made, the delay was condoned.

Interpretation of Section 244A - Interest on Refunds:
The Tribunal referred to the case of 'CIT Vs. Gujarat Flluro Chemicals' and 'Sandvik Asia Ltd. Vs. CIT' to interpret the issue. The Supreme Court clarified that interest under Section 244A of the Income Tax Act is only on the statutory interest and not on interest on interest. The larger bench further held that the interest component is an integral part of the amount due and payable to the assessee, and it cannot be considered as interest on interest. The assessee is entitled to interest on the refund of any amount due under the statute, and the interest component partakes the character of 'amount due' under Section 244A.

Entitlement to Compensation for Delayed Payment of Interest:
The Tribunal, following the decisions of the Supreme Court in 'CIT Vs. H.E.G. Ltd' and 'CIT Vs. Gujarat Flluro Chemicals', held that in cases of inordinate delay in payment of interest, the Revenue can be directed to pay compensation in the form of simple interest on the amount due. As there was an inordinate delay of more than 10 years in the present case, the assessee was entitled to compensation for the delayed payment of interest. Therefore, the appeals of the assessee were allowed, and the Revenue was directed to pay compensation in the shape of simple interest on the amount due at the applicable rate.

This judgment clarifies the interpretation of Section 244A of the Income Tax Act regarding interest on refunds and establishes the entitlement of the assessee to compensation for delayed payment of interest.