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TMI Blog2009 (12) TMI 271X X X X Extracts X X X X X X X X Extracts X X X X ..... tantial questions of law: "1. Whether, the appellate authorities were correct in holding that the assessee was entitled to interest under section 244A of the Act on the amount of interest paid under sections 234A, 234B and 234C of the Act which was waived in accordance with the Board notification dated May 23, 1996, issued under section 119 of the Act by the Settlement Commission? 2. Whether, the appellate authorities have jurisdiction to entertain a statutory appeal under the provisions of the Income-tax Act against the intimation passed by the Assessing Officer/Deputy Commissioner of Income-tax declining to grant interest under section 244A of the Act? 2. The facts leading to this case are as hereunder: The assessee is a partnership f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e being aggrieved by the order passed by the Commissioner of Income-tax (Appeals) preferred appeal before the Income-tax Appellate Tribunal, Bangalore Bench on the ground that the assessee as a matter of right cannot claim interest under section 244A of the Act since there was no preexisting right to claim the interest by him as the interest levied under sections 234A, 234B and 234C of the Act was waived only on account of the request of the assessee. In such circumstance, the Deputy Commissioner was justified in not allowing the interest as contemplated under section 244A of the Act. The Tribunal after hearing the parties dismissed the appeal on the ground that the assessee is entitled to claim interest under section 244A of the Act. In th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above provisions of law erroneously. 5. Section 244A of the Act read as under: "244A. Interest on refunds.-(1) Where refund of any amount becomes due to the assessee under this Act, he shall subject to the provisions of this section, be entitled to receive in addition to the said amount, simple interest thereon calculated in the following manner, namely:- (a) Where the refund is out of any tax paid under section 115WJ or) (collected at source under section 206C or paid by way of advance tax or treated as paid under section 199, during the financial year immediately proceeding the assessment year, such interest shall be calculated at the rate of one-half per cent. for every month or part of a month comprised in the period from the f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee, whether the assessee as a matter of right can claim interest invoking section 244A of the Act has to be considered by this court. 7. Mr. Kulkarni, learned counsel appearing for the assessee relying upon the judgment of the Madras High Court in CIT v. Needle Industries P. Ltd. [1998] 233 ITR 370 contends that the assessee is entitled to claim interest even though interest is waived by the Settlement Commission. He further contends that the judgment of the Madras High Court in Needle Industries' case [1998] 233 ITR 370, has been considered and upheld by the hon'ble Supreme Court in Sandvik Asia Ltd. v. CIT [2006] 280 ITR 643 and he further contends that a similar view is also taken by the Madhya Pradesh High Court in CIT v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ettlement in Sandvik Asia's case [2006] 280 ITR 643 (SC). 10. In order to appreciate the case of Needle Industries' case [1998] 233 ITR 370, we have to consider rule 117A of the Rules, which reads as hereunder: 11. Rule 117A of the Rules. In respect of assessment relating to an assessment year commencing on or before the first day of April, 1988, the Assessing Officer may reduce or waive the interest payable under section 139 in the cases and in the circumstances mentioned below, namely:- (i) where the return of income is furnished by a person who has been treated under section 163 as an agent of a nonresident and is assessed in respect of the latter's income; (ii) where the return of income is furnished by an assessee who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; [1998] 233 ITR 370. But the facts involved in Sandvik Asia's case [2006] 280 ITR 643 (SC) are entirely different. Similarly in the case of Hope Textiles Ltd. [2007] 295 ITR 571 the High Court of Madhya Pradesh had no occasion to consider the question that arises in the present case. Therefore, we are of the view that the submission made by Sri Kulkarni, learned counsel for the assessee cannot be accepted. 14. There is no dispute in regard to allowing interest under section 244A of the Act in favour of the assessee where an order of refund is passed in regular course based on the entitlement of the assessee to claim refund on account of the reversal of the order passed by the Assessing Officer or by the Commissioner of Income-tax (App ..... X X X X Extracts X X X X X X X X Extracts X X X X
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