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TMI Blog2012 (7) TMI 420X X X X Extracts X X X X X X X X Extracts X X X X ..... enue had, in its identical grounds of appeals for the assessment years under dispute, raised nine grounds, out of which, ground Nos. 1, 8 and 9 are general in nature and no specific adjudication is called for; hence, the same are dismissed. The remaining grounds are relating to the solitary issue, namely, 'the learned CIT (A) had failed to appreciate that interest can be paid only on the tax portion in the refund and not on the entire amount of refund.' 3. As the issue raised in these appeals are common and pertains to the same assessee, for the sake of convenience, they were heard, considered together and disposed off in this consolidated order. 4. Before venturing in to take up the issue for adjudication, we would like to reiterate that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Before the CIT(A), the assessee disputed the Assessing Officer's action in not granting interest on the revised amount of interest. It was contended that the Assessing Officer did not follow the ratio laid down by the Hon'ble Supreme Court in the case of Sandvik Asia Ltd v. CIT 280 ITR 643 (SC) and also the Instruction No.2 of 2007 dated 28.3.2007 of the CBDT. 6. After due consideration of the contentions of the assessee, extensively quoting the ruling of the Hon'ble Supreme Court cited supra and also analyzing the ruling of the Hon'ble Madhya Pradesh High Court in CIT v. H.E.G. Ltd reported in (2009) 310 ITR 341 (MP), the CIT(A) directed the Assessing Officer to verify the veracity of the assessee's computation and recalculate the intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... agreed with a similar view taken by the Kerala High Court in the case of CIT v. Ambat Echukutty Menon (1988) 173 ITR 581. Both these were cases where cases where the Court was called upon to decide whether further interest was payable by the Revenue on interest which had to be repaid to the assessee. 4.5. It is crystal clear from the fore-going analysis that the Hon'ble Madhya Pradesh High Court considered the decisions of various High Courts before arriving at the following conclusion:- 'In our opinion, the appellant is entitled to interest u/s 244 and/or Sec.244A in accordance with the terms and provisions of the said sections...........In CIT v. Cholomandalam Investment & Finance Co. Ltd (2007) 211 CTR (Mad) 384: (2007) 294 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITR 527 (Del.). It was contended that the ratio laid down in the above judgments cannot be applied to the instant case inasmuch as these cases relate to assessment year prior to 1989-90 when section 244 and not section 244A was in operation. It was, further, argued that there was a marked difference between these two sections; namely, section 244 which allows interest on the amount of refund as against section 244A which allows interest on any tax. It was, therefore, argued that in view of specific language in s.244A, interest can be paid only on the tax portion in the refund and not on the entire amount of refund. To drive home his point, the Ld. D R had placed strong reliance on the ruling of the Hon'ble Delhi High Court in the case of M ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated......'. Thus, the assessee is entitled to receive interest on refund which is out of any tax. As a matter of fact, the refund arises only on tax portion. There is misconception in the interpretation of the AO that interest can be paid only on the tax portion in the refund and not on the entire amount of refund. Moreover, section 244A doesn't distinguish that the assessee shall be entitled to receive interest only on tax portion in the refund and not on the entire amount of refund as projected by the Revenue. If the interpretation of the Revenue were to be taken on its face value, we are afraid; it would lead to miscarriage of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erence, we reproduce the relevant ruling of the Hon'ble Court as under: "When the refund of tax becomes payable as a result of orders passed in appeal or other proceedings under the Income-tax Act, 1961, this refund is to be given along with interest which is to be calculated as per section 244A of the Act. If that interest is paid along with the excess tax, no further payment is to be made. It is only when the excess amount of tax is refunded but the interest is not refunded therewith, that the retention of interest amount would become unjustified and interest on interest would also become payable. The reason is simple. It is the tax which was paid in excess by the assessee which became refundable. The assessee would be compensated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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