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Tam Tam Pedda Guruva Reddy Versus The Asst. Commissioner of Income-tax, Circle-4 (1) , Bangalore

Levy of interest u/s 234D - excess refund given due to wrong computation of interest u/s 244A - rectification of mistake where barred by limitation - Held that:- In the case on hand, there was a mistake in computation of the refund to be granted to the assessee pursuant to the order of the Hon’ble High Court. The mistake was due to computation of interest u/s 244A of the Act payable to the assessee. This mistake in computing the interest u/s 244A of the Act has been rectified by passing the orde .....

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, the second condition that refund granted earlier becomes refundable to Revenue on regular assessment is also not satisfied.In view of the factual matrix of the case on hand, as discussed above, we are of the considered opinion that both the conditions for charging of interest u/s 234D of the Act are not satisfied.

On the actual dated on which the undated order giving effect has been passed, except to observe that the documents brought on record by the learned DR clearly establish th .....

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r dated of the Commissioner of Income-tax(A) - II, Bangalore dated 26/11/2013 for the asst. year 1992-93. 2. The facts of the case, briefly, are as under: 2.1 The Hon ble High Court of Karnataka passed an order in ITA No.36 of 1999 dated 8/9/2006 in the assessee s case whereby the total income came to be reduced to ₹ 9,39,406/- from the originally assessed income of ₹ 30,95,390/-. The Assessing Officer passed an order giving effect (hereafter referred to as OGE) to the Hon ble High C .....

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ue to wrong computation of interest u/s 244A of the Act. The Assessing Officer, therefore sought to rectify the OGE by invoking the provisions of sec. 154 of the Act. After putting the assessee on notice, the Assessing Officer passed an order u/s 154 of the Act dated 31/3/2011 ( (sic.31/3/2012) determining the amount of refund to the assessee at ₹ 36,21,199/-; which included an amount of ₹ 15,72,339/- towards interest u/s 244A of the Act, as against ₹ 26,58,286/- granted earlie .....

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s order u/s 154 of the Act was dated 31/3/2011. Subsequently, the Assessing Officer passed a corrigendum, correcting the date thereof to 31/3/2012. 2.3 Aggrieved by the order u/s 154 of the Act dated 31/3/2012 for Asst. Year 1992-93, the assessee preferred an appeal to the CIT(A)-II, Bangalore. After hearing the assessee and obtaining a remand report from the Assessing Officer, the learned CIT(A) upheld the decision of the Assessing Officer and dismissed the assessee s appeal vide the impugned o .....

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terest granted earlier u/s 244A is illegal and hence to be withdrawn. 3) The appeal may be allowed for the above ground(s) and any other grounds(s) which the appellant may be permitted to adduce at the time of hearing. 3.2 In the proceedings before us, the learned AR for the assessee reiterated the submissions made before the learned CIT(A). In short, the assessee contends that the undated OGE of the Assessing Officer was actually passed on 31/3/2007 and, therefore, the rectification order u/s 1 .....

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he undated order was passed in the Fin. Year 2007-08 and, therefore, there was time till 31/3/2012 to pass any rectification to the OGE. 3.4.1 We have heard the rival contentions and perused and carefully considered the material on record, including the judicial pronouncements cited and relied upon. The issues for consideration before us is two- fold: (i) Whether the order u/s 154 of the Act dated 31/3/2012 is barred by limitation and, therefore, needs to be set aside. (ii) Even if the said orde .....

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nly on the charging of interest u/s 234D on the same. The learned CIT(A) has dismissed the contention of the assessee observing that- (i) The section only mentions the interest to be charged on the excess refund granted earlier. (ii) Since the assessee enjoyed excess refund to which he was not entitled, the charged interest u/s 234D of the Act is charged on such refund upto the period which he enjoyed the excess refund. (iii) The interest charged u/s 234D of the Act is compensatory in nature as .....

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nd is granted to the assessee under sub-section (1) of section 143, and - (a) no refund is due on regular assessment; or (b) the amount refunded under sub-section (1) of sec. 143 exceeds the amount refundable on regular assessment, the assessee shall be liable to pay simple interest at the rate of [one half] percent on the whole or the excess amount so refunded, for every month or part of a month comprised in the period from the date of grant of refund to the date of such regular assessment. (2) .....

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ent so made shall be regarded as a regular assessment for the purposes of this section.] From the provisions of section 234D of the Act, the two attendant conditions stipulated for charging of interest are- (a) Any refund granted to the assessee u/s 143(1) of the Act, AND (b) - No refund is due on regular assessment OR - The amount of refund u/s 143(1) of the Act exceeds the amount refundable on regular assessment 3.4.4 Therefore, the first condition for charging of interest u/s 234D of the Act .....

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e Act to mean assessment made u/s 143(3) or 144 of the Act. Therefore, the definition of regular assessment does not include order giving effect to appellate order . This principle has been upheld by the ITAT, Delhi Bench, in the case of ACIT Vs. Oracle India Pvt. Ltd., in ITA Nos.4639 & 4640/Del/2007 dated 31/3/2008 wherein it was held that the charge of interest u/s 234D of the Act by the Assessing Officer for the first time in an order passed u/s 254/250 of the Act while giving effect to .....

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not the case of Revenue that the refund has arisen due to order u/s 143(1) of the Act. Therefore, the first necessary condition for charging of interest u/s 234D of the Act is not satisfied. 3.4.7 Further, the refund has arisen due to an order giving effect to an appellate order, which was subsequently rectified u/s 154 of the Act, wherein the interest u/s 234D of the Act was charged. In these circumstances, the second condition that refund granted earlier becomes refundable to Revenue on regul .....

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