Belated Claim of Refund during the course of Assessment Proceedings which resulted into delay in granting of refund could not be a reason attributable to the assessee and couldn’t dismiss the payment of interest for the amount of refund delayed

  • Vide decision of High Court of Bombay in Commissioner of Income Tax V. Melstar Information Technologies Limited.

Facts of the Case:

  1. The Assessee (Melstar) had not claimed certain expenditure before the assessing officer but eventually raised that claim before the Tribunal.
  2. Where the Tribunal remanded back the proceedings to CIT(A) and the additional benefit claimed by the assessee was granted. This result Refund and also question of payment of Interest on refund.
  3. The interest on refunds would be payable under section 244A(1) of Income Tax Act, 1961 with the prescribed rates in it.
  4. It also provides under section 244A(2) that if the proceedings resulting in delayed for reasons attributable to the assessee period of delay for reasons attributable could be excluded from the period for which interest is payable under section 244A( 1).
  5. The Tribunal in the present case came to conclusion that the delay cannot be attributable to the asssessee and directed for payment of interest.
  6. Here, the Revenue Challenges the judgment of the Income Tax Appellate Tribunal (ITAT), Mumbai.

Judgement:

The Honorable high Court of Bombay Dismissed the Appeal by considering the previous Cases similar to this case. The Previous case laws Considered are

  • Ajanta Manufacturing Ltd. v. Deputy CIT by the division bench of Gujarat High Court with a similar issue under which the court allows for the payment of Interest.
  • CIT v. South Indian Bank Limited by Kerala High Court in which the Assessee claimed for the Refund which was granted by the commissioner and remanded back to the Assessing Officer (AO) and the AO rejected for payment of Interest for the delay in Refund and the court held that if the officer feels that there is any delay in refund attributable to the assessee  the matter should be referred to Commissioner or Chief  commissioner for the purpose of granting interest to the assessee and as if there  is no decision  the Commissioner or Chief Commissioner the court ordered the officer for payment of Interest to the Assessee.

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