In ITA No. 1813/Mum/2023 -ITAT- ITAT (Mumbai) upholds M/s Small Industries Development's right to interest on refund under Section 244A of the Income Tax Act until actual receipt
Members Narender Kumar Choudhry (Judicial) & Prashant Maharishi (Accountant) [22-08-2023]

Read Order: DCIT, Circle v. M/s Small Industries Development

Chahat Varma

New Delhi, August 25, 2023: The Mumbai bench of the Income Tax Appellate Tribunal has upheld the M/s Small Industries Development’s (assessee) right to interest under Section 244A of the Income Tax Act, from the date of refund to the date of actual receipt of the refund.

In the matter at hand, the Assessing Officer (AO) was aggrieved by the direction of the CIT (A) to grant interest to the assessee under Section 244A of the Act, for the month of January, 2019 to May, 2019. The AO was further aggrieved that the CIT (A) had held that the assessee should be granted interest under Section 244A, up to the date of receipt of refund order by the assessee without appreciating the fact that under the Income Tax Act, provision was to grant interest, up to the date of grant of refund and not up to the date on which refund was actually received by the assessee.

The two-member bench of Narender Kumar Choudhry (Judicial) and Prashant Maharishi (Accountant) placed reliance on Commissioner of Income Tax v. Pfizer Limited [LQ/BomHC/1991/265] and observed that the assessee was eligible for interest on the refund amount until the actual receipt of the pay order by the assessee, following the order that sanctioned the refund.

Thus, the bench found no fault with the order of the CIT(A) directing the AO to grant interest to the assessee under Section 244A of the Act, up to the date of receipt of the refund order. As a result, the Tribunal dismissed the grounds of appeal raised by the AO.