CIT Vs. NAGARJUNA FINANCE LTD.

JUDGEMENT

(1.) THIS appeal by the Revenue under section 260A of the Income Tax Act, 1961 (for short the Act) is directed against the order of the Income Tax Appellate Tribunal, Hyderabad A Bench, dated 30.01.2009 in I.T.A. No. 68/H/2004 pertaining to the Assessment Year 1998 -99.

(2.) THE brief facts leading to present appeal may be noticed. The respondent (assessee) filed its return of the income on 30.11.1998 showing NIL income after adjusting unabsorbed depreciation/loss for the Assessment Years 1996 -97 and 1997 -98 amounting to Rs. 27,81,37,991. The return was revised on 29.01.2001 showing current years income at Rs. 6,59,08,290 which was adjusted against unabsorbed depreciation/loss for the Assessment Year 1997 -98 and the net taxable income was shown as NIL. A refund of Rs. 2,22,01,591 was claimed on account of TDS of Rs. 1,69,01,591 and advance tax of Rs. 53,00,000. The return was processed under section 143(1)(a) of the Act on 30.09.1999. Credit for TDS of Rs. 1,29,89,691 and advance tax of Rs. 25,00,000, in all Rs. 1,54,89,691 was allowed and the amount refundable to the assessee including interest was calculated at Rs. 1,82,77,819. The refund was however withheld after obtaining approval from the Commissioner of Income Tax (CIT). Thereafter, regular assessment under section 143(3) of the Act was completed on 15.02.2001 determining the total income at Rs. 34,12,48,010 on which the net income tax payable was worked out at Rs. 16,57,95,368. Thereafter, the assessment was revised under section 154 of the Act on 04.06.2001 and the total income was computed at Rs. 28,34,11,990 and the net tax payable was determined at Rs. 9,82,73,535.

(3.) ON 01.04.2003 the assessee claimed credit for MAT for the Assessment Year 1997 -98 at Rs. 88,74,800. On this application, the Assessing Officer passed an order under section 154 of the Act on 29.07.2003 allowing MAT credit to the extent of Rs. 27,27,698 and refunded the tax of Rs. 27,27,698 which was demanded and collected from the assessee, however without granting payment of interest on the quantum of refunded tax. Aggrieved, the assessee preferred an appeal to the Commissioner (Appeals). This appeal was allowed by the order dated 27.11.2003. Before the Commissioner (Appeals), the Revenue specifically contended that in effect the assessee was claiming interest on the MAT credit. Rejecting this contention, the Commissioner (Appeals) held that by the consequent order dated 15 -4 -2002, the Assessing Officer had issued refund for the tax already collected and what the assessee was claiming was not interest on MAT paid for the preceding assessment year but interest on refund to the extent it is attributable to advance tax and TDS. Allowing the appeal of the assessee, the Commissioner (Appeals) held that the assessee was entitled to interest under section 244(A)(1) of the Act on the refund of Rs. 27,27,698 granted vide the rectification order dated 29 -7 -2003.