The Ahmedabad Bench of Income Tax Appellate Tribunal (ITAT) has held that interest on income tax refund must be calculated from the first day of the assessment year when the assessee has filed its original return within the due date — even if a revised return is later submitted.
The Bench comprising Dr. B.R.R. Kumar (Vice President) and Shri Siddhartha Nautiyal (Judicial Member) observed that the filing of a revised return does not amount to delay attributable to the assessee, especially when the original return was submitted within the prescribed time limit. Relying on the Gujarat High Court’s decision in Ajanta Manufacturing Ltd. v. DCIT (391 ITR 33), the Tribunal held that interest under Section 244A(1)(a)(i) should be granted on the refund claimed in the original return from April 1, 2017 till the date of grant of refund.
The case revolved around short grant of interest on a refund exceeding Rs. 10 crore. The Assessing Officer had restricted the computation of interest under Section 244A from the date of filing of the revised return, reasoning that the delay was attributable to the assessee. The Commissioner of Income Tax (Appeals) [CIT(A)] upheld this view, observing that the refund should be treated as “granted” on the date of issue of the refund demand draft and not on the date of its actual receipt.
The assessee, however, contended that the original return was filed on time, and the revised return merely corrected minor omissions. Therefore, interest should have been computed from April 1, 2017 (the start of the assessment year)until the date the refund was issued.
The Tribunal clarified that Section 244A(1)(a)(ii) — which computes interest from the date of filing the return — would apply only to the additional TDS claim introduced in the revised return and not to the entire refund amount.
On the question of the “date of grant of refund,” the Tribunal agreed with the CIT(A) that when refunds are issued via demand draft, the date of issue of the instrument constitutes the date of grant. The Tribunal reasoned that the tax department cannot be expected to calculate interest up to an uncertain future date when the assessee presents the instrument for encashment or the bank credits the amount.
Accordingly, the Tribunal directed that interest be computed up to September 25, 2018, the date of issue of the refund demand draft.
The ITAT directed the Assessing Officer to recompute the interest under Section 244A in accordance with these observations — granting interest from April 1, 2017 to September 25, 2018 for the refund claimed in the original return, and applying clause (ii) only to the incremental refund claimed later.
The ITAT partly allowed the appeal.
Case Details
Case Title: Suzlon Gujarat Wind Park Ltd. Versus DCIT
Case No.: I.T.A. No.382/Ahd/2025
Date: 08.10.2025
Counsel For Appellant: Tushar Hemani, Sr. Adv.
Counsel For Respondent: B. P. Srivastav, Sr. DR
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