INCOME TAX ACT 1961

Section 244A

Refund - Interest under section 244A - Payment of interest on interest -

Revenue filed appeal against the order of Tribunal which did not appreciate the fact that interest on delayed refund interest cannot be granted since there is no specific provision in the Act for payment of interest on the amount of interest and in not considering the fact that the Department had not wrongly retained the refund amount. Held: In case of CIT v. Narendra Doshi, (2002) 254 ITR 606 (SC) : 2002 TaxPub(DT) 0496 (SC), it was held that revenue is liable to pay interest on the amount of interest, which had to be paid to the assessee. Further, when an order of refund is issued, the same should include interest payable on the amount, which is refunded. If the refund does not include interest due payable on the amount refunded, the revenue would be liable to pay interest on the short fall. This does not amount to payment of interest on interest. In view of aforesaid enunciation of law by Supreme Court, assessee was entitled to interest in terms of section 244A only.

Followed:CIT v. Narendra Doshi, (2002) 254 ITR 606 (SC) : 2002 TaxPub(DT) 0496 (SC).

REFERRED :

FAVOUR : In favour of assessee

A.Y. : 1987-88

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