Interest Payable on Refund adjusted against demand :SC

By | April 8, 2016

SUPREME COURT OF INDIA

Commissioner of Income-tax, Delhi-II

v.

Jyotsna Holdings (P.) Ltd.

A.K. SIKRI AND ROHINTON FALI NARIMAN, JJ.

CIVIL APPEAL NO (S). 1774 OF 2006

MARCH  8, 2016

Ms. Liz. Methew, Ashok Kr. Panigria and B.V. Balaram Das, Advs. for the Appellant. Ajay Vora, Sr. Adv., Ms. Kavita Jha, Bhargava V. Desai, Ms. Saumya Mehrotra, Prakash Kumar and Ms. Bhavita, Advs. for the Respondent.

ORDER

1. For the sake of convenience, we take note of the facts in respect of Assessment Year 1987-88 as similar factual situation appears in respect of all three Assessment Years viz. 1985-86, 1986-87 and 1987-88. For the Assessment Year 1987-88, the respondent herein filed its return on the basis of self tax assessment made by it and paid a sum of Rs. 3,23,68,834/- on 12.09.1987. The assessment was made under Section 143(3) by the Assessing Authority as per which an amount of Rs. 2,03,29,841/- was found refundable to the respondent/assessee. Instead of immediate refund of this amount, the Assessing Authority ordered that the same would be adjusted against the demand for the year 1986-87. It was ultimately adjusted on 25.07.1991. The question that arose, in these circumstances, was as to whether the assessee would be entitled to interest on the aforesaid amount which was kept by the revenue for the period from 28.03.1988 to 25.07.1991. The assessee claimed the interest, which request was rejected by the Assessing Officer. However, the Commissioner of Income Tax (Appeals) allowed the appeal of the assessee against the order of the Assessing Officer by invoking the provisions of Section 244(1A) of the Income Tax Act and held that the interest is payable on the aforesaid amount. This order is upheld by the Income Tax Appellate Tribunal as well as by the High Court.

2. We have gone through the impugned order and we do not find anything wrong with the impugned order. The amount in question, though found refundable to the assessee, was utilized by the Department and, therefore, interest was payable under Section 244(1A) of the Income Tax Act.

3. This appeal is, thus, without any merit and is, accordingly, dismissed

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