Case Law Details
The sum found refundable to the Petitioners as a result of the waiver of interest order passed by the CCIT is a definite sum that was wrongly deducted from the Petitioners as interest. Payment of interest on that sum by the Revenue cannot be characterised as payment of ‘interest on interest’. In India Trade Promotion Organisation Vs. CIT (supra) the question before the Court concerned the denial of interest on refund. It was clarified that “if the refund does not include interest due and payable on the amount refunded, the Revenue would be liable to pay interest on the shortfall. This does not amount to payment of interest on interest.”
FULL TEXT OF THE HIGH COURT ORDER / JUDGMENT
1. The central question involved in these three writ petitions under Article 226 of the Constitution of India is whether the expression in any other case‟ occurring in Section 244A (1) (b) of the Income Tax Act, 1961 (Act) would include the amount of refund which constitutes the interest that has been waived by the Income Tax Department (Department) under Section 220 (2A) of the Act?
2. The factual background is that the three Petitioners were notified on 17th June 1997 under Special Courts (Trial of Offences relating to transactions in Securities) Act, 1992 whereby all the assets were attached to be dealt with as per orders of the Special Court.
3. The consequential assessments made under the Act in respect of each of the Petitioners entailed their paying the substantial amounts towards tax and interest. By a communication dated 29th August 2006 the Assistant Commissioner of Income Tax („ACIT‟), Central, Circle-19, New Delhi requested the Custodian (Special Court) for recovery of the income tax demand.
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