Interest on refund has to be granted when withholding tax is paid pursuant to the AO’s order under section 195(2)

Court: Mumbai Income-tax Appellate Tribunal

Citation: ADIT Vs. Reliance Info comm Ltd. [2010-T11-84-ITAT-MUM-INTL]

Brief:- In a recent ruling, the Mumbai Income-tax Appellate Tribunal (“the Tribunal”) in the case of ADIT Vs. Reliance Info comm Ltd. [2010-T11-84-ITAT-MUM-INTL]  has held that the assessee would be entitled to interest on the refund under the provisions of clause (b) of section 244A(1) of the Income Tax Act, 1961 (“Act”) if the refund became due under an order passed in any appeal or any other proceeding, as referred to in section 240 of the Act.

The assessee has withheld tax while making a payment to a non-resident under section 195 the Act according to the determination of tax by the Assessing Officer’s (“the AO”) order under section 195(2) of the Act. On appeal, the Commissioner of Income-tax (“CIT(A)”) held that there was no liability to deduct tax at source. When the assessee was consequently granted refund of the tax withheld, the tax officer did not pay any interest on the refund of the tax. The CIT(A) upheld the assessee’s claim for such interest The Tribunal held that interest under section 244A of the Act is payable on refund due to the assessee pursuant to the order of CIT(A).

Facts

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