Sandvik Asia Limited Vs. DCIT (ITAT Pune)– The Issue before the tribunal was whether interest paid on income tax due can be set off against interest received on income tax refunds under the Income Tax Act, 1961. Before the Division Bench (DB) of the Pune Tribunal, there was a difference of opinion between the Members and, accordingly, the issue was referred to the Third Member for a majority opinion. The Third Member held that the interest paid and interest received from the Tax Authority cannot be set off against each other and the whole of the interest received is taxable under the Income Tax Act, 1961.
The Pune Tribunal also held that the interest paid on income tax due was not deductible as business expenditure under the Income Tax Act, 1961. ITAT Pune has taken a view different from the view taken by ITAT Mumbai in the case of DCIT v. Bank of America NT & SA recently, In which ITAT Mumbai has ruled that Interest received on income tax refund can be set-off against the interest paid on delayed payment of income tax. Even in past