“interest on refund”
The decision most relied on for interest on refund is Sandvik Asia Ltd. v. CIT (280 ITR 643), cited in 96 judgments on BharatTax.
Leading authorities on interest on refund
Assessees are entitled to compensation for the inordinate delay by the Income Tax Department in refunding excess tax, which includes interest on the statutory interest due under section 244A for such delayed refunds.
The Department has a moral and legal obligation to refund excess tax collected from taxpayers, along with interest. An assessee is entitled to interest on the amount of taxes refunded, including interest on interest, as per Section 244A of the Income-tax Act.
An insurance claim received on stock in trade constitutes business income and is not an independent source of income.
Interest levied under Section 201(1A) for delayed remittance of Tax Deducted at Source (TDS) is compensatory in nature, not penal. It is a distinct provision for delayed remittance, similar to interest paid by Revenue on refunds.
An assessee is not entitled to interest on interest under section 244A of the Income-tax Act, particularly regarding interest granted on a refund.
A tax refund must first be adjusted towards interest payable under Section 244A, with the balance then appropriated against the principal tax amount. This approach does not lead to interest on interest.
Under Section 244A, the "amount due" for a refund includes both the principal tax and the interest accrued thereon up to the date the refund is granted. If the revenue fails to pay the full amount of refund, it is liable to pay further interest on the outstanding balance of this total refund, which does not constitute "interest on interest".
When a refund is due to an assessee under Section 244A, the amount must first be adjusted towards the interest payable on such refund, with the balance then adjusted against the tax amount refundable. This follows the principle of Section 140A(1) and means "any amount" in Section 244A includes accrued interest.
