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2011 (7) TMI 1322 - ITAT LUCKNOWInterest on Refund u/s 244A - The AO has passed order on January 2006 under sec. 254/154/148 of the IT Act, 1961 vide which a refund amount has been determined - But refund has actually been granted on 29th May, 2006 - HELD THAT:- There was statutory liability on the Revenue to pay the interest on the refund which was retained for seeking the administrative approval. As the refund was granted to the assessee only on 29th May, 2006, therefore, the assessee was entitled for the interest upto the said date and the AO was not justified in granting the interest only upto January, 2006 - Decision in favour of Assessee. Interest on Retained Interest u/s 244A - Assessee's contention was that interest was short allowed for four months, so interest on interest was also payable u/s 244A - AO stated that there was no delay in granting relief or refund as procedure and instructions of CBDT were followed HELD THAT:- Following the ratio laid down by the Hon'ble Supreme Court in the SANDVIK ASIA LIMITED VERSUS COMMISSIONER OF INCOME-TAX AND OTHERS [2006 (1) TMI 55 - SUPREME COURT], where it was held that "even assuming that there is no provision for payment of compensation, compensation for delay is required to be paid as per the act itself recognizes in principle of the liability of the Department to pay interest when excess tax was retained and the same principle should be extended to cases where interest was retained." We, therefore, direct the AO to allow the interest to the assessee also on the interest which was payable on the amount to be refunded. - Decision in favour of Assessee.
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