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2018 (4) TMI 713 - ITAT DELHIIncome tax refund and interest thereon adjusted towards demand - whether the interest on income tax refund is chargeable to tax in this year according to the above facts? - Held that:- Claim of the assessee that it has not received any refund is devoid of any merit as the refund was not issued by issue of cheque to the assessee but was adjusted against the outstanding demand for assessment year 2004 – 05. Naturally, when the demand is outstanding for A Y 2004 – 05 there was no question of issuing any refund voucher to the assessee Whether the interest on income tax refund is chargeable to tax in this year? - Held that:- Income tax refund is chargeable to tax under the head income from other sources on accrued or receipt basis according to the method of accounting employed by the assessee. Admittedly, the assessee is following the mercantile method of accounting. Therefore, the interest on income tax refund if the revenue has admitted it shall be chargeable to tax as and when it is determined and refund voucher thereof. In the present case the Ld. AO as well as the Ld. CIT (A) has already interest of ₹ 102537/– has been determined and refund voucher is been prepared by the revenue but instead of issuing the cheque same has been adjusted against the outstanding demand of the assessee for assessment year 2004 – 05. In the interest amount has already accrued to the assessee of ₹ 1 025237/– same is chargeable to tax in the year in which it is determined. In the present case, it has been determined on 1/3/2011 and therefore it is chargeable to tax in AY 2011 – 12. In view of above facts we do not find any infirmity in the order of Ld. CIT (A) in confirming the order of the Ld. assessing officer holding that interest to the extent of ₹ 1025237/– is correctly charged to the tax for the impugned assessment year. - Decided against assessee.
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