2009 (12) TMI 35 - SUPREME COURT - Income Tax

Head Note / Extract:
Interest on Interest - , the question raised by the Department is whether the assessee was entitled to claim interest on interest under the provisions of Section 244A of the Income Tax Act, 1961 –that during the Assessment Year 1993-1994, the amount paid by the assessee towards TDS was ₹ 45,73,528/-. The Tax paid after Original Assessment was ₹ 1,71,00,320/-. The total of TDS amounting to ₹ 45,73,528/- plus Tax paid after Original Assessment of ₹ 1,71,00,320/- stood at ₹ 2,16,73,848/-. In other words, the total tax paid had two components, viz., TDS + Tax paid after Original Assessment. The respondent was entitled to the refund of ₹ 2,16,73,848/- (consisting of ₹ 1,71,00,320/- and ₹ 45,73,528/- which payment was made after 57 months and which is the only item in dispute assessee claimed interest for delayed refund - held that - this is not a case where the assessee is claiming compound interest or interest on interest as is sought to be made out in the civil appeals filed by the Department. - we are of the view that the assessee was entitled to interest for 57 months on ₹ 45,73,528/-. The principal amount of ₹ 45,73,528/- has been paid on 31st December, 1997 but net of interest which, as stated above, partook the character of "amount due" under Section 244A