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Interest on excess I-T payment upheld

The Calcutta High Court last week ruled that the Income Tax Appellate Tribunal was justified in granting interest to Birla Corporation on refund arising due to excess payment on self-assessment. It also stated the relevant provision, Section 244A of the Income Tax Act, did not bar payment of interest on such refunds. The court thus dismissed the appeal of the Commissioner of Income Tax against the judgment of the tribunal.

The revenue authorities argued the law did not provide for interest. Rejecting their contentions, the high court stated when an assessee out of abundant caution pays tax after self-assessment, on which claim is accepted, resulting in refund, the assessee should be entitled to interest. The provision was inserted in the Act as a measure of rationalisation to ensure that the assessee is compensated by the government for monies legitimately belonging to the assessee and wrongfully retained by it.

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