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Issues involved: Interpretation of section 244(1A) of the Income-tax Act, 1961 regarding the entitlement to interest on refunded amounts including interest levied under sections 139(8) and 215.
Summary: The case involved a company's appeal against the Income-tax Officer's decision to not grant interest on interest. The Commissioner accepted the company's contention that interest should be granted on the interest levied under sections 139(8) and 215. The Tribunal upheld this view, leading to the reference of questions of law to the High Court for consideration. The questions revolved around the interpretation of section 244(1A) of the Act, which outlines the process for granting interest on refunded amounts. The Court analyzed the section's language and determined that the expression "amount" includes not only tax and penalty but also interest paid by the assessee. The Court emphasized that interest paid under sections 139(8) and 215 was paid in pursuance of an assessment order, making it eligible for interest under section 244(1A). Referring to precedents, the Court aligned with the Kerala High Court and the Madhya Pradesh High Court's views that the "amount" in section 244(1A) encompasses interest levied and paid under sections 139(8) and 215. Consequently, the Court answered the questions in favor of the assessee, affirming their entitlement to interest on refunded interest amounts. In conclusion, the Court ruled in favor of the assessee, emphasizing their right to interest on the refunded interest levied under sections 139(8) and 215. The decision aligned with previous judgments and interpretations of the relevant provisions.
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