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Issues Involved:
The issue involves whether an assessee, entitled to a refund of interest collected under section 220(2) of the Income-tax Act, is also entitled to interest on the same. Judgment Details: The respondent, an assessee to income-tax, had refunds due for the assessment years 1961-62 to 1963-64, including income-tax, penalty, and interest levied under section 220 of the Income-tax Act. The Income-tax Officer granted interest under section 244 of the Act on income-tax and penalty refunds but not on the interest collected under section 220. The Appellate Assistant Commissioner reversed this decision, allowing interest on the interest amount as well. The Appellate Tribunal upheld this decision, stating that interest under section 220 falls within the purview of section 240 and is eligible for interest under section 244(1) of the Act. The Revenue appealed this decision, leading to the current reference to the High Court. The High Court analyzed sections 220(2), 240, and 244 of the Act. It noted that the interest collected under section 220 became refundable to the assessee due to a court order, falling under section 240 for refunds of any amount due. Section 244 mandates interest payment when a refund is due and not granted within a specified period. The Court found no prohibition in section 244 against paying interest on interest collected under section 220. Therefore, if interest collected under section 220 becomes refundable, it is eligible for interest under section 244. The Court upheld the Tribunal's decision, ruling in favor of the assessee. In conclusion, the High Court answered the question in the affirmative, against the Revenue and in favor of the assessee. The judgment will be communicated to the Income-tax Appellate Tribunal, Cochin Bench.
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