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TMI Blog2012 (8) TMI 158X X X X Extracts X X X X X X X X Extracts X X X X ..... terest on income tax refund, does not require to be assessed. 2. We have heard learned counsel. The following questions of law arises, viz, "whether interest paid on income-tax refund bears the character of income and is, therefore exigible to tax". 3. Brief facts necessary for the purpose of this case are that the assessee, an undertaking of the Govt. of NCT of Delhi, had received the grants. They were brought to tax and the assessee was directed to pay income tax. Subsequently, the refund was claimed and allowed to the extent of Rs.41.89/- crores. This also included a sum of Rs.2,57,55,508/- as interest. The assessee argued that this amount could not be brought to tax. The assessing officer rejected this argument and included it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Delhi Administration and merely governed by the appellant. Here the issue is interest on income tax refund, which is chargeable to tax. The assessing officer has rightly added this amount to the income of the appellant and I uphold this action of the assessing officer. This ground of appeal is dismissed." 4. The Tribunal‟s reasoning allowing the assessee‟s appeal is extracted below:- "19. We have heard the rival contentions and perused the records. We find that assessee had paid taxes in respect of scheme relating to allocation of industries and CETP Scheme. Subsequently, as per the orders of the appellate authorities, the refund was allowed to the assessee to the extent of Rs.41.89 crores which also included interest to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te that necessary evidence as to whether the entire amount has been paid to the Delhi Government or not is not available. Hence, we direct the Assessing Officer to certify the same and allow the assessee's claim accordingly." 5. The Revenue contends that the assessee had paid tax in respect of scheme of relocation of industries, formulated by the Govt. It contested the taxability of the amount; and was successful before the income tax authority who directed refund tax. The amount refunded included interest on the tax deposited. It was contended that even though there was no taxable event that amount wrongly assessed to tax, had to be refunded, by virtue of mandate under the Income-tax Act. Interest was payable and to the extent of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X
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