S.C : Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the order of the Dy. CIT(A), Indore, directing to allow interest on interest, when the law points for grant of similar interest only?

Supreme Court Of India

CIT vs. Narendra Doshi

Section 214

S.P. Bharucha, Y.K. Sabharwal & Brijesh Kumar, JJ.

Civil Appeal No. 2053 of 2000

26th July, 2001

Counsel Appeared

R.P. Bhatt with Mrs. Lakshmi Iyengar, B.V. Balaram Das & Ms. Sushma Suri, for the Appellant : Krishnanand Pandeya, for the Respondent

ORDER

BY THE COURT :

The question that the High Court was called upon to answer read thus : “Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in upholding the order of the Dy. CIT(A), Indore, directing to allow interest on interest, when the law points for grant of similar interest only?” It answered it in the affirmative and in favour of the assessee, relying upon the judgments which laid down that interest was payable on the excess amount paid towards income-tax.

The Tribunal, whose decision the High Court affirmed, had relied upon the decision of the Gujarat High Court in the case of D.J. Works vs. Dy. CIT (1992) 102 CTR (Guj) 2 : (1992) 195 ITR 227 (Guj) : TC 43R.380, which had been followed by the same High Court in Chimanlal S. Patel vs. CIT (1994) 119 CTR (Guj) 293 : (1994) 210 ITR 419 (Guj) : TC 43R.438. These decisions hold that the Revenue is liable to pay interest on the amount of interest which it should have paid to the assessee but has unjustifiably failed to do.

The Revenue has not challenged the correctness of the two decisions of the Gujarat High Court. They must, therefore, be bound by the principle laid down therein. Following that principle, the question has, as we find, been rightly answered in the affirmative and in favour of the assessee.

The civil appeal is dismissed. No order as to costs.

[Citation : 254 ITR 606]

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