Facts of the Case

The Revenue challenged the order dated 9 June 2005 passed by the Income Tax Appellate Tribunal, Delhi Bench "D", in ITA Nos. 4125 to 4128/Del/2004 relating to Assessment Years 1978-79, 1982-83, 1983-84 and 1984-85. The dispute concerned T65T65T65T65 assessee's entitlement to interest under Section 244(1A) of the Income Tax Act on amounts paid by the assessee under Section 220(2) of the Act.

Issues Involved

Whether an assessee is entitled to receive interest under Section 244(1A) of the Income Tax Act on payments made under Section 220(2) of the Income Tax Act when such amounts become refundable.

Petitioner’s Arguments

The Commissioner of Income Tax, acting as the appellant, challenged the Tribunal's decision granting relief to the assessee. The Revenue contended that the Tribunal erred in holding that the assessee was entitled to interest under Section 244(1A) in respect of amounts paid under Section 220(2) of the Act.

Respondent’s Arguments

The assessee, M/s R.D. Ramnath Company, relied upon the settled legal position and supported the Tribunal's finding that interest under Section 244(1A) was payable on the amount refunded, including sums paid under Section 220(2). The assessee placed reliance on judicial precedents governing the issue.

Court Findings

The High Court observed that the issue was no longer res integra in view of its earlier decision in Modipan Ltd. Corp. vs. CIT (2004) 270 ITR 257. The Court noted that in Modipan Ltd. Corp., reliance had been placed on the judgment of the Gujarat High Court in CIT vs. Gujarat State Warehousing Corporation (2002) 256 ITR 596. The Gujarat High Court had in turn relied upon several judgments of various High Courts, including the Madras High Court, Madhya Pradesh High Court and Kerala High Court.

The Delhi High Court found no reason to take a different view from the settled judicial position and accepted the Tribunal's conclusion.

Court Order

The Court held that no substantial question of law arose for consideration. Consequently, the appeal filed by the Revenue was dismissed.

Important Clarification

The judgment reaffirms that where an issue has already been conclusively settled by binding judicial precedent, the High Court will not interfere merely because the Revenue seeks a different interpretation. The decision confirms the applicability of Section 244(1A) interest on refunds involving payments made under Section 220(2), following the principles laid down in Modipan Ltd. Corp. and Gujarat State Warehousing Corporation.

Sections Involved

  • Section 244(1A) of the Income Tax Act, 1961 – Interest on Refund
  • Section 220(2) of the Income Tax Act, 1961 – Interest for Default in Payment of Demand

Link to Download the Order-https://delhihighcourt.nic.in/app/case_number_pdf/2006:DHC:25014-DB/MBL24082006ITA11992006_124525.pdf

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