COMMISSIONER OF INCOME TAX Vs. NARENDRA DOSHI

JUDGEMENT

(1.) 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 Deputy Commissioner (Appeals), Indore, directing to allow interest on interest, when the law points for grant of simple interest only

(2.) 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.

(3.) 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 V/s. Dy. CIT, 1992 195 ITR 227 which had been followed by the same High Court in Chimanlal S. Patel V/s. CIT, 1994 210 ITR 419. 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.