Income Tax — Tax at Source/TDS — Refund

Cases Reported in  2014 SCC Vol. 6 July 14, 2014 Part 3

When collection is illegal, Revenue is obliged to refund such amount with interest as money so deposited is retained and enjoyed by it. Hence, resident/deductor who had deducted tax at source and deposited the same before remitting amounts payable to non-resident/foreign company is entitled to interest on such refund on par with assessee. No discrimination can be shown between assessee and resident/deductor in payment of interest on refund of tax. Further, such refund attracts interest from date of payment/deposit of the tax since it falls under “in any other case” in S. 244-A(1)(b) of IT Act, 1961. Money received and retained without right, carries with it right to interest. Whenever money received by a party which ex ae quo et bono ought to be refunded, the right to interest follows, as a matter of course and the State is not exempted from payment of interest. Union of India v. Tata Chemicals Ltd., (2014) 6 SCC 335 

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