2004 (3) TMI 15 - HC - Income Tax

Court awards interest on advance tax refund despite Act repeal

Hari Nagar Sugar Mills Ltd. Versus State Of Bihar And Others.

The court awarded a lump sum amount of Rs. 50,000 as interest to the petitioner who had deposited an amount towards advance tax under a repealed Act. The ... Interest on amount which was deposited by the petitioner towards advance tax, in respect of the agricultural income-tax - case of the petitioner is that as the amount was deposited on the oral direction made by the authority of the Department, it is entitled to interest on the said amount - whether the petitioner is entitled to any interest on the amount, which remained with the State Government - Admittedly, in this case, when the Act was repealed, the amount was deposited and as such the said deposit was not made under the provisions of the Act – Held that in this case instead of allowing an interest at a particular percentage, a lump sum amount of Rs. 50,000 should be paid to the petitioner towards interest so as to bring an old matter to an end. Issues: Entitlement to interest on deposited amount under repealed Act.In this case, the petitioner filed a writ application seeking to quash an order rejecting their prayer for interest on an amount deposited towards advance tax under the repealed Bihar Agricultural Income-tax Act. The petitioner claimed the deposit was made on oral direction from the Department and thus, they were entitled to interest. The State argued that as there was no demand for advance tax and the amount was voluntarily deposited by the petitioner, no interest was due. The main issue for consideration was whether the petitioner was entitled to interest on the amount that remained with the State Government.The court noted that the amount was deposited after the Act was repealed, and therefore, the deposit was not made under the provisions of the Act. While the Act provided for interest on refunds, the petitioner did not approach the court promptly for a refund. Considering the delay in seeking a refund and to bring the matter to an end, the court decided to award a lump sum amount of Rs. 50,000 as interest to the petitioner. The court directed the Department to make this payment within six months from the date of the judgment.Overall, the judgment addressed the issue of entitlement to interest on a deposited amount under a repealed Act. It highlighted the importance of timely legal action and balanced the interests of the petitioner with the need to conclude the matter efficiently.