Delayed-refund interest on investigation deposits applies from the date of deposit until refund, treating the payment as under protest.

Amounts deposited during investigation are treated as deposits under protest for refund purposes, and delayed-refund interest is payable from the date of deposit until the date of refund. The approach noted that the assessee is entitled to interest where the refund is not made promptly, and prior Tribunal and jurisdictional High Court decisions were relied on to support interest at 12% per annum. The contrary view that interest would arise only after the statutory period under section 35FF was not accepted on the facts discussed, and the refund was treated as carrying interest from the date of deposit.

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Issues: Whether interest was payable on the refund sanctioned to the appellant, and if so, from what date and at what rate.

Analysis: The dispute concerned non-sanction of interest on a refund arising from amounts deposited during investigation. The governing approach adopted was that such deposits are to be treated as deposits made under protest, and that the assessee is entitled to interest on delayed refund from the date of deposit until the date of payment. Reliance was placed on prior Tribunal and jurisdictional High Court decisions holding that interest at 12% per annum is appropriate in such cases. The contrary stand that interest would arise only after the statutory period under section 35FF was not accepted on the facts, and the refund was treated as one attracting interest from the date of deposit.

Conclusion: Interest was held payable to the appellant on the refunded amount from the date of deposit till the date of refund at 12% per annum.

Final Conclusion: The order denying interest was set aside and the appellant obtained relief on the claim for delayed-refund interest.

Ratio Decidendi: Amounts deposited during investigation are to be treated as deposits under protest for the purpose of refund interest, and interest is payable from the date of deposit till refund at 12% per annum.

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