2001 (7) TMI 10 - SC - Income Tax

Revenue must pay compound interest when it unjustifiably delays payment; appellate orders upholding interest on interest affirmed, appeal dismissed

The SC affirmed the Tribunal and HC, holding that the revenue must pay interest on interest where it unjustifiably delayed payment of interest to the ... Interest on interest - simple interest - liability of the Revenue to pay interest on interest - precedential binding effect of unchallenged decisionsInterest on interest - simple interest - liability of the Revenue to pay interest on interest - Whether the Revenue is liable to pay interest on the amount of interest when law otherwise speaks of simple interest only. - HELD THAT: - The Tribunal's allowance of interest on interest was upheld by the High Court by applying prior decisions of the Gujarat High Court which held that the Revenue is liable to pay interest on interest where it has unjustifiably failed to pay interest due to the assessee. The Revenue did not challenge the correctness of those precedents; accordingly the principle laid down therein governs the present dispute. Applying that principle, the appellate authorities were correct in directing payment of interest on interest in favour of the assessee.Appeal dismissed; the order allowing interest on interest in favour of the assessee is upheld.Final Conclusion: The Supreme Court dismissed the civil appeal, holding that the Tribunal and High Court were right to allow interest on interest in accordance with the unchallenged precedents, and there is no order as to costs. The Supreme Court upheld the High Court's decision regarding interest payment on excess income tax, citing previous judgments. The appeal was dismissed with no costs. (Case citation: 2001 (7) TMI 10 - Supreme Court)