https://www.taxtmi.com/caselaws?id=751077 The ITAT Ahmedabad held that when a partial income-tax refund is received by an assessee, it must be adjusted first against the outstanding interest component under section 244A, then against the principal tax amount. The assessee contended for adjustment against interest first, while the Department argued for adjustment against principal first. Following precedents from Delhi HC in India Trade Promotion Organisation and ITAT Mumbai in Union Bank of India, the tribunal ruled that adjusting against principal first would allow Revenue to avoid paying interest indefinitely without sanction, constituting a premium on non-compliance. The tribunal rejected the Department's arguments regarding Indian Contract Act provisions and proportionate adjustment, holding such approaches would unjustly benefit Revenue since interest is not payable on interest refunds. en-us Wed, 03 Apr 2024 00:00:00 +0530 Thu, 23 Jul 2026 12:38:00 +0530 TaxTMI RSS Generator https://www.taxtmi.com/caselaws?id=751077 The ITAT Ahmedabad held that when a partial income-tax refund is received by an assessee, it must be adjusted first against the outstanding interest component under section 244A, then against the principal tax amount. The assessee contended for adjustment against interest first, while the Department argued for adjustment against principal first. Following precedents from Delhi HC in India Trade Promotion Organisation and ITAT Mumbai in Union Bank of India, the tribunal ruled that adjusting against principal first would allow Revenue to avoid paying interest indefinitely without sanction, constituting a premium on non-compliance. The tribunal rejected the Department's arguments regarding Indian Contract Act provisions and proportionate adjustment, holding such approaches would unjustly benefit Revenue since interest is not payable on interest refunds. Case-Laws Income Tax Wed, 03 Apr 2024 00:00:00 +0530 https://www.taxtmi.com/caselaws?id=751077