In Brief
This case concerns whether a partnership firm assessee is entitled to interest under Section 244(A) of the Income-Tax Act on refund that arises when the Settlement Commission waives interest under Sections 234(A)-(C). The High Court held that since waiver was discretionary, no legal right to claim interest on the refunded amount arose. The Supreme Court reversed this, holding that once the Settlement Commission exercises its discretionary power to waive interest (pursuant to a CBDT circular), a concomitant statutory right automatically springs into being in the assessee's favour. Interest on refund is a non-discretionary statutory obligation once refund becomes due. The Court approved prior precedent that 'amount' in the refund provisions encompasses interest, making the assessee's right to interest parasitical to the refund itself.
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