In Brief
Universal Cables Ltd., a tax deductor at source, sought interest on an income tax refund issued by the Department under Section 244-A of the Income Tax Act, 1961. The Supreme Court held that a deductor who deducts tax at source and deposits it with the Treasury is entitled to interest on refunded amounts, just as an assessee would be. The Court reasoned that interest compensates for the Department's use of the money. Following its earlier decision in Union of India v. Tata Chemicals Ltd., the Court allowed the appeal and directed the Department to pay interest as prescribed under Section 244-A."
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