22 March 2014
I have paid advance tax for 2012-2013=10 lakhs. I have filed my return with tax liability as nil. After intimation u/s 143(1), I received refund of advance tax=10 lakhs and interest on I.T. refund=30,000. However within 6 months from the end of the financial year in which the return was furnished, scrutiny assessment’ u/s.143 (2) was carried out, and it was held that my tax liability was not nil and I had to pay tax on my tax liability which was more than the amount of advance tax. So, the question of interest on IT Refund does not arises and I have to repay back Rs. 30,000 to the IT Department. I had shown interest on I.T. refund= 30,000 as other income in the subsequent year and paid taxes (@30% on 30,000)=9,000. But, due to the scrutiny assessment’ u/s.143 (2) being carried out, I have to refund back entire Rs. 30,000. So what treatment will be done to the tax paid on Interest on I.T. Refund= 9,000?
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