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Income tax update

ARUN KUMAR (Financial Consultant ) (992 Points)

26 September 2011

ITAT MUMBAI:

INTEREST RECEIVED ON INCOME TAX REFUND CAN SET OFF AGANIST INTEREST PAID ON DELAYED PAYMENT OF INCOME TAX.

CASE LAW :-BANK OF AMERICA VS DCIT

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6 Replies

Ashraf Ali (Manager ) (66 Points)
Replied 26 September 2011

No Interest received on income tax refund cannot be setoff against Delayed payment of Interest on incomet tax. The same delayed payment of interest must be paid in order to avoid penalty. and the Interest received on refund must be shown as Income from Other sources while computing Income tax

Chintan (Accounts and Finance Executive CS Executive Pursuing) (98 Points)
Replied 26 September 2011

Interest received on refund must be shown in income from other souces.

Jayesh (Internal Auditor) (214 Points)
Replied 26 September 2011

Dear Ashraf & Chintan,

Arun is not asking any query. Information provided by Arun Kumar is about decided case law.

DCIT v. Bank of America NT & SA (ITAT Mumbai) – Tribunal held that interest received on income tax refund can be set-off against the interest paid on delayed payment of income tax and only net amount is to be taxed.

Regards,

Jayesh

parag_0302 (Asstt. Commercial Officer) (124 Points)
Replied 26 September 2011

Originally posted by : Jayesh
	Dear Ashraf & Chintan, Arun is not asking any query. Information provided by Arun Kumar is about decided case law. DCIT v. Bank of America NT & SA (ITAT Mumbai) – Tribunal held that interest received on income tax refund can be set-off against the interest paid on delayed payment of income tax and only net amount is to be taxed. Regards, Jayesh

Jayesh is right...

Chintan (Accounts and Finance Executive CS Executive Pursuing) (98 Points)
Replied 27 September 2011

thnks for the info jayesh

Pragnesh (AM - Taxation) (1259 Points)
Replied 10 October 2011

Dear All

Pls. refer recent case law of "Pune Tribunal rejects set off for interest paid and received on income tax" after judgement of DCIT v. Bank of America NT & SA (ITAT Mumbai)

Extract from case law "the recent ruling of the Pune Tribunal (Pune Tribunal) in the case of Sandvik Asia Limited (Taxpayer) on the issue of whether interest paid on income tax due can be set off against interest received on income tax refunds under the Indian Tax Laws ( ITL). Before the Division Bench of the Pune Tribunal, there was a difference of opinion between the Members and, accordingly, the issue was referred to the Third Member for a majority opinion. The Third Member held that the interest paid and interest received from the Tax Authority cannot be set off against each other and the whole of the interest received is taxable under the ITL. The Pune Tribunal also held that the interest paid on income tax due was not deductible as business expenditure under the ITL."