Income Tax Refund Paid without Sanctioned Interest: Madras HC Directs Dept to Take Action on Pending Claim [Read Order]

In the matter of income tax refund that was sanctioned with interest but paid without it, the Madras High Court directed the Income Tax Department to consider and dispose of the taxpayer’s representation regarding the unpaid interest.

The petitioner, Vinplex India Private Limited filed writ petition seeking the interest to be paid with the refund as the income tax department failed to consider the representation. It was contended that the tax refund, inclusive of interest till October 2024, was duly sanctioned and communicated by the department through an email dated 10.10.2024.

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Pursuant to this, the Court had earlier directed the respondents, via its order dated 10.02.2025, to release the refund along with the sanctioned interest. While the principal refund amount was credited, the interest component was omitted without explanation.

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The department, represented by the Junior Standing Counsel, did not dispute the sequence of events and left the matter to the discretion of the Court.

Justice Krishnan Ramasamy Court found merit in the petitioner’s grievance. The court noted that the sanctioned refund included interest, and there was no justification for withholding the same after the petitioner had already brought the issue to the department’s attention through a formal representation.

The court ruled that “In the present case, the refund of a sum of Rs.3,71,04,013/-, which includes the interest amount for the period till October, 2024, was sanctioned by the respondents to the petitioner vide e-mail dated 10.10.2024. Hence, this Court, vide order dated 10.02.2025, has directed the respondents to refund the amount along with interest as stated in the aforesaid e-mail.”

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Accordingly, the High Court directed the Income Tax Department to consider and dispose of the petitioner’s representation dated 11.03.2025 on its own merits and in accordance with law, within four weeks from the date of receipt of the Court’s order.

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To Read the full text of the Order CLICK HERE

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