- (1.) This civil appeal arises out of judgment and order passed by the Delhi High Court dated July 31, 1997 directing the appellant namely the Revenue to dispose of the claim of interest preferred by the respondent viz. D.D.A., on the amount of refund and to release the amount thereof, in their favour.
(2.) The facts which admit of no dispute are that the Delhi Development Authority (for short 'DDA') was to construct and allot flats to the buyers within the time stipulated in their agreements. On failure to do so, the D.D.A. was liable to pay interest to the buyers on the amount paid by them, for the period of delay. The D.D.A. defaulted as consequencewhereof it made payment of interest to the buyers. The concerened ITO(TDS) foundthat the DDA failed to deduct Income-tax at source on the payment of interest made to the buyers as provided under section 194A of Income-tax Act. Accordingly, a demand was raised for the Assessment years 1987-88, 1988-89 and 1989-1990. An appeal to CIT failed and it was found that Assessing officer had rightly levied tax under Section(1A) of Section 201(1) of the Act and the interest under sub-section 201 of the Act. The DDA preferred an appeal before the Income-tax Appellate Tribunal. The appeal was allowed by order dated 24-1-95 passed by the ITAT holding that amounts credited to the accounts of the allottees were not in the nature of interest within the meaning of Section 2(28A) of the Act. The orders passed by the Income-tax Authorities were quashed. It was further provided that amounts, if removed from D.D.A., be refunded immediately.
(3.) It also transpires that the Department moved ITAT under Section 256(1) of the Income-tax Act for making reference to High Court and by order dated 13-12-1995 ITAT referred the questions. In the meantime the order of the Appellate Tribunal was given effect to by the concerned authorities refunding the amount with interest calculated under Section 244(1) of the Act.;