2005 (12) TMI 69 - HC - Income Tax

Interest refund - On noticing that interest under section 214 has been calculated on the refund due as per the original assessment order by totally ignoring the amended section 214 the petitioner filed a revision application before the Commissioner of Income-tax under section 264 of the Income-tax Act. The said revision came to be rejected held that revision could not be rejected only on ground of delay further held therein that the Taxation Laws (Amendment) Act 1984 is procedural in nature and therefore it will apply to all the pending actions. This being so sub-section (1A) which was introduced in section 214 will apply to the petitioner s case. There is no substance in the second ground of rejection of revision. - impugned order passed by the Commissioner of Income-tax is set aside. The respondents are accordingly directed to pay the interest to the petitioner as permissible u/s 214(1A)

Summary

Issues:
Challenge to order under section 264 of the Income-tax Act, 1961 - Delay in revision application - Applicability of amended provisions of section 214(1A) - Calculation of interest on refund.

Analysis:
The judgment of the High Court pertains to a petition challenging the order dated January 30, 1992, passed by the Commissioner of Income-tax under section 264 of the Income-tax Act, 1961. The petitioner had filed a return of income for the assessment year 1982-83, and after various proceedings, was entitled to a refund. The issue arose when the petitioner sought details of the interest calculation on the refund and found discrepancies in the application of the amended section 214. The revision application was rejected on two grounds - delay and non-applicability of the amended provisions of section 214(1A) to the year in question.

Regarding the delay in the revision application, the court found that based on the facts presented, there was no undue delay that would warrant rejection of the application solely on that ground. Moving to the second ground, the court analyzed the applicability of the amended provisions of section 214(1A) introduced on April 1, 1985. The petitioner argued that a Division Bench judgment established the procedural nature of the amendment, making it applicable to pending actions. The court agreed with this interpretation, ruling that the amended section 214 would indeed apply to the petitioner's case, contrary to the Commissioner's decision.

Consequently, the High Court allowed the petition, setting aside the order of the Commissioner of Income-tax dated January 30, 1992. The respondents were directed to pay the interest to the petitioner in accordance with section 214(1A) of the Income-tax Act. The court made the rule absolute without any order as to costs, thereby resolving the issues raised in the petition and providing relief to the petitioner in terms of the interest calculation on the refund.