TMI Blog1982 (11) TMI 73X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee is a limited company : 21-2-1976 The assessment was completed under section 143(3) of the Act, on an income of Rs. 9,01,941. Refund of Rs. 1,50,095 was due and interest under section 214 of the Act amounted to Rs. 48,916 as per the assessment order itself. 7-6-1976 The order was rectified for computation of tax at 60 per cent instead of 55 per cent which was originally done by mistake. This resulted in a demand against the assessee to the extent of Rs. 1,19,717. 28-11-1976 Order under section 155 of the Act was passed by the ITO granting gratuity provision of Rs. 2,31,838, which was originally not allowed under section 40A(7). By this order total refund came to Rs. 2,24,122, i.e., to the extent of Rs. 74,027 more than what was origin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ut since it is a pure question of law, we permitted Mr. Jain to raise this ground and we have heard arguments from the other side as well. (ii) Provisions of section 214 do not apply to revised or rectified assessments and that they are applicable only to regular assessments. Mr. Jain relied on a number of authorities for both the propositions and we shall deal with them while considering the contentions. The learned counsel of the assessee argued that appeal does lie as the question that came up for consideration has some peculiarity and it is not merely an appeal against levy of interest under section 214. It is virtually an appeal against the order of the ITO, who did not give effect to the appellate order and in such a situation the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... atter, we may also state that the decision of the Bombay High Court in CIT v. Shantilal J. Mehta [1981] 132 ITR 453 is also of not much relevance. Same is the comment with regard to the decision of the Madras High Court in Triplicane Urban Co-operative Society Ltd. v. CIT [1980] 126 ITR 125. In this case what happened was that the AAC in his order dated 3-11-1977 while tracing out the facts stated as follows : "The appellant claimed that it was entitled to interest under section 214 on the excess payment of Rs. 2,24,122 under section 210 from 1-4-1973 to the date of grant of above refund vide an application under section 154." Having noticed this aspect, the AAC finally held : "I accordingly hold that the appellant will be entitled to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s sought to be given effect to on merits and at that stage it is not possible to allow the revenue to object to the maintainability of the appeal. The ITO had no option but to give effect to the order of the appellate authorities. Secondly, the ITO while passing an order to give effect to the order of the appellate authority virtually passes a fresh order which has to be treated as a part of the assessment order which he originally passed. Against such an order the assessee undoubtedly has a right of appeal. In other words, the order passed by the ITO giving effect to the order of the appellate authority merges with the order of the assessment and whatever order the ITO has to pass must be treated as a part of the assessment order, which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... [1980] 122 ITR 272, held that interest is not payable as a result of the decision of the appellate authority. In other words, they held that it must be only with reference to the regular or initial assessment. Similarly, the Punjab and Haryana High Court in CIT v. Rohtak Delhi Transport (P.) Ltd. [1981] 130 ITR 777 also held the same view. No doubt, the Delhi High Court in National Agricultural Co-operative Marketing Federation of India Ltd. v. Union of India [1981] 130 ITR 928 also held that section 214 applies only to the regular assessments but their Lordships held that the assessee is entitled to interest under section 214 even in relation to refund granted on account of the revised assessments. Their Lordships stated : ". . . the exp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of section 214(2)." It may be mentioned here that, in that case though their Lordships agreed with the Madras High Court's view that the assessee would be entitled to refund upto the date of the refund, since the assessee's confined its claim upto the date of the order of refund, their Lordships allowed relief to that extent to the assessee. Here also the assessee claimed interest only upto the date of the order of refund and, therefore, the facts more or less tally. Their Lordships of the Delhi High Court did not stop at the provisions of section 214(2). They referred to the provisions of section 244(1A) which was introduced by the Taxation Laws (Amendment) Act, 1975. Construing those provisions their Lordships held that even otherwi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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