TMI Blog1990 (4) TMI 96X X X X Extracts X X X X X X X X Extracts X X X X ..... interest u/s 244(1A) but it was also rejected. Thereafter the assessee preferred an appeal before the CIT(Appeals) submitting that in accordance with the decision of the Delhi High Court in the case of National Agricultural Co-operative Marketing Federation of India Ltd. v. Union of India [1981] 130 ITR 928, the assessee is entitled to interest u/s 244(1A) also. The CIT held that the provisions of section 244 are applicable only where the refund due to an assessee is not granted within a period of 3 months from the end of the month in which the order making the assessee eligible for refund was passed. In the instant case, the appellate order was passed on 30-10-1984 and the order granting refund alongwith the interest due was passed on 28-11-1984, i.e., within a period of one month and, therefore, the assessee would not be entitled to the claim of interest u/s 244. He distinguished the facts of the case in National Agricultural Co-operative Marketing Federation of India Ltd.'s case. He also supported the order of the ITO by observing that the assessee's plea to rectify the assessment u/s 154 was not tenable because the grant of interest u/s 244 was highly debatable and as per the d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... High Court on an identical issue in the case of K. Subramanian, ITO v. Siemens India Ltd. [1985] 156 ITR 11 and that of the Allahabad High Court in the case of Omega Sports Radio Works v. CIT [1982] 134 ITR 28. The Bombay High Court has pointed out in Siemens India Ltd.'s case that even if the judgment of the High Court is not accepted by the parties and further proceedings on the same are pending, the authorities working under the jurisdictional High Court are duty bound to follow its judgment. The Allahabad High Court has pointed out in the case of Omega Sports Radio Works that if there is a decision on a particular point by the High Court of a State, it is binding on the Income-tax authorities in that State and merely because there is some judicial divergence of opinion on that point between some High Courts, it cannot be said that there is still a scope for a debate on the point and, therefore, Section 154 is not attracted in the case. The binding nature of the High Court decision is not in any manner affected or kept in abeyance or postponed merely because a further appeal is filed against that judgment or a different High Court has taken a contrary view. 4. The learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even the payment of advance tax can be worked into the provisions of Sec. 244(1A). On the language of Section 219, the advance tax paid is treated as a payment of tax for the assessment year and is given credit for at the time of the regular assessment. This means that when the regular assessment is made in the first instance, the advance tax paid earlier is treated as having been paid in pursuance of the regular assessment and in satisfaction thereof. Thus, the advance tax paid earlier will get converted into a payment on the date of the initial assessment of the tax due for the assessment year. Carrying this fiction to its logical extent, the assessee must be held entitled to interest on the amount of advance tax also to the extent is found refundable from the date of the excess payment right upto the date of the actual refund. 6. After the introduction of sub-section (2) in Section 214, whatever may be the interpretation that might be placed on the expression " regular assessment " contained in Section 214, there is no escape from the conclusion that the assessee is entitled to a refund along with interest up to the date of refund. This decision of the Delhi High Court, which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, speaking through Justice M. Fathima Beevi (as she then was) observed that the phrase 'regular assessment' occurring in section 214 of the Income-tax Act means the first assessment made by the ITO, when he is bound to determine the sum paid by the assessee or refundable to him on the advance tax paid before such assessment and only such excess of tax determined or advance tax paid is entitled to interest u/s 214 and once, that process is over, the advance tax paid changes its character as advance tax and partakes the character of tax paid, as per demand and if in an appeal the assessment is set aside pursuant to an appellate order and in the consequential order, the sum refundable is determined, the question of excess of advance tax over the tax determined would not arise at that subsequent stage. Hence the liability of the Government to pay interest u/s 214 is limited only to the period up to the date of the first assessment and on the amount found to be in excess on that date and not by the revised order. We find that the Kerala High Court had not differed from the judgment of the Delhi High Court in National Agricultural Co-operative Marketing Federation of India Ltd.'s case, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the Delhi High Court decision. It is no doubt true that the Bombay High Court in the case of Siemens India Ltd. v. K. Subranmnian, ITO [1983] 143 ITR 120 held merely because an appeal has been filed or a special leave application is pending against that decision, would not denude that decision of its binding effect and until set aside, that decision is binding on all upon whom it operates, unless the operation of the judgment has been stayed by the Supreme Court. In this case the interim stay has been granted. In that sense it can be said that the Delhi High Court decision is stayed by the Supreme Court and therefore not binding precedent but yet the decision of the Delhi High Court clarifies the position of law that the advance tax paid gets merged into the regular tax paid and that becomes tax paid " in persuance of an order of assessment " and misinterpretation has to be taken into consideration for the purpose of calculating interest u/s 244(1A) and we do not think that the principle can be said to be inapplicable merely because the operation of the order has been stayed and as we have observed above, the Kerala High Court did not express a contrary view in the case cited ..... X X X X Extracts X X X X X X X X Extracts X X X X
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