TMI Blog1990 (1) TMI 117X X X X Extracts X X X X X X X X Extracts X X X X ..... er which was passed u/s 154 of the I.T. Act. " 2. The assessee company paid advance tax of Rs. 3,41,76,687 and a sum of Rs. 4,64,436 was deducted at source. The assessee also paid a sum of Rs. 1 10,42,642 on self-assessment on various dates. On completion of assessment, the company further paid a sum of Rs. 71,64,892. The company pursued the assessment in appeal and on the basis of the appellate order of ITAT, a refund of Rs. 73,22,050 was granted to the which included interest u/s 244(1A). Later on, the assessing officer discovered that the interest calculated u/s 244(1A) was in excess by Rs. 3,26,691. He, therefore, initiated proceedings u/s 154 so as to reduce the interest by the aforesaid amount. The company on the other hand claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dingly the claim of the assessee could not be entertained u/s 154. 4. The ld. counsel for the assessee, Shri O.P. Vaish contended that u/s 140A(2), any amount paid u/s 140A(1) is deemed to have been paid towards regular assessment. That being so the payment made u/s 140A falls within the ambit of payments made in pursuance of an order referred to in section 244(1A). The ld. counsel further pointed out that 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 has held that advance tax paid gets converted into a payment on the date of initial regular assessment as payment made in pursuance of an assessment and in satisfaction thereof. The learned couns ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng) officer does not grant the refund within a period of (three months from the end of the month in which such order is passed), the Central Govt. shall pay to the assessee simple interest at fifteen per cent per annum on the amount of refund due from the date immediately following the expiry of the period of (three) months aforesaid to the date on which the refund is granted. (1A) Where the whole or any part of the refund referred to in sub-section (1) is due to the assessee, as a result of any amount having been paid by him after the 31 st day of March, 1975, in pursuance of any order of asst. or penalty and such amount or any part thereof having been found in appeal or other proceeding under this Act to be in excess of the amount which ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the advance tax paid gets converted into payments towards regular assessment on the date of making of initial assessment. Up to the date of initial assessment, section 214 entitles the assessee to interest for the excess payments made in advance. From initial assessment when the advance tax gets converted into the payment towards regular asst., section 244(1A) has been held to be applicable up to the date of grant of refund. So by reading section 214 together with section 244(1A), the Hon'ble Delhi High Court has held that the assessee would be entitled to interest from the date of payment to the date of refund. 7. The Hon'bleDelhiHigh Court in the case of National Agricultural Co-operative Marketing Federation of India Ltd. has derived ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egular assessment on the date of initial assessment. That being so, the assessee would be entitled to interest on payments made u/s 140A which are converted into payments towards regular assessments. 9. Now, the question which is interlinked with the payment of interest arises as to from what date the assessee would be entitled to interest on the payments made u/s 140A. On plain reading of section 244(1A), one would get the impression that the assessee would be entitled to interest from the date of payment to the date on which the refund is granted. For payments made u/s 140A, what is the date of payment for the purposes of section 244(1A) is a question which we would like to answer. Any payment made u/s 140A would not come within the pur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the refund, assessee cannot be entitled to interest from the date of payment till the date of initial assessment. So the fiction created by section 140A(2) taken to the logical conclusion cannot operate prior to the date of initial assessment. We would like to mention that Their Lordships of the Hon'ble Supreme Court in the case of M.K. Venkatachalam, ITO v. Bombay Dyeing Mfg. Co. Ltd. [1958] 34 ITR 143, stated with approval the observations of Lord Asquith of Bishop in East End Dwellings Co. Ltd. v. Finsbuery Borough Council [1952] AC 109, 132 : " If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative ..... X X X X Extracts X X X X X X X X Extracts X X X X
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