TMI Blog1995 (1) TMI 1X X X X Extracts X X X X X X X X Extracts X X X X ..... , the respondent-company was taken over by the Government. The respondent received compensation therefor which amount was brought to tax by the Revenue. The original assessment was completed on January 31, 1966. The appeal preferred by the respondent was allowed by the Appellate Assistant Commissioner on March 6, 1969. He set aside the assessment and directed the Income-tax Officer to complete the assessment afresh in the light of the directions given by him. In short, the Appellate Assistant Commissioner directed that the income of the respondent-assessee must be determined under section 12B of the Indian Income-tax Act, 1922, and not under section 10(2)(vii) of the said Act. The respondent filed an appeal before the Tribunal questioning the correctness of the Appellate Assistant Commissioner's order but it was dismissed on September 20, 1971. The Income-tax Officer then took up the assessment proceeding and called upon the respondent to furnish certain particulars. The respondent furnished the particulars finally on April 13, 1973, and the Income-tax Officer completed the assessment on August 14, 1973. As a result of this assessment, a sum of Rs. 84,562 was found refundable to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hall be entitled to a refund of the excess. 240. Refund on appeal, etc.-Where, as a result of any order passed in appeal or other proceeding under this Act, refund of any amount becomes due to the assessee, the Assessing Officer shall, except as otherwise provided in this Act, refund the amount to the assessee without his having to make any claim in that behalf: Provided that where, by the order aforesaid,- (a) an assessment is set aside or cancelled and an order of fresh assessment is directed to be made, the refund, if any, shall become due only on the making of such fresh assessment; (b) the assessment is annulled, the refund shall become due only of the amount, if any, of the tax paid in excess of the tax chargeable on the total income returned by the assessee." [ The proviso was added by the Direct Tax Laws (Amendment) Act, 1987, with effect from April 1, 1989.] "244. Interest on refund where no claim is needed.-(1) Where a refund is due to the assessee in pursuance of an order referred to in section 240 and the Assessing 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 Government ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined on such assessment may be either more or less than the tax determined in the original (set aside) assessment. Therefore, no one can say on the date of such appellate order that any amount has become due to the assessee-or for that matter, to the Revenue. Take a case where the tax determined as payable under a fresh assessment is found to be more than the tax paid under the original assessment, is the Revenue entitled to interest on such amount from the date of the appellate order? Certainly not. According to section 220(2), interest is payable by the assessee on the amount due only after the service of the notice of demand pursuant to such fresh assessment. It is true that the language of section 220(2) and section 244(1) is different, but a consideration of both the concepts helps in placing a proper interpretation on section 240 and section 244(1). Be that as it may, the question has yet to be answered, whether refund of any amount has become due to the assessee as a result of the appellate order in this case? One answer given by the Allahabad High Court in Purshottam Dayal Varshney v. CIT [1974] 94 ITR 187 and followed by some other High Courts is that once the assessment i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate Assistant Commissioner and after the dismissal of that appeal, the Income-tax Officer completed the assessment on August 14, 1973, and promptly refunded the excess amount in the same month. In the circumstances of this case, it cannot be said that any amount became due as a result of the Appellate Assistant Commissioner's order. To repeat, the Appellate Assistant Commissioner's order did not determine the tax payable by the assessee. It merely directed the Income-tax Officer to make a fresh assessment in accordance with its directions. The amount due or the amount refundable to the assessee, as it may be called, was ascertained only on the making of a fresh assessment on August 14, 1973. It may also be noticed that the Appellate Assistant Commissioner's order had the effect of reviving the assessment proceedings which had yet to be completed and which proceedings were in fact completed on August 14, 1973. When the assessment proceedings are still pending, it is idle to talk of any amount or any refund becoming due to the assessee in respect of that assessment year, particularly in the light of section 237. In this sense, clause (a) of the proviso to section 240, added with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (1A) of section 244-or, for that matter, the second proviso thereto upon which an argument can possibly be built up-for the reason that here the tax amount was paid prior to October 1, 1975, an also because the applicability of that sub-section turns upon the language employed therein, viz., "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 the assessee is liable to pay as tax . . . " Lastly, Mr. Javali submitted that having regard to the fact that the amount concerned herein is very small and also because the company is already under liquidation for a number of years, this court may not interfere with the orders of the High Court even though it may declare the law correctly. But this is a case where as a result of our order, the assessee is not being asked to refund any amount which has already been received by it; it would only be disabled from claiming any further amount from the Revenue. In such a case, we see no reason to adopt the course suggested by learned counsel, assuming that such a course is permissible in law, upon which aspect we express no opinion. For the above reasons the appeal ..... X X X X Extracts X X X X X X X X Extracts X X X X
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