1997 (12) TMI 14

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..... an borrowed monies and debts due and payable ? 6. Whether the Appellate Tribunal was justified in law in holding that the technical fees paid to Warner Lambert Pharmaceutical Company of U.S.A. of Rs. 51,264 and Rs. 1,56,777 for the assessment years 1970-71 and 1971-72, respectively, was revenue expenditure ? 12. Whether the Tribunal erred in holding that the amount of tax recoverable as on the first day of the computation period was not to be included in the capital employed in the assessee's industrial undertaking as till the assessment was completed, the said amount did not constitute a debt due to the assessee ?" So far as question No. 6 is concerned, the amount is not very large. The assessment years involved are 1970-71 and 1971-72. .....

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..... ference, to which it is entitled by way of refund, as an asset. The authorities below have held that the right to refund will arise only after assessment is made and till then it cannot be treated as an asset of the assessee. Payment of advance tax is a statutory liability and may be in accordance with the books of the assessee, it may result in a refund. But, till such time the assessment is completed and all order of refund is made, the assessee cannot treat the payment which has been made under a statutory obligation as its asset. Admittedly, the assessee cannot ask for refund of the said amount till the assessment is made, whether provisional or final. In such circumstances, the view taken by the Tribunal is correct. The said amount can .....

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..... , the right of the assessee to get refund arose on the very first day of tile assessment year. Applying this principle, it was held in the case of Modi Industries Ltd. v. CIT [1995] 216 ITR 759 (SC), that interest was payable on advance tax from the first day of the assessment year because the right to get refund of the excess amount of advance tax paid arose on the first of April of the assessment year itself. It was observed : "It will be seen from the aforesaid that the right to get refund arises because the advance payment of tax is in excess of the tax liability of a particular year. Since this right becomes known and ascertainable because of the provisions of the Income-tax Act and the annual Finance Act on the 1st of April of all as .....

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