9911796707
TMI Blog2004 (7) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessment year 1985-86 was completed under section 143(1) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"), and after the completion of the assessment proceedings, the Assessing Officer found that the appellant had received a sum of Rs. 4,09,344 by way of interest under section 214 of the Act for the assessment year 1981-82 by order dated September 6,1984. The Assessing Officer was of the view that the interest received by the assessee is an income of the assessee chargeable to tax which had escaped assessment and reopened the assessment earlier made under section 143(1) of the Act and assessed the interest income received by the assessee and revised the assessment. The Commissioner of Income-tax (Appeals), on appeal, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Member held that the interest quantified and paid would retain the character of income and it was assessable as revenue receipt in the year of payment by the Department. He agreed with the view of the learned Accountant Member and held that the interest received by the asses-see under section 214 of the Act was an income for the assessment year 1985-86. He also gave a direction that in case the assessee repays the excess interest received, that would be allowed as a deduction under section 37 of the Act in the year in which the assessee is called upon to repay and made such repayment. It is against the order of the Appellate Tribunal, the assessee has preferred the appeal. This court admitted the appeal on the following substantial questio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t provides for interest payable by the Central Government on the excess amount of advance tax paid during the financial year. This court in B. Seshamma v. CIT [1979] 119 ITR 314 held that there is no distinction between the interest paid under section 237 read with section 243 of the Act and the interest paid under section 214 of the Act and the interest cannot be construed to be a capital receipt and the interest was paid under a statutory obligation with reference to the amount refundable and it is an income assessable under the head "Other sources". This court further held that the interest is not paid as personal compensation, but it is paid for deprivation of the use of the money. It has been held by the Patna High Court in CIT v. Maha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessment year 1985-86, we hold that the interest income is assessable in the assessment year 1985-86. We are fortified by the view taken by the Allahabad High Court in J.K. Spinning and Weaving Mills Co. v. Addl. CIT [1976] 104 ITR 695 where the Allahabad High Court has taken a view that interest would be taxable in the year in which the right to receive the interest accrued though it was not actually received. The Karnataka High Court in Syndicate Bank's case [1986] 159 ITR 464 has also taken the same view. We are of the view that so far as the assessee is concerned, the right to receive the interest under section 214 of the Act accrued on September 6, 1984, when the assessee was granted interest in the previous year relevant to the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee challenged the order of assessment for the year 1981-82 would not have any bearing as to the nature of receipt of interest on excess advance tax paid and even if the appeal filed by the assessee for the assessment year 1981-82 fails, there would not be any liability on the part of the assessee to refund any part of the amount received by the assessee. We therefore hold that the Appellate Tribunal was correct in holding that the amount received by the assessee as interest under section 214 of the Act is of income nature and assessable in the year in which the right to the income has accrued. The Appellate Tribunal has also given a further direction following the decision of the Karnataka High Court in Syndicate Bank's case [1986 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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