TMI Blog1998 (6) TMI 84X X X X Extracts X X X X X X X X Extracts X X X X ..... ppellate Tribunal. The order of the Appellate Tribunal was passed on January 14, 1980, and the Income-tax Officer gave effect to the order of the Appellate Tribunal on February 16, 1981, and the order resulted in refund computed as under : (Rs.) (Rs.) Total income as per revision order dated 14-1-1980 28,07,900 Tax payable including surcharge 17,58,477 Tax collected 17,92,925 ------------------- 34,488 Interest under section 139(8) payable 48,288 ---------------- Interest collected 49,293 1,065 Interest under section 215 21,731 ---------------- Interest collected 32,819 12,153 ------------------- Total refund 46,601 Interest under section 244 from 1-5-1980 to 31-1-1981 4,193 ------------------- Total amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... worked out by the assessee at Rs. 42,885 and after deducting the interest already granted of a sum of Rs. 24,537, the assessee prayed for additional interest of Rs. 18,298. The Commissioner accepted the contention urged on behalf of the assessee and he held that the assessee was entitled to interest on the interest levied under sections 215 and 139(8) of the Act as the interest was not payable by the assessee. The Tribunal on an appeal by the Revenue upheld the view of the Commissioner of Income-tax (Appeals) and held that the assessee was entitled to interest under section 244(1A) in respect, of the interest collected under sections 139(8) and 215 and refunded under the provisions of Act. The Appellate Tribunal, at the instance of the R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in sub-section (1) on the amount so found to be in excess from the date on which such amount was paid to the date on which the refund is granted." The simple arithmetic involved in granting the interest is wrapped up in an involved language employed in section 244(1A) of the Act. A fair reading of the section would suggest that there are three steps that should be undertaken to determine the amount on which interest is to be granted. The first step is to determine what is the amount of refund due to the assessee under section 244(1) of the Act. Section 244(1) refers to section 240 and under section 240 of the Act, where, as a result of any order passed in appeal or other proceedings, refund of any amount becomes due to the assessee, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he contention of the Revenue was that the same meaning should be ascribed to the expression "amount of refund" used in the earlier part of section 244(1A) of the Act. We are unable to agree. There can be no dispute that the interest paid under sections 139(8) and 215 of the Act was paid in pursuance of an order of assessment. The interest levied may be a statutory levy; it may arise automatically once the default occurs, but still the interest was paid in pursuance of the order of assessment. The calculation of interest under section 139(8) or section 215 depends upon the date on which the return was furnished or the date of completion of assessment. Though these amounts paid by the assessee are statutory levies, they were paid by the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nomalous situation resulting in exclusion of the concept of the interest. In our opinion, the word "tax" in the later part of section 244(1A) has to be construed in the light of the expression "amount" found in the earlier part of section 244(1A) of the Act to include the amount of interest paid by the assessee. Therefore, in the context of section 244(1A) of the Act, the expression "tax", in our opinion, would include interest also and the definition of tax in section 2(43) meaning "income-tax" cannot be applied in the context of section 244(1A) of the Act. Consequently, the interest paid in pursuance of the order of assessment has to be regarded as forming part of income-tax or an adjunct to income-tax. The result would be that the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 240 envisages refund of each amount, the assessee is entitled to interest on the interest refunded under section 244 of the Act. Though the decision of the Kerala High Court arose under section 244(1), the principle would equally apply to the interpretation of section 244(1A) of the Act. The Madhya Pradesh High Court in the case of CIT v. Sardar Balwant Singh Gujral [1990] 86 CTR 64 (MP) held that the liability to pay interest is on the amount of refund due and the assessee would be entitled to interest on the amount of refund due which includes interest paid under sections 139(8) and 215 of the Act. We are in complete agreement with the views expressed by the Kerala High Court and the Madhya Pradesh High Court. We find no infirmity in th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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