TMI Blog1995 (12) TMI 54X X X X Extracts X X X X X X X X Extracts X X X X ..... hereof. Similar notice dated November 24, 1978 (annexure-3), was issued to the petitioner, whereby a sum of Rs. 77,05,134 was determined to be payable during the financial year 1978-79 relating to the assessment year 1979-80. The petitioner deposited advance tax of Rs. 56,00,000 after adjusting Rs. 14,16,000 the tax deducted at source. Under section 143(3) of the Act, the petitioner's total income for the assessment year 1978-79 was computed at Rs. 2,59,80,050 (vide annexure 4) and for the assessment year 1979-80 at Rs. 2,69,79,430 (vide annexure 5) and deduction under sections 80MM and 80-O of the Act on gross receipts was disallowed. On appeal, the Commissioner of Income-tax (Appeals) by a consolidated order dated March 2, 1981 (annexure-8), for the assessment years 1977-78 to 1979-80 directed the Inspecting Assistant Commissioner of Income-tax (respondent No. 2) to delete the addition made under sections 80MM and 80-O of the Act after allowing the claim of the petitioner with respect to gross receipts. By letter dated March 31, 1981 (annexure-9), respondent No. 2 proposed to set off the amount refundable to the petitioner against the demand made, pursuant to the orders under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of mandamus to the respondents not to act pursuant to or in furtherance of the said order, so far as it related to rejection of the petitioner's claim for interest payable under section 214 of the Act for the assessment years 1978-79 and 1979-80. A prayer has also been made for a further direction to calculate the interest payable to the petitioner under section 214 of the Act in accordance with law and payment thereof to the petitioner. Mr. Moitra, counsel for the petitioner, submitted that the expression " regular assessment " appearing in section 214 of the Act has been defined under section 2(40) of the Act to mean the assessment made under section 143 or section 144 of the Act. It does not mean the initial or first assessment only. The order passed by the Inspecting Assistant Commissioner of Income-tax (respondent No. 2) in order to give effect to the order of the appellate authority, is also an order of assessment made under section 143 of the Act. The expression "regular assessment" should be construed to mean the assessment made by the Income-tax Officer/Inspecting Assistant Commissioner of Income-tax initially, if there is no appeal therefrom ; but in case there is an a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the case are simple and are not in dispute. The only question of law as raised by the parties is whether the petitioner-assessee is entitled under section 214 of the Act to the interest on the advance tax refundable to it as a result of the decision of the Commissioner of Income tax (Appeals) reducing the total income determined by the Inspecting Assistant Commissioner of Income-tax. According to the respondents, the petitioner is entitled to claim interest under section 214 of the Act only on the advance tax ordered to be refunded to it by the Inspecting Assistant Commissioner of Income-tax on "regular assessment" made at the first instance under section 143 of the Act, unaffected by the refund, if any, that might be subsequently ordered as a result of the recomputation of tax liability in pursuance of the direction given by the higher authority. In a case where an assessee pays advance tax under sections 207 and 213 of the Act in excess of the amount determined on "regular assessment" under section 214(1) of the Act, provision has been made for payment of interest on the excess by the Central Government. The interest is payable from the first April of the assessment year fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, which is involved in this writ application, there were conflicting views of various High Courts of India. A Full Bench of the Bombay High Court in CIT v. Carona Sahu Co. Ltd. [1984] 146 ITR 452 held that the words "regular assessment" in section 214(1) of the Act mean the first order of regular assessment passed by the Income-tax Officer and not the last operative order of the assessment passed as a result of appellate or revisional proceeding. Consequently, the Central Government is liable to pay interest up to the date of the first order of regular assessment only. A large number of High Courts including Kerala, Allahabad, Punjab and Haryana, Andhra Pradesh and Gauhati also took the same view. On the other hand, a Full Bench of the Gujarat High Court in Bardolia Textile Mills v. ITO [1985] 151 ITR 389 held that interest on the excess advance tax refunded under section 214(1) of the Act has to be paid up to the date of regular assessment, when the first assessment of the Income-tax Officer is final, i.e., the regular assessment for the purpose of section 214 of the Act. Where on appeal from the first assessment, the appellate court does not set aside the assessment, but merely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ursuant to an order of assessment on and from the date when those amounts were set off against the tax demand raised in the assessment order ; in other words, the date of the assessment order. With effect from April 1, 1985, interest payable under section 214 will increase or decrease in accordance with the variation in the quantum of the excess payment of tax brought about by orders passed subsequent to the regular assessment as mentioned in sub-section (1A) of section 214 of the Act. Having regard to the scheme of the Act and use of the phrase "regular assessment" in various sections of the Act, the Supreme Court held that in section 214 "regular assessment" has been used in no other sense than the first order of assessment passed under section 143 or 144 of the Act and if any consequential order has to be passed by the Income-tax Officer to give effect to an order passed by the higher authority, that consequential order cannot be treated as "regular assessment" nor can the date of the consequential order be treated as the date of the regular assessment. The amendments made to section 214 of the Act from time to time also go to indicate that regular assessment in section 214 wa ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
