TMI Blog1991 (7) TMI 3X X X X Extracts X X X X X X X X Extracts X X X X ..... r the advance tax and tax deducted at source, determined the refund due to the company at Rs. 6,46,140 and granted interest under section 214 on the said amount of refund. By order dated March 30, 1976, the assessment order was rectified under section 154 of the Act as certain mistakes apparent from the record were noticed. As a result of the rectification, the income of the company was enhanced by Rs. 5,918 and the total income was Rs. 4,06,99,809. The Income-tax Officer raised the demand for income-tax of Rs. 3,419 and the said amount was paid by the company on August 16, 1976. The company preferred an appeal to the Appellate Assistant Commissioner of Income-tax against the original order of assessment under section 143(3) of the Act. The company also preferred an appeal against the order of rectification passed by the Income-tax Officer. By order dated October 25, 1978, the Commissioner of Income-tax partly allowed both the appeals and effect was given to the orders of the Commissioner of Income-tax and of the Tribunal by order dated July 30, 1979. The total income of the company was computed at Rs. 4,02,54,680 and a total refund of Rs. 2,54,533 was found due. The said amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ddressed a letter to respondent No. 2, Inspecting Assistant Commissioner, for grant of interest as prescribed under section 214 and section 244(1A) of the Act. As respondent No. 2 did not take any steps, the company applied to respondent No. 1, Commissioner of Income-tax, under section 264 of the Act for revision of the order passed by respondent No. 2 and requesting that respondent No. 2 should be directed to grant interest due to the company under sections 214, 244(1) and 244(1A) of the Act on the excess tax refunded pursuant to the order of respondent No. 2 giving effect to the order of the Commissioner of Income-tax and the Tribunal. Respondent No. 1 consolidated the two petitions in respect of the two assessment orders and by order dated July 16, 1981, held that interest under section 214 cannot be allowed on the revised excess advance tax determined as the result of the appellate decision. Respondent No. 1 held that the material date for the purpose of allowing interest under section 214 of the Act is the date of regular assessment and that means the date of original assessment. Respondent No. 1 thereupon rejected the claim for interest under section 214 of the Act for both t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount having been paid by him after the 31st day of March, 1975, in pursuance of any order of assessment or penalty and 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 such assessee is liable to pay as tax or penalty, as the case may be, under this Act, the Central Government shall pay to such assessee simple interest at the rate specified 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 : Provided that where the amount so found to be in excess was paid in instalments, such interest shall be payable on the amount of each such instalment or any part of such instalment, which was in excess, from the date on which such instalment was paid to the date on which the refund is granted : Provided further that no interest under this sub-section shall be payable for a period of one month from the date of the passing of the order in appeal or other proceeding : Provided also that where any interest is payable to an assessee under this sub-section, no interest under sub-section (1) shall be payable to him in re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... was completed on September 29, 1975, and demand of Rs. 36,441 was raised and the demand was adjusted against the refund due to the company for the assessment year 1972-73. The order of rectification was passed on October 27, 1976, and demand of Rs. 7,717 raised was adjusted towards the refund due for the assessment year 1973-74. Effect to the orders passed by the appellate authorities was given on October 3, 1979, and the adjustment was completed on January 3, 1980. Shri Dastur submits that the company is entitled to interest under section 244(1A) of the Act in respect of the assessment year 1974-75 right from April, 1974, till January 3, 1980. Shri Dastur submitted that respondent No. 1 was in error in denying relief under section 214(1) of the Act to the company for the assessment year 1973-74 by holding that the interest is payable only till the date of regular assessment and that means the date of original assessment. Learned counsel urged that there is no rationale to treat the expression "regular assessment" in section 214(1) as equivalent to the original or initial assessment. It was contended that the expression "regular assessment" should be-construed as the final assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... und to be in excess from the date on which the amount was paid to the date on which refund was granted. Shri Dastur submitted that the company had paid advance tax in regard to the assessment year 1974-75 and that the regular assessment was completed on September 29, 1975, and the amount of advance tax was credited towards the tax liability under section 219 of the Act. Shri Dastur submitted that, as credit has been given after March 31, 1975, it should be held that the first ingredient that the amount is paid after March 31, 1975, in pursuance of the order of assessment is complied with. The second ingredient that the amount was paid by the company was found to be in excess of the amount which the company was liable to pay as tax by the appellate authority is also complied with. Learned counsel, therefore, urged that the company is entitled to interest on the excess amount found from the date on which the amount was paid till the date of grant of refund. The submission was controverted by Shri Jetley, learned counsel appearing on behalf of the Department, by urging that the provisions of sub-section (1) are attracted only when the payment is made in regard to the disputed liabilit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 244 of the Act may lead to anomalous results. We are unable to find any merit in the sub mission. In our judgment, there is no ambiguity whatsoever in regard to the construction of sub-section (1A) of section 244 of the Act. Reference was made by Shri Jetley to clause 57 in the Notes to the Taxation Laws (Amendment) Bill, 1973, and by which the amended sub-section (1A) was inserted. Clause 57 of the Notes sets out that sub-section (1A) is inserted so as to provide that interest on refund of tax due as a result of appeals is to be allowed from the date the disputed demand was originally paid to the date of grant of refund. Shri Jetley submitted that the expression "disputed, demand" must be construed as the demand made in pursuance of the passing of the order of regular assessment and which the assessee challenged in appeal. Shri Jetley submitted that the payment of advance tax being a voluntary one, there was no occasion to dispute the said amount and, therefore, sub-section (1A) is not applicable in respect of claims for payment of interest in respect of refund of part of the advance tax paid by the assessee. We are unable to find any merit in the submission. The disputed amoun ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance tax by denying the benefit of the provisions of section 244(1A) of the Act. The decision of the Full Bench proceeds to conclude that section 244(1A) of the Act has no application to amounts paid as advance tax only because the Full Bench holds that interest is payable under section 214(1) of the Act not up to the date of the first assessment but up to the date of the revised assessment. In our judgment, the Gujarat High Court decision does not help the claim of Shri Jetley. Reference was also made to the decision of the Kerala High Court in K. A. Karim and Sons v. CIT [1990] 186 ITR 97, but this decision of the single judge is of no assistance because the question which arose was in a different context and the observations made by the single judge have no application to the controversy in the present case. On the other hand, the decision relied upon by Shri Dastur in CIT v. Leader Engineering Works [1989] 178 ITR 529 (P H) is appropriate. The Punjab High Court held that advance tax paid lost its identity the moment it was adjusted towards the tax liability created under the regular assessment and took the shape of payment of tax in pursuance of the order of assessment. We ar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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