TMI Blog1984 (8) TMI 70X X X X Extracts X X X X X X X X Extracts X X X X ..... le, the interest on such instalment will run from the date of payment. As to the point of commencement of the period for which interest is thus payable under s. 214(1) there is no controversy. The other terminus is the date of the regular assessment for the assessment year immediately following the above said financial year. The controversy concerns the meaning of the expression " regular assessment " used in s. 214(1). Evidently, this is a provision obliging the Central Government to pay interest on the money paid by the assessee as advance tax and found to be in excess on assessment, just as law provides an obligation on an assessee to pay the interest on what is payable by him as determined on assessment when the advance tax paid falls short beyond the specified percentage of what is due. In normal cases, where there is only an original assessment and that becomes final, there would be no scope for controversy. But where the tax determined as payable by an assessee for an assessment year in an assessment made pursuant to the decision in an appeal or revision is less than the tax determined by the assessing authority at the time he made the first or original assessment, the quest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e tax payable on account of such assessments made afresh : Rs. 1964-65 24,403 1965-66 3,290 1966-67 278 1967-68 and 1,878 1969-70 1,147 That these amounts have been refunded is not in dispute, but in doing so, interest on these amounts was not paid to the assessee. This 'was said to be because the refund was due not by reason of the earlier assessments which had been set aside, but by reason of the fresh assessments made, and the Department has evidently taken the stand that reference to regular assessment in s. 214(1) of the I.T. Act, 1961, is to the original assessment. A request made by the petitioner for such payment of interest was declined by letter Ext. 'E' which mentions that : " it is not permissible to recompute interest under section 214 of the Income-tax Act, 1961, with reference to appellate orders. " The assessee had pointed out in his letter that the Calcutta High Court had in the decision in Chloride India Ltd. v. CIT [1977] 106 ITR 38 held that such interest was due. Referring to this, in Ext. 'E' letter, the ITO told the petitioner that the said decision had not been accepted by the Department and the appeal filed against the decision before the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... have been paid in excess. The payment of interest by the assessee under s. 215 is evidently on the principle that the assessee had been holding money due to the Central Government in his hands. When he pays such money later, he must pay it with interest. Where the Government holds the money of the assessee in its hands in excess of what is due, the Government is to pay interest on the money so held. If the matter were to be decided on simple logic or commonsense in the light of such scheme for payment of interest on money due from one to the other, the answer to the case before us would be quite simple. Advance tax has been paid in excess. Though it might not have been found to be in excess, when the ITO originally passed the order of assessment, if, on the final liability of the party being determined pursuant to an order passed by the AAC, the amount determined as tax is seen to be less, it would be that amount alone which would be due from the assessee and any amount held by the Department in excess would be the amount due to the assessee. It may not be quite logical to decline to pay interest on the excess amount till the date of the revised assessment by which order alone such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that being Part C of Chapter XVII. Section 4(2) provided for charge for advance tax in the new Act. There was no corresponding provision in the Act of 1922. By s. 4(2), income-tax was made deductible at source or payable in advance, where it was so deductible or payable under any provisions of the I.T. Act. Section 207 specifies the categories of income on which tax is payable in advance in accordance with ss. 208 to 219. Section 208 provides for the condition of liability to pay advance tax. The computation of advance tax is dealt with in s. 209. Section 209 indicates that the basic factor to be taken into account in determining the advance tax payable by the assessee in the financial year is the total income of the latest previous year on which the assessee has been assessed by way of regular assessment. Several adjustments have to be made thereafter in order to arrive at the advance tax payable. Section 210(1) empowers the ITO to pass an order requiring payment of advance tax in accordance with ss. 207 to 209. How such tax is to be paid in instalments is specified in s. 211. Section 212 enables an assessee who estimates, at any time before the last instalment of advance tax is d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder the Act, refund of any amount becomes due to the assessee, the ITO must refund the amount without the assessee having to make any claim in that behalf. Section 244(1) provides for payment of interest to the assessee, where refund is due in pursuance of an order under s. 240 and the ITO does not grant the refund within a period of three months from the end of the month in which such order is passed. Interest on the amount of refund due is to be paid to the assessee for the period commencing from the date immediately following the expiry of the period of three months aforesaid till the date of refund. Section 244(1A) is quite relevant for our purpose. It was inserted in the section by the Taxation Laws (Amendment) Act, 1975, with effect from October 1, 1975. For the first time, specific provision is seen made for payment of interest on so much of the amount paid by the assessee in pursuance of any order of assessment or Penalty as is found to be in excess by reason of a decision in appeal or other proceeding, provided such amount is paid after March 31, 1975. The section does not apply to any payment made in excess on or before March 31, 1975. It applies only to payments made ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable for the period from 1st day of April next following the financial year during which the advance tax is paid to the date of the regular assessment. The concept of the regular assessment is relevant in two contexts in the section. It is with reference to the regular assessment that the question whether any excess has been paid by way of advance tax has to be determined. It is up to the date of that regular assessment that interest has to be paid on the refund. The question to be posed is not " up to what date interest is payable, the date of the first assessment or the date of the revised assessment ", but " on what amount is interest payable, on the amount that could be found to be excess on the basis of tax determined under the first assessment, or the revised assessment ? " We called upon the Revenue to state its case categorically to ascertain whether the Revenue concedes that if at the time of first assessment the tax determined does not justify any refund, but consequent upon a revised assessment pursuant to the order in appeal or revision or otherwise, refund is found due to the assessee, the interest is payable at least up to the date of the first assessment on suc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . It is difficult to envisage that the Legislature contemplated that such result should follow. Unless it be that we are compelled by the plain language of the section to so construe it, we would not be justified in doing it. This amply illustrates the fallacy of the approach of the Revenue that no interest would be payable even up to the date of the first assessment, view which has not gained acceptance in many courts. We may, therefore, consider the alternative plea that interest would be payable only up to the date of the first assessment, but it will be so payable on the amount of excess determined on the basis of the revised assessment, a plea which has appealed to many courts. The above contention of the Revenue in the alternative envisages two different meanings to be given to the term " regular assessment " occurring in s. 214(1) of the Act. This contention assumes that in s. 214(l), the first reference to regular assessment is to the revised assessment, and the reference to regular assessment immediately following is to the first assessment. Read and understood in that manner, interest will be due up to the date of the first assessment, and the interest will be due on an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he State and found to be such excess later. The provision for payment of interest was envisaged simultaneously with the scheme of introduction of advance tax. No doubt that underwent several changes and refinements, but it remained essentially a part of the scheme relating to payment of advance tax. There will be more logic in saying that, if interest is to be paid on any amount retained by the Government in excess found ultimately to be due to the assessee, such interest is to be paid till the date on which it is determined as excess, consequent upon which an obligation to pay such excess arises in law, than to say that such obligation is only to pay up to an earlier date, the date when the ITO erroneously determined higher tax as payable by the assessee. If in a case, where the ITO makes a correct determination, the assessee gets the benefit of refund with interest immediately, where he makes a mistake on assessment which is revised later, interest must naturally be payable up to the date of such revision. Our attempt is only to show that no circumstances disclosed in the facts justify an approach suggested by the Revenue in regard to the meaning to be assigned to the term " regu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... termining the quantum of refund, necessarily the obligation to pay interest on such quantum will be determined with reference to those orders, as those are the only orders that could be referred to as assessment orders at that time. Reference in s. 214(1) can only be to the revised order, where the original order is set aside and a fresh order is passed and, if so, interest would be payable up to the date of such revised order. We may appropriately refer now to another contention urged on behalf of the Department. It is said that if s. 214(1) is understood as entitling the assessee to interest not only up to the date of the first assessment, but up to the date of the revised assessment, there will be an anomaly in that there will be double payment of interest to the assessee after October 31, 1975. Evidently, the reference is to s. 244(1A) inserted in the Act by the Taxation Laws (Amendment) Act, 1975, with effect from October 1, 1975. It is said that this sub-section enables an assessee to interest on the amount found to be in excess by reason of a decision in appeal or other proceeding under the Act from the date on which the amount was paid to the date on which the refund is g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee claims that the tax paid or deemed to have been paid exceeds the tax payable on the basis of the return and the accounts and documents accompanying it, the ITO is obliged to make a provisional assessment in a summary manner within six months, if he is of the opinion that the regular assessment is not likely to be made within six months from the date of furnishing of the return, and the assessee claims that the tax paid on the basis of the return is in excess. The provisional assessment is of the sum refundable to the assessee. Sub-s. (4) of s. 141A deals with how the refund made under sub-s. (1) of s. 141A is to be dealt with on the regular assessment being made on the assessee. Where the amount refunded under s. 141A is equal to the amount determined as excess on regular assessment, the amount refunded is to be deemed to have been refunded towards the regular assessment. When refund exceeds the amount refundable on regular assessment, the excess amount refunded is to be deemed tax payable by the assessee. The proviso to s. 214(1) was inserted evidently by reason of the insertion of s. 141A. Had it not been for this amendment, s. 214(1), as it stood, would have enabled the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e should also be a provision as to what should happen if at the regular assessment made thereafter the tax due is determined as Rs. 50,000. The assessee who had originally paid Rs. 50,000 as advance tax has walked away with Rs. 10,000 on account of the order under s. 141 A(1). Section 141A(4)(b) provides that if the amount refunded exceeds the amount refundable on regular assessment, the excess amount refunded is to be deemed tax payable by the assessee. Therefore, after regular assessment is made, the amount of Rs. 10,000 which had been refunded to the assessee, but which is due, will be treated as tax payable by the assessee. Then again there would be the question of interest on the sum of Rs. 10,000 refunded from the date of refund to the date of the regular assessment. The obligation under s. 214(1) being to pay interest on excess advance tax, when such excess is refunded on a date earlier to the regular assessment, viz. by virtue of an order under s. 141A(1), it would be natural to make such refund with interest thereon up to the date of the provisional assessment. The proviso indicates that no interest shall be paid for the period after the date of the provisional assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the situation where such interest has been paid, but on final determination it is found such interest was really not payable as no such refund was due, is dealt with by the provision that such interest is recoverable as tax. We have taken pains to elaborate this only because it has been urged by the Revenue and successfully before the High Court of Kerala that the term " regular assessment " in sub-s. (1A) of s. 214 must refer to an assessment subsequent to the first assessment and, therefore, it should refer to the revised assessment. The term " completion of the regular assessment " in sub-s. (1A) of s. 214 is to be understood in the context of the proviso which was inserted by the same Act which contemplated a provisional assessment in order to determine the tax refundable. Had such a provision not been inserted, there would have been no need for sub-s. (1A). Perhaps the purpose of sub-s. (1A) would have been better served by enacting it as a further proviso to s. 214(1). It will be pertinent here to notice how the Revenue has understood the scheme of the proviso to s. 214(1) as well as s. 214(1A). The construction put on these provisos by the Revenue accords with our approac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Bombay case, it would be advisable to outline the legislative history of the provision with which we are concerned here. We have already adverted to the fact that the provision for payment of advance tax was introduced in the Indian I.T. Act, 1922, for the first time in 1944. It was by incorporating s. 18A(5) into the Act. That section had many sub-sections dealing with many of the matters which are now dealt with in ss. 207 to 219 of the I.T. Act, 1961. The section corresponding to s. 214 of the Act is s. 18A(5). The sub-section corresponding to s. 216 of the present Act is s. 18A(6). We will extract s. 18A(5) and s. 214 here : Section 18A(5) Section 214 "(5) The Central Government " 214. Interest payable by Government. shall pay simple interest-- --(1) The Central Government shall pay (i) at two per cent. per annum simple interest at twelve per cent. per on any amount payable in annum on the amount by which the accordance with the provisions of aggregate sum of any instalments of this section before the 1st day of advance tax paid during any financial April, 1955, and paid accordingly; year in which they are payable under (ii) at four per cent. per annum sections 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from the beginning of the financial year next following to the date of the regular assessment." It may also be necessary to advert once again to s. 4(2) of the Indian I.T. Act, 1961, to indicate that under the present Act the charging section provides for payment in advance of the tax payable and the provisions thereof are in Part C of Chapter XVII. From the year 1944, when advance tax was introduced for the first time, up to April 1, 1952, the Central Government had an obligation to pay simple interest at 2 per cent. per annum on advance tax paid under the Act from the date of payment to the date of the assessment made under s. 23. This was a scheme different from the present scheme under which the State has no obligation to pay interest on the advance tax, merely because it is paid as advance tax. It is different from the scheme introduced with effect from April 1, 1952, by the insertion of proviso to sub-s. (5) of s. 18A. For the first time, the obligation to pay interest on the advance tax was limited to so much of the advance tax as was found to be in excess of the tax determined on regular assessment. In other words, the scheme adopted in the 1961 Act in s. 214(1) came int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... me was reduced but even so there was no question of any refund due. The question that arose then was whether the assessee was entitled to claim the 2 per cent. interest under s. 18A(5) of the Indian I.T. Act, 1922, up to March 30, 1948, only, that being the date of the first assessment, or up to January 25, 1954, that being the date of the revised assessment. According to the assessee, the Central Government had to pay interest up to the date of assessment made under s. 23 and that meant in that case that the assessee was entitled to claim interest on the advance tax paid by him up to January 25, 1954, and not the date of the earlier order. The question was not one of any interest payable on a refund to the assessee. The question had to be decided entirely on the construction of s. 18A(5) as it stood then, regard being had to the scheme of that provision, which, as we have indicated, was entirely different from the scheme which came into force with effect from April 1, 1952, and the further scheme which came into force under the present I.T. Act. Evidently, it was a case, where the State had an obligation to pay interest on an amount which was received in the nature of a deposit. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t terms. The provision in the Act of 1961 refers to " regular assessment " in two contexts and the construction is called for of the section as it now stands. Such a situation did not arise in the Bombay case. Therefore, however high the authority of the decision may be, it may not be applicable to a case arising under the section as it now stands, a section which has a different scheme. The section will have to be understood and the meaning of the terms used therein applied in the context of the present Act. The circumstances that should be of relevance in considering the decision of the Bombay High Court as not applicable to the case here may be said to be : (a) s. 18A(5) as it stood prior to the amendment in 1952, had a different scheme as to advance tax and the character of the obligation of the assessee to pay and the State to account for it stood entirely on a footing different from that envisaged in the scheme under the Act of 1922. The liability to pay arose as soon as the assessment order was made. There was an obligation under s. 18A(5) to pay interest to the assessee on whatever amount was paid as advance tax giving it more or less the character of a deposit whereas unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n respectful agreement with the above said observation. While we are considering the Bombay decision, we should notice one more aspect arising from the reasoning therein. Chagla C.J. said in that case (p. 703 of 31 ITR): " Let us look at this order from another point of view. When the order of assessment was made, it was competent to the taxing authorities to recover the tax, and the liability to refund would only arise when the assessment order was set aside. But the taxing Department would have the use of the assessee's money from the date when the amount was paid till the taxing authorities chose to refund the money. Could it be suggested that the position would be different with regard to advance payment of tax ? The liability to pay the tax arose as soon as the assessment order was made; and that liability would cover not only the advance tax already paid, but also any additional amount that might have to be paid by the assessee. In this very case the assessee paid an additional amount of Rs. 6 lakhs. Although it put forward a claim for interest on this amount also, that claim was ultimately abandoned. Therefore, if we were to give the construction to s. 18A as suggested b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt and the case before the Allahabad High Court to which we have adverted. The assessment year in question in the Allahabad case was 1960-61, and s. 18A(5) as it stood then was materially different from that as it stood prior to April 1, 1952. As we had indicated, whereas the obligation prior to April 1, 1952, was to pay interest on whatever money was paid by the assessee as advance tax irrespective of whether such amount was found due on final assessment or not, subsequent to the amendment, it was only on the excess determined on regular assessment that interest was payable to the assessee. In the case before the Allahabad High Court, the revised order made by the ITO to give effect to the appellate order enabled the assessee to claim a refund taking into account the amount of advance tax deposited by the petitioner during the financial year 1960-61. The petitioner moved for payment of interest on the excess payment by him and wanted his petition to be treated as one for rectification. The relief was denied to him and he moved the court in a petition under article 226 of the Constitution. To come to a conclusion on the claim of the petitioner that the reference in s. 18A(5) to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... suant to the order of the AAC it was found that the assessee had paid excess advance tax and that was found refundable. The assessee's request to the Commissioner for payment of interest did not succeed as the Commissioner took the view relying upon the Allahabad case, Sir Shadilal Sugar and General Mills Ltd. v. Union of India [1972] 85 ITR 363 (All), that the date of regular assessment mentioned in s. 214 must be taken to be the first assessment as was held in relation to s. 18A(5) in the Allahabad case. Mukharji J. explained the decision in Sarangpur Cotton Mfg. Co. v. CIT [1957] 31 ITR 698 (Bom), as not applicable to a case arising under s. 214 of the Act and also explained the decision of the Allahabad High Court in Sir Shadilal Sugar and General Mills Ltd. v. Union of India [1972] 85 ITR 363. It was noticed that in the Allahabad case also the court was not concerned with the question of the tax determined on regular assessment and what was considered was only the date of the regular assessment for the purpose of s. 18A(5). The court further noticed that evidently aware of the said interpretation, Parliament has deliberately chosen to define "regular assessment " in the new Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ria with s. 214 of the new Act and, therefore, the decisions rendered under the old Act could be usefully referred to. After referring to the decisions in Sarangpur cotton mfg. Co. Ltd. v. CIT [1957] 31 ITR 698 (Bom) and Sir, Shadilal Sugar and General mills Ltd.v. Union of India [1972] 85 ITR 363 (All), to which we have adverted earlier, the court went on to observe (p. 295): " As section 214 of the Act is in pari materia with sub-section (5) of section 18A of the old Act, the rulings of the Bombay High Court in Sarangpur Cotton Mfg. Co.'s case [1957] 31 ITR 698 (Bom) and of this court in Sir Shadilal Sugar Mills' case [1972] 85 ITR 363 (All) are equally applicable to the present case. " We have only to point out that the provision which the court was called upon to consider in that case was different from the provision in the repealed Act prior to 1952 and also as amended in 1952. We have adverted to these earlier and so we do not reiterate our view again. We do not find any further reasoning in the judgment of the Allahabad High Court in Lala Laxmipat Singhania v. CIT [1977] 110 ITR 289 calling for an answer. The Allahabad High Court noticed the subsequent decision of the Ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gular assessment' not being understood as the first or the original assessment. But I should have thought that there was nothing also in the context of s. 214 which required that the expression 'regular assessment' be confined to the first or the original assessment. As I have indicated before, the expression 'regular assessment' is of wider amplitude and need not be confined to the first or the original assessment. The legislature has not chosen to use the expression 'first' or 'the original assessment' and, therefore, the expression 'regular assessment' should not be given a meaning different from the meaning which may be attributable to that expression in ss. 209 and 210 and as I have pointed out, in my previous decision, if the expression 'regular assessment' is given the meaning first or the initial assessment in ss. 209 and 210, certain anomalies would result which have also been noticed by the learned judges of the Division Bench of the Allahabad High Court." Now, we advert to the decision of the Kerala High Court in Devaki Amma v. ITO [1980] 122 ITR 272, the Delhi High Court decision in National Agricultural Co-operative Marketing Federation of India Ltd. v. Union of Indi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be 'regular assessment' made under s. 143 or s. 144 of the Act, as the case may be, the expression 'regular assessment' appearing in s. 214 of the Act should be so interpreted as to refer only to 'revised regular assessment' where the 'original regular assessment' was set aside or modified as a result of the decision of a superior authority." We have dealt with this contention earlier in this judgment and it is sufficient to indicate our disagreement with this view, with great respect to the learned judges. Where the original order of assessment has been set aside and a fresh assessment order is passed, such revised assessment order is the only order in force as in this case and reference can be only to that order. When the original assessment order stands modified in appeal, and as a consequence, a revised assessment order is passed, the revised order is also an order under s. 143, as held by courts, and the reference in s. 214(1) could be either to the first order or the revised order. The context in which the term appears, understood in the background of the scheme of the Act, must determine whether the reference therein is to the first assessment or revised assessment. There ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per because, so far as the excess amount refunded is concerned, it is treated as tax under s. 141A(4)(b) while the interest on such excess amount paid is treated as tax under s. 214(1A). We think it is only appropriate that this circular is noticed to give a reasonable and logical interpretation to the sections. Another approach made in the judgment of the Division Bench is that while sub-s. (1A) of s. 214 provides that excess shall be deemed to be tax payable by the assessee " there is no corresponding provision to pay interest to the assessee on the amount where the position is the reverse ". The corresponding provision, as we see, is in s. 214 itself. The provision for payment of interest to the assessee is in s. 214(1) itself and the reference to the other sections in the Act may not be called for. Reference is next made by the learned judges to the scheme of the Act. It is assumed that it was never the intention of the Legislature to cast on the Central Government a liability under s. 214(1) of the Act to pay interest to the assessee on the advance tax " on 'revised regular assessment "'. Referring to the scheme, it is said that on first assessment, the advance tax ceases to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milar to the facts here. It was the decision of the AAC consequent on which the ITO passed a revised assessment order that enabled the petitioner in that case to a refund of Rs. 8,82,586, that being the excess amount paid as advance tax. The assessee claimed interest on it partly under s. 214 and partly under s. 244. It was the assessee's case that till the revised assessment order of the ITO passed on September 2, 1977, interest was due under s. 214 while subsequent interest would be due under s. 244 to the extent permitted by that section. Unable to get relief from the Department, the assessee moved the High Court in a writ petition and the High Court, while discountenancing the claim for interest under s. 214 for the whole amount, gave relief to the petitioner holding that s. 244(1A) enabled the petitioner to get interest from the date on which such excess was paid to the date on which refund is granted. In coming to this conclusion, it examined the question whether 9. 214 would apply and further examined the question that if s. 214 would not apply, whether s. 244(1A) read with s. 214(2), could give relief to the petitioner. It is evident that the view taken by the Delhi High Co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nguage of s. 244(1A). We have discussed in this judgment earlier that s. 244(1A) covers an entirely different field in that it only refers to the payment of interest on tax made pursuant to an assessment order and not tax paid as advance tax. Sections 214 and 244(1A) are, as it is, complementary to each other and those sections are to be understood as such. We are unable to agree with the Delhi High Court that the term " regular assessment " would mean only the first or initial assessment in all the provisions in Chapter XVIIC. It would be illogical to assume that ss. 209 and 210 refer to the first assessment. In view of the very elaborate approach which we have made to s. 214, we do not think that we should reiterate our reasoning once again here. We have to notice the case before the Andhra Pradesh High Court in Trustees of H. E. H. Nizam's Religious Endowment Trust v. ITO [1981] 131 ITR 239 (AP). In that case also refund was made of excess advance tax paid by the assessee pursuant to a revised order passed by the ITO, so revised consequent to the AAC's order. Two questions arose for consideration by the court. The first of them was whether s. 244 read with s. 240, applied to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he can act only under the provision of s. 143. He acts under s. 143. Otherwise, he will have no power to pass an order at all. The orders, which are before us on the basis of which refunds were made, refer to the section under which the orders are passed as s. 143 and as we noticed, that is not a matter in controversy. May be that regular assessment may not include assessment of escaped income, for " regular assessment " having been defined as one made under s. 143 or s. 144, if another provision of law enables such income and tax thereon to be determined as for instance under s. 147, that would not be an order under s. 143 or s. 144 and will not be taken within the scope of the term " regular assessment ". Reference to cases where the assessment, orders do not fall within s. 143 or s. 144 would, therefore, be of no assistance. We respectfully dissent from the view expressed by the Andhra Pradesh High Court.. The Punjab and Haryana High Court has taken the same view as that expressed by the Allahabad, Andhra Pradesh, Kerala and Delhi High Courts in CIT v. Ambala Electric Supply Co. Ltd. [1983] 142 ITR 872. The court refers to an earlier decision of that court in CIT v. Rohtak De ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessment order. The question that had to be considered in that case was whether the order of recomputation made pursuant to the order of the AAC could be said to be an order under s. 143 so as to bring the case within s. 214. The question whether even if it be an order of regular assessment, whether it would be the first assessment that would be taken within the scope of s. 214(1) was not discussed in that case. The only controversy being whether the order of the ITO passed pursuant to the decision in the appeal could be said to be one under s. 143, the court had only to consider the nature of such order. Referring to the decisions in Kooka Sidhwa and Ca. v. CIT [1964] 54 ITR 54 of the Calcutta High Court and Gopi Lal v. CIT [1967] 65 ITR 477 of the Punjab High Court, the court took the view that the order must be taken as one passed under s. 143. In the latter case of the Madras High Court in Rayon Traders P. Ltd. v. ITO [1980] 126 ITR 135, the ITO passed a consequential order on the appeal being allowed by the AAC and consequent on that, refund was due. The question of the entitlement of the assessee to interest on such refund under s. 214 arose for decision. There again the que ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the ultimate decision, but, for independent reasons, the court also noticed the decision in Chloride India Ltd. v. CIT [1977] 106 ITR 38 of the Calcutta High Court and expressed its agreement with the view expressed by the Calcutta High Court. The recent decision of the Bombay Full Bench in CIT v. Carona Sahu Co. Ltd. [1984] 146 ITR 452, calls for close study, both because it considers almost all the relevant reported decisions on the question and also because the court has dealt with a contention on behalf of the Revenue in regard to the interpretation of s. 214(1A) and (2) which in that form has not been dealt with in any earlier reported case. That was not a case where the AAC set aside the assessment orders and directed fresh assessment as in this case, but one where the AAC reduced the tax liability and the ITO consequently passed the order to give effect to the appellate order. Not that this should make any material difference. Consequent upon such fresh order, the ITO granted a refund of Rs. 56,198 for 1970-71 and, similarly, for the year 1971-72 also granted refund. Against the failure to grant interest under s. 214 on the amount refunded for the period up to the dat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n order passed under s. 143 of the I.T. Act. After referring to the decisions in Kooka Sidhwa Co. v. CIT [1964] 54 ITR 54 (Cal), Gopi Lal v. CIT [1967] 65 ITR 477 (Punj), CIT v. Warner Hindustan Ltd. [1979] 117 ITR 15 (AP) and Triplicane Urban Co-operative Society Ltd. v. CIT [1980] 126 ITR 125 (Mad), the court took the view that for the purpose of appealability, an order giving effect to the directions of the appellate authority under the Act must be treated as an order passed under the provisions of s. 143, but the decisions do not hold that such an order is an order passed under s. 143 for all purposes. The court found that it cannot subscribe to so wide a proposition ; (b) Assuming that the revised order was also an order of regular assessment, the court considered the question whether regular assessment must be taken as the first assessment or the last operative order of regular assessment. In dealing with this question, the one and only reference made was to the scheme of s. 215 of the Act. It found that having regard to the interpretation of s. 215 and the similar objectives of ss. 214 and 215, a strong case was made out for reading " regular assessment " in s. 214 as the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an appellate order because s. 244 provides for the same. We have dealt with, in this judgment, the scope of s. 244 and we have held that it covers a field entirely different from that envisaged by s. 214(1). Whereas s. 214(l) dealt with interest payable on excess advance tax paid, s. 244 deals with refund due as a result of an order referred to in s. 240. Section 244(1A) provides for interest even for a prior period but only in respect of amounts paid pursuant to an order of assessment. As we have indicated earlier, s. 214(1) and s. 244 operate in different fields and naturally they find their place in different Chapters. We agree with the Full Bench of the Bombay High Court that s. 244 is not determinative of the construction attempted to be placed on s. 214 by the Revenue. With great respect, we fully endorse the reasoning of the Full Bench on the understanding of the proviso to s. 214(1), s. 214(1A) and s. 214(2). We do not repeat our reasoning here as we have set it down earlier. Looking at the legislative history and the background of these provisions, it is evident that the only meaning that could be ascribed to these provisions is what has been given in the Bombay decision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... points narrated as (a) and (b) that we have difference of opinion with the Bombay High Court. We respectfully dissent from the Bombay view on these points. As to the first, the answer so far as it concerns the case before us is simple. Even the Revenue has no dispute that the revised orders passed in this case were under s. 143. There can be no controversy in a case where, by reason of the appellate orders, the original assessment is set aside and the ITO is called upon to assess afresh. In the case before the Bombay High Court, the position was slightly different in that the ITO passing the revised order was recomputing the income and the tax to give effect to the appellate decision. Even so, according to us, this should make no difference. The decisions which have been adverted to by the learned judges themselves answer the question. Section 246 of the I.T. Act enumerates appealable orders. Only orders which fall under one or other of the categories mentioned in s. 246 would be appealable under this section and no orders similar to such orders would be appealable. An order of assessment under sub-s. (3) of s. 143 or an order under s. 144 where the assessee objects to the amount o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to the assessee under s. 214, the revised assessment would create an obligation on the Central Government to pay interest even though there may not be obligation to pay interest on account of the first assessment. We are pointing out this to indicate that to assume that there should be a scheme in s. 214 similar to that in s. 215 may not be logical particularly in a taxing statute. The requirement of paying interest to the assessee is met with in s. 214 and the requirement of paying interest to the Central Government is met with in s. 215. This should be sufficient to explain why the term " regular assessment " in s. 215(1) and (2) should refer to the first assessment, for it is that assessment which creates the liability on the assessee and once that liability arises, he has to pay. In the event the assessee succeeds in his appeal and the amount on which interest was payable under s. 215 is thereby reduced, he must get relief. Such relief is expressly provided for in sub-s. (3). In the very nature of things, the scheme of ss. 214 and 215 cannot be identical and to import such a concept may not be warranted. At any rate, the meaning of s. 214, in its setting, is not ambiguous. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... such a provision in s. 214 when s. 214(1) itself provides for the same result. Section 214 has to provide for many situations, such as situation arising from provisional assessment under s. 141A, refund pursuant to such provisional assessment, a subsequent regular assessment, amount of tax due being found more than that determined under s. 141A on such regular assessment and providing for recovery of such tax. To provide for this, a scheme entirely different from that contemplated in s. 215 will have to be envisaged. Now we will come to the reference by the Full Bench to the decided cases of the High Courts. We are not referring to the views expressed by the Bombay judges of the Full Bench in regard to those cases because we have dealt with them earlier in this judgment. Suffice it to say, we respectfully dissent from the approach made to these judgments for reasons stated by us. To sum up Section 214(1) provides for payment by the Central Government to an assessee of interest up to the date of regular assessment. It provides for payment of interest on the excess advance tax paid. The quantum of excess tax will be determined on the basis of the regular assessment. When the firs ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
