TMI Blog1979 (7) TMI 45X X X X Extracts X X X X X X X X Extracts X X X X ..... the first instance under s. 143 of the Act (s. 144 not being applicable to the facts of the present case), unaffected by the refund, if any, that might be subsequently ordered as a result of the recomputation of the tax liability in pursuance of the direction given by a higher authority. For the sake of convenience, we would hereinafter refer to " regular assessment " made by the ITO at the first instance under s. 143 of the Act as the " original regular assessment " and the subsequent order passed by the ITO for giving effect to the directions of the higher authority as the " revised regular assessment ". To appreciate the background in which the writ petitions happened to be filed, we would narrate briefly the facts as stated in O.P. No. 3120 of 1976. On the AAC allowing deduction of a sum of Rs. 62,374 claimed by the petitioner, the total income in his hands found liable to be assessed for the assessment year 1970-71 was reduced to Rs. 11,551 resulting in the refund of Rs. 29,492 paid by way of advance tax in compliance with the provisions of the Act in that regard ; the ITO, however, did not allow interest on the amount refunded. The petitioner took up the question of interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be, we do not find overselves persuaded to accept the reasoning of Sri Radhakrishna Menon that, because " revised, regular assessment " also is to be deemed to be " regular assessment " made under s. 143 or 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. Under s. 214 of the Act interest is payable " on the amount by which the aggregate sum of any instalments of advance tax paid ...... exceeds the amount of the tax determined on regular assessment, from the 1st day of April next following the said financial year to the date of the regular assessment ". The section contemplates the payment of interest if the advance tax paid exceeds the amount of tax determined on regular assessment. The questions, therefore, are what the amount of tax determined on regular assessment is, and by what amount the advance tax paid exceeds it. The answers to these questions, would take us to a further question as to the particular regular assessment un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India Ltd. v. CIT [1977] 106 ITR 38 (Cal) at 42 : " Regular assessment is certainly different from the first assessment or provisional assessment. But regular assessment is not confined to first assessment. When an assessment is modified pursuant to the order of the appellate authority or direction, the subsequent order will be regular assessment and must supersede and replace the earlier assessment order. Having regard to the scheme of the Act and the context in which the expression has been used, in my opinion, regular assessment under section 214 would include in the particular facts and circumstances of the case, an assessment made by the order of the Income-tax Officer, pursuant to the direction of the Appellate Assistant Commissioner. " With due respect, we are unable to subscribe to the view expressed above. In our opinion, the expression " regular assessment " by itself would not indicate whether it is the " original regular assessment " or the " revised regular assessment " that is meant ; and it may have to be construed in the particular context in which it is used. This position, we believe, could be best illustrated and understood with reference to s. 214 itself, o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dvance tax refunded on provisional assessment, particularly, so, in view of the express provision contained in that behalf in s. 214(1) of the Act. In fact, it appears that the very sub-section (sub-s. (1A)) makes it abundantly clear that the reference is not to any interest paid under s. 141A, but to interest paid under sub-s. (1) of that section (s. 214), which in turn means on a regular assessment under s. 143 prior to the " completion of the regular assessment " mentioned in that sub-section [sub-s. (1A)]. It would be worthwhile here also to notice that the proviso to sub-s. (1) of s. 214 of the Act only lays down that in respect of any amount refunded on a provisional assessment under s. 141A, no interest would be payable for any period after the date of such provisional assessment ; and this again implies that interest is payable on such amount refunded according to the terms of s. 214(1) itself till the date of such provisional assessment. Sri Radhakrishna Menon drew our attention to Circular No. 91 issued by the CBDT which reads as follows : " Any refund of tax on the provisional assessment will be deemed to have been granted in respect of the regular assessment when su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completion of regular assessment (which expression, we are inclined to hold, means a regular assessment made subsequent to the one under which interest on advance tax paid in excess was paid) the amount on which interest was paid under sub-s. (1) has been reduced, interest shall be reduced accordingly, and the excess, if any, paid 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 absence of a specific provision in that behalf cannot be considered to be accidental or due to oversight. Section 215 of the Act, which contains a provision converse to that in s. 214, provides for payment by the assessee of interest on the amount by which the advance tax paid by him on the basis of his own estimate under s. 212 falls short of 75% of the tax determined on regular assessment. The assessee's liability under the charging provisions contained in sub-s. (1) of that section is subject to the provisions contained in sub-s. (3) of the section which reads as follows : " Where as a result of an order under section 154 or section 155 or section 250 or section 254 or section 260 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect to the amount which he had to pay by virtue of the provisions contained in ss. 207 to 213 of the Act before the regular assessment was made and to the extent it exceeds the tax liability as determined on regular assessment. It is reasonable to construe that the Legislature presumed that the ITO ordinarily passes a valid order under s. 143 or s. 144 of the Act, and it is on that basis the expression " on regular assessment " is used in s. 214(1) of the Act. If the Legislature had any intention to extend the application of the sub-section to the refund ordered eventually as a result of the directions given by the appellate or revision authority, that would have certainly found a place in the section itself. In the absence of such a specific provision, if regard be had to the scheme of the Act, it seems to us that the Legislature meant the Central Govt. to pay interest under the section only on the amount of advance tax paid in excess of the tax determined on regular assessment made at the first instance unaffected by the reduction in tax, if any, subsequently allowed on recomputation in pursuance of the direction given by the superior authority. It may also be noticed that the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the principle " pay as you earn ", without waiting for the determination of the actual liability on regular assessment. Section 18A(5) of the 1922 Act (now replaced by s. 214 of the Act) has been amended from time to time, and they give us an insight into the mind of the legislature on the principle adopted in the matter of payment of interest on advance tax paid in excess. The legislative history pertaining to the advance tax also strengthens our conclusion that the intention of the legislature, as the law stood during the material time, was to make the Central Govt. liable to pay assessees like the petitioners interest on the amount of advance tax ordered to be refunded on original regular assessment, and that that liability did not in any way change as a result of the reliefs granted to them by the AAC reflected in the revised regular assessment. Sri Ravindranatha Menon placed reliance on the decision of the Division Bench of the Bombay High Court in Sarangpur Cotton Manufacturing Co. Ltd. v. CIT [1957] 31 ITR 698, followed by the Division Benches of the Allahabad High Court in Shadilal Sugar and General Mills Ltd. v. Union of India [1972] 85 ITR 363 and Lala Laxmipat Singhani ..... X X X X Extracts X X X X X X X X Extracts X X X X
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