TMI Blog1989 (5) TMI 81X X X X Extracts X X X X X X X X Extracts X X X X ..... CIT(A) vide order dt. 25th Sept., 1984. (4) The ITO gave appeal effects to the order of the CIT(A) vide order dt. 10th Oct., 1985 and allowed a refund of Rs. 60,124 comprising of Rs. 53,449 as tax and Rs. 6,675 as interest under s. 244. (5) The assessee thereafter moved an application under s. 154 to the ITO on 7th Nov., 1985 requesting him to allow interest under s. 214. (6) The ITO vide letter dt. 11th March, 1986 rejected the assessee's application for grant of interest under s. 214. (7) The assessee filed an appeal before the CIT(A) against the rejection order of the ITO dt. 11th March, 1986. The CIT(A) vide order dt. 2nd Sept., 1986 held that the appeal was maintainable. He further directed the ITO to re-consider the asses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levy of interest under s. 214 was not an appealable matter and even if it was presumed that the letter dt. 11th March, 1986 did constitute a formal order the same was not appealable. On merits it was submitted that the CIT(A) erred in directing the ITO to allow interest to the assessee vis-a-vis the decision of the Hon'ble Gujarat High Court supra. According to the Departmental Representative the aforesaid decision was not applicable to the facts of the assessee's case. 4. The learned counsel for the assessee on the other hand submitted that what was sought to be challenged before the CIT(A) was the rejection of the claim for interest under s. 214. According to him the letter dt. 11th March, 1986 addressed by the ITO to the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... find that no such decision has been taken by the CIT(A). All that he has done is to direct the ITO to "reconsider the appellant's claim of interest in view of the Gujarat High Court decision". According to us this is not a decision on merits and as the subsequent events would show the matter was left wide open. 7. In the final analysis we confirm the order of the CIT(A) dt. 2nd Sept., 1986 and which is subject-matter of the Revenue's appeal. 8. We now take up for consideration the assessee's appeal which arises out of the order of the CIT(A) dt. 10th June, 1987. As a result of the order of the CIT(A) dt. 2nd Sept., 1986 directing the ITO to consider the assessee's claim for interest under s. 214 vis-a-vis the decision of the Gujarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... TO dt. 10th Oct., 1985 only cancelled the original assessment and, therefore, it is an order, not of assessment, but of non-assessment. It is certainly not "regular assessment" as envisaged in s. 2(40). It has been decided by the Madras High Court in the case of Triplicane Urban Co-operative Society Ltd. vs. CIT (1980) 16 CTR (Mad) 273 : (1980) 126 ITR 125 (Mad) that when as a result of the AAC's order of appeal, the assessment is reduced and the ITO passes an order giving effect to the decision of the AAC, the ITO's order has to be treated as one passed under s. 143 and, therefore, a regular assessment for the purpose of s. 214. In the present case, the assessment is not revised or reduced but it is annulled. Therefore, the assessment i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... outset placed reliance on the two decisions in the case of Bakelite Hylam Ltd. and Perfect Pottery Co. Ltd. for the proposition that the appeal was maintainable. It was further submitted that although the first assessment did not result in any refund to the assessee the same arose as a result of the subsequent order of the CIT(A) whereby the assessment itself was cancelled and the assessee became entitled to the refund of Rs. 53,449. According to the learned counsel the order of the ITO dt. 10th Oct., 1985 giving appeal effects to the order of the CIT(A) was an assessment order itself in view of the ratio laid down by the Full Bench of the Hon'ble Gujarat High Court in the case of Bardolia Textile Mills. It was further submitted that the as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 13. As regards the main issue of interest under s. 214 we are of the view that the assessee should succeed in its claim. The assessee became entitled to a refund of Rs. 53,449 as a result of the order of the CIT(A) dt. 25th Sept., 1984 although no such refund was due to it when the ITO framed the assessment on 12th March, 1984. The ITO framed the assessment on a protective basis in the hands of the assessee although he was of the view that the income was assessable in the hands of the bigger HUF of Navnitlal Gordhandas. This was the view which the ITO had taken in the assessee's case in asst. yr. 1980-81 as well. Taking these facts into account in case the ITO had finalised the assessment in the hands of the assessee at Nil income and b ..... X X X X Extracts X X X X X X X X Extracts X X X X
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