COMMISSIONER OF INCOME TAX Vs. MYSORE MINERALS LIMITED

JUDGEMENT

(1.) THIS is a reference made by the Income-tax Appellate Tribunal, Bangalore, at the instance of the assessee in which the question posed for our answer is as under :

(2.) THE brief facts leading to the above reference as stated in the statement of case, as gathered from the submissions made by learned counsel for the Revenue and the assessee are that in respect of the assessment year 1984-85, the return filed by the assessee indicated that advance tax to the tune of Rs. 53,00,000 had been paid on behalf of the assessee and further a sum of Rs. 4,22,544 had been deducted at source from out of the amount payable to the assessee and remitted to the credit of the Department by persons responsible for such payment and deduction. THE assessment order had been passed by the Income-tax Officer as per order dated April 30, 1986. Though this is not made part of the papers forwarded by the Appellate Tribunal, Sri Seshachala, learned standing counsel appearing on behalf of the Revenue, has made available a copy of the same before this court. THE controversy arose in the context of entitlement of interest on the amount of refund found due to the assessee on the passing of this assessment order. Though the Assessing Officer indicated a sum of Rs. 7,63,329 was the amount of refund due, being the difference between the assessed tax and the advance tax paid, on passing of the assessment order, no interest was allowed on this refund amount.

(3.) THE assessee being still aggrieved by this order, in so far as the interest was restricted on the sum of Rs. 4,67,679 which was the difference between the advance tax paid by the assessee and the amount of tax as was indicated to be payable on regular assessment and did not take into account the amount of tax deducted at source which amount totalled to a sum of Rs. 4,22,544 preferred appeal to the Commissioner of Income-tax (Appeals). THE assessee took the stand that the tax deducted at source is an amount which had been paid to the credit of the Department and from out of the income of the assessee even at an earlier stage before the amount of tax was determined and the assessee was called upon to pay that amount and inasmuch as the advance tax payable by an assessee is the amount which he is required to estimate only after taking into account the tax deducted at source, the Assessing Officer ought to have given credit to the amount of tax deducted at source on account of the amount payable to the assessee and ought to have deducted this amount even before computing the tax determined on regular assessment which the assessee was called upon to pay and was required to pay. It was the stand of the assessee that if such amount of tax deducted at source had been given credit to, then, the amount of tax payable by the assessee on regular assessment itself would have come down and so the difference between the advance tax amount paid by the assessee and the tax determined on regular assessment would have been not merely Rs. 4,67,679 as had been found by the Assessing Officer, but Rs. 4,67,679 + Rs. 4,22,544. THE contention urged on behalf of the assessee found favour with the Commissioner (Appeals) and the Commissioner (Appeals) allowed the appeal of the assessee and held that the assessee was entitled to interest under Section 214 in respect of the difference of the two figures, namely, Rs. 53,00,000--Rs. 44,09,777, i.e., Rs. 8,90,223, as we have indicated above.