COMMISSIONER OF INCOME TAX Vs. AMBAT ECHUKUTTY MENON

JUDGEMENT

(1.) At the instance of the Revenue, the Income Tax Appellate Tribunal, Cochin Bench, has referred the following question of law for the decision of this Court:

(2.) The respondent is an assessee to income tax. The question involved in this batch of cases relates to the assessment years 1961-62 to 1963-64. For these years certain refunds became due to the respondent (assessee) as a result of the orders passed by the Supreme Court of India. These amounts consisted of income tax, penalty and interest levied under S.220 of the Income Tax Act. The assessee failed to comply with the notice of demand. So interest under S.220 of the Act was levied and collected. In pursuance to the decision of the Supreme Court, amounts became refundable to the assessee. While granting refund, the Income Tax Officer allowed interest under S.244 of the Act, in respect of amounts representing income tax and penalty. He did not award interest under S.244 of the Act, on that portion of refund, which represented interest, levied under S.220 of the Act and collected from the assessee. The plea of the assessee to allow interest under S.244 of the Act on the interest collected earlier by the Revenue under S.220(2) of the Act was negatived. The Income Tax Officer took the view that the words 'any amount' occurring in S.240 of the Act could only refer to tax and penalty levied. The order of the Income Tax Officer is dated 4th January 1980. In appeal the Appellate Assistant Commissioner of Income Tax, by order dated 6th October 1981, held that the refund referred to in S.240 of the Act is "of any amount that had become due to the assessee" and so would include the interest under S.220 of the Act as well, which became refundable by virtue of the proviso to S.220(2) of the Act. He, therefore, reversed the decision of the Income Tax Officer and directed the Income Tax Officer to grant interest on the amount of Rs. 6,903, which represented the interest levied and collected under S.220(2) of the Act. The Revenue filed an appeal before the Appellate Tribunal and assailed the order of the Appellate Assistant Commissioner. The Appellate Tribunal, after referring to relevant provisions of the Act held that the refund of interest under S.220 of the Act is an amount coming within the purview of S.240 and therefore eligible for the interest contemplated in S.244(1) of the Act. The appeals filed by the Revenue were dismissed. Thereafter the Revenue filed an application to refer certain questions of law, arising out of the appellate order of the Tribunal dated 13th October 1983. The Tribunal accordingly referred the question of law formulated herein above for the decision of this Court.

(3.) We heard counsel for the Revenue and also counsel for the assessee. The argument put forward before the Tribunal was reiterated before us. It was contended that the Appellate Tribunal erred in holding that the refund of interest under S.220 (2) of the Act is "an amount" which comes within the purview of S.240 and therefore eligible for the interest contemplated in S.244(1) of the Act. We are unable to accept this plea. S.220(2) of the Act alongwith the proviso, S.240 and S.244 of the Act may be looked into to understand their import.