TCI INDUSTRIES LTD. Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) THIS writ petition is filed with a prayer to quash the order dated 26.05.1999 passed by the 2nd respondent in exercise of power under Section 154 of the Income Tax Act (for short 'the Act') as well as the order, dated 21.08.2000 passed by the 1st respondent in a revision filed under Section 264 of the Act. The brief facts are as under.

(2.) THE petitioner is an assessee under the Act. For the assessment year 1996 -97, it filed returns furnishing the necessary particulars of income, expenditure, deductions etc. The assessing officer, 2nd respondent herein gave an intimation dated 11.03.1997 under Section 143(1)(a) of the Act declaring the income of Rs. 3,18,81,420/ -, making provisional adjustments. The petitioner realised that instead of claiming depreciation of about Rs. 10,38,90,681/ -, it claimed the depreciation of only Rs. 5,83,52,311/ -. Therefore, it filed an application under Section 154 of the Act, before the 2nd respondent for rectification. The application was entertained and after verification, the 2nd respondent allowed the depreciation to the extent of Rs. 10,38,90,681/ -. Since that resulted in the refund of Rs. 1,98,93,254/ -, the same was directed. A sum of Rs. 58,90,495/ - was directed to be paid as interest under Section 244 -A of the Act. This was followed by an order of assessment, dated 15.03.1999 by the 2nd respondent. Two months thereafter, the 2nd respondent passed the impugned order in exercise of power under Section 154 of the Act, taking the view that the interest under Section 244 -A was wrongly allowed from 1996, though it was payable only from the date on which an application for rectification was filed under Section 154. He accordingly recomputed the refundable amount and it was shown at Rs. 1,69,99,893/ -. Aggrieved by this order, the petitioner filed a revision under Section 264 of the Act before the 1st respondent. The revision was rejected through order, dated 21.08.2000.

(3.) SRI J.V. Prasad, learned Standing Counsel for the Income Tax Department, on the other hand submits that the first order of rectification in exercise of power under Section 154 of the Act was passed on 15.03.1999 at the instance of the petitioner and an error crept into it in the context of awarding interest. He submits that the component of interest is referable to the allowing of depreciation to the extent of about Rs. 4,55,00,000/ - and since that claim was made for the first time on 29.04.1998, interest was payable only from that date. He contends that the order of assessment passed under Section 143(3) of the Act was entirely based upon the order, dated 15.03.1999 passed in exercise of power under Section 154 of the Act and once the latter was found to be defective, the effect thereof must naturally be reflected in the order. He pleaded that no defect has crept into the orders and the writ petition is liable to be dismissed.