COMMISSIONER OF INCOME TAX Vs. SUNIL KUMAR

JUDGEMENT

(1.) THE Tribunal has referred the following question of law arising out of its order dt. 9th Dec., 1985, in respect of the asst. year 1978 79 under S. 256(1) of the IT Act, 1961:

(2.) THE brief facts of the case are that the assessee is a partner in the firm of M/s Vasant Trading Co. The assessment under S. 143(3) of the IT Act was completed on an income of Rs. 82,940 on which a tax of Rs. 31,290 was determined, vide order dt. 13th Nov., 1979. After giving credit for tax deducted at source, advance tax payments and self assessment tax, a balance of Rs. 7,711 was determined as payable. The assessee moved an application under S. 154 on the basis of which the ITO carried out the rectification, vide his order dt. 10th Jan., 1980. Giving effect to the appellate order the income was determined at Rs. 74,010 on the basis of which the tax payable came to Rs. 758, which was paid on 12th Feb., 1981. The second appeal was filed before the Tribunal and the income was further reduced to Rs. 66,180 on the basis of which the assessee became entitled to refund of Rs. 4,731. The assessee submitted an application under S. 154 claiming interest under S. 214 at Rs. 190, under S. 244(1A) at Rs. 1,598 and under S. 243 at Rs. 130. This application was rejected by the ITO on 15th Jan., 1984, but an appeal was preferred before the AAC. The interest claimed under S. 243 was allowed and the claim of interest under ss. 214 and 244(1A) was rejected. In the second appeal preferred by the assessee before the Tribunal it was held that the assessee is entitled to interest under ss. 214 and 244(1A) even in the rectification proceedings.

(3.) THE provisions of S. 214 provide for payment of interest by the Government on the amount by which the aggregate sum of any instalments of advance tax paid during any financial year in which they are payable under ss. 207 to 213 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 for the assessment year immediately following the said financial year, and where any such instalment is paid after the expiry of the financial year during which it is payable by reason of the provisions of S. 213, interest as aforesaid shall also be payable on that instalment from the date of the payment to the date of the regular assessment. Sub s.(2) of S. 214 provides that on any portion of such amount which is refunded under Chapter XVII, interest shall be payable only up to the date on which the refund was made. This Court in the case of CIT vs. M.L. Sanghi (1988) 170 ITR 670 (Raj) ; TC 4R.529, held that the expression "regular assessment" occurring in s. 214(1) means the original order of assessment made by the ITO as also the final order made as a result of any direction having been given by the appellate authority. Once the order is taken in appeal, the original order of the ITO no longer survives after the modification by the appellate authority and the only order of regular assessment in existence as a result of the appellate order was the order of the ITO which was made in compliance with the directions given in the appellate order. Therefore, where an assessee was found entitled to a refund of the excess amount of tax deposited by him as a consequence of the order made in appeal, he would also be entitled to interest under S. 214(1) on the amount of refund. The point which has been raised could have been considered to be debatable because other High Courts have taken a different view. But since the view taken by this Court is binding on the Tribunal and other authorities under the Act in this State, it could not be considered to be a debatable point in view of the decision of this Court in the case of CIT vs. M.L. Sanghi (supra). It is submitted that the grant of interest under S. 244(1A) is debatable point. This contention of learned counsel has no force as it has been provided under sub s. (1) thereof that where a refund is due to the assessee in pursuance of an order referred to in S. 240 and the ITO does not grant the refund within a period of three months from the end of the month in which such order is passed, the Central Government shall pay to the assessee simple interest at twelve per cent. per annum on the amount of refund due from the date immediately following the expiry of the period of three months aforesaid to the date on which the refund is granted. Sec. 244(1A) provides for payment of interest in pursuance of any order of assessment or penalty and such amount or part thereof having been found in appeal or other proceeding under the Act to be in excess of the amount which such assessee is liable to pay as tax or penalty. On such amount the assessee is entitled to simple interest at the rate specified in sub s (1) on the amount found to be in excess from the date on which such amount was paid to the date on which the refund is granted. Therefore, it is only in respect of the amount as contemplated under S. 244(1A) that the assessee is entitled to interest and it cannot be said to be a debatable point so as not to attract the provisions of S. 154. The payment of interest on the amount deposited under the self assessment is a debatable issue and, therefore, the interest is allowable on the amount which falls under S. 244 (1A), i.e., deposited in pursuance of an order of assessment.