Court Affirms Interest Entitlement Under Income-tax Act Sections 214 & 244, Emphasizing Mandatory Nature

Commissioner Of Income-Tax Versus Graphite India Limited

Commissioner Of Income-Tax Versus Graphite India Limited - [1994] 209 ITR 318, 122 CTR 7, 80 TAXMANN 436 Issues:
- Refund of excess advance tax paid
- Rectification of provisional assessment order
- Appeal against assessment order
- Entitlement to interest under sections 214 and 244 of the Income-tax Act, 1961

Refund of Excess Advance Tax Paid:
The respondent filed a statement of advance tax for the assessment year 1982-83 and paid a total of Rs. 70,79,546. After filing the return, the Assessing Officer made a provisional assessment and initially refunded only a partial amount. Subsequently, the Assessing Officer rectified the provisional assessment order, leading to a further refund. The Commissioner of Income-tax (Appeals) allowed the respondent's appeal against the rectification order. The Tribunal dismissed the Revenue's appeal, and the Commissioner further allowed the appeal in part, resulting in a substantial refund due to the respondent.

Rectification of Provisional Assessment Order:
The Assessing Officer rectified the provisional assessment order under section 154 of the Act, reducing the refund amount initially granted. The Commissioner of Income-tax (Appeals) later allowed the respondent's appeal against this rectification, leading to a revised refund amount.

Appeal Against Assessment Order:
The Assessing Officer completed the assessment under section 143(3) of the Act, resulting in a computation of refundable and payable amounts. The Tribunal dismissed the Revenue's appeal against the Commissioner's order, and the Commissioner allowed the appeal in part, leading to a substantial refund due to the respondent.

Entitlement to Interest under Sections 214 and 244 of the Income-tax Act, 1961:
The respondent sought interest under sections 214 and 244 of the Act on the refundable amount. The Commissioner of Income-tax granted interest under section 214 but refused further interest under section 244. The respondent moved the court, arguing for full interest under section 214 and interest under section 244. The court held in favor of the respondent, citing precedents like Chloride India Ltd. and Pixray (India) Ltd., stating that interest under both sections is payable due to the delay in refunding the amount.

In conclusion, the court dismissed the appeal, upholding the respondent's entitlement to interest under sections 214 and 244 of the Income-tax Act, 1961, emphasizing the mandatory nature of such interest payments in cases of delayed refunds arising from appellate orders.