Rectification and interest on tax refund: debatable scope of "regular assessment" barred section 154 relief

Interest under section 214 was confined to the statutory limits, and the expression "regular assessment" in section 2(40) was treated as limited to assessments under sections 143 and 144. An order passed merely to give effect to appellate directions was not treated as clearly falling within that definition, and the point was regarded as debatable. Because a debatable issue is not fit for rectification under section 154, the assessee's rectification application was held not maintainable and interest under section 214 was not payable up to the date of the order giving effect to the appellate decision.

---

---

Issues: Whether rectification under section 154 of the Income-tax Act, 1961 could be invoked to claim interest under section 214 up to the date of the Income-tax Officer's order giving effect to appellate directions, on the footing that such a claim raised a debatable question and that the expression "regular assessment" in section 214 included an order passed to give effect to appellate orders.

Analysis: Section 214 grants interest only within the limits fixed by the statute. The definition of "regular assessment" in section 2(40) is confined to assessments made under section 143 or section 144, and its extension to an assessment made merely to give effect to appellate orders was held to be uncertain. Since the point was regarded as one on which two views were possible, it was treated as a matter not fit for rectification.

Conclusion: The assessee's application under section 154 was not maintainable, and interest under section 214 was not payable up to the date of the order giving effect to the appellate decision; the answer was therefore in favour of the Revenue.

---