Interpretation of 'regular assessment' under s. 214(1) of I.T. Act, 1961 for interest on excess advance tax

Commissioner Of Income-Tax, Bombay City IV Versus Carona Sahu Company Limited

Commissioner Of Income-Tax, Bombay City IV Versus Carona Sahu Company Limited - [1984] 146 ITR 452, 38 CTR 219, 16 TAXMANN 32 Issues Involved:
1. Meaning of 'regular assessment' under s. 214(1) of the I.T. Act, 1961.
2. Assessee's entitlement to interest under s. 214 beyond the date of the first regular assessment.
3. The applicability of interest provisions in the context of appellate or revisional orders.

Summary:

1. Meaning of 'regular assessment' under s. 214(1):
The court addressed whether 'regular assessment' in s. 214(1) of the I.T. Act, 1961, referred to the first order of regular assessment passed by the ITO or the last operative order of regular assessment at any given point of time passed as a result of appellate or revisional proceedings. The court concluded that 'regular assessment' means the first order of regular assessment passed by the ITO. Consequently, the Central Government is liable to pay interest on the excess amount of advance tax paid by the assessee from 1st April following the financial year to the date of such first order of regular assessment.

2. Assessee's entitlement to interest under s. 214 beyond the date of the first regular assessment:
The court examined whether interest under s. 214 is allowable beyond the date of the regular assessment and up to the date of the ITO's order giving effect to the AAC's order. The court noted that it was precluded from answering this question due to the Supreme Court's judgment in CIT v. V. Damodaran [1980] 121 ITR 572. However, the court discussed the matter and concluded that the words 'regular assessment' in s. 214 mean the first order of regular assessment, not the last operative order. Therefore, interest is not payable beyond the date of the first regular assessment.

3. Applicability of interest provisions in the context of appellate or revisional orders:
The court considered various judgments and the statutory provisions, including ss. 214, 215, and 244, to determine the applicability of interest provisions in the context of appellate or revisional orders. It concluded that 'regular assessment' refers to the first order of regular assessment. The court also addressed the interpretation of sub-s. (2) of s. 214, which provides that interest is payable only up to the date on which the refund was made, and found that it does not extend the period of interest payment beyond the first regular assessment.

Final Judgment:
The court held that the words 'regular assessment' in s. 214(1) of the I.T. Act, 1961, mean the first order of regular assessment passed by the ITO. Consequently, the Central Government is liable to pay interest on the excess amount of advance tax paid by the assessee from 1st April following the financial year to the date of such first order of regular assessment. The question referred at the instance of the Revenue was answered in the negative, i.e., in favor of the Revenue. The assessee was ordered to pay the costs of the reference to the Revenue.