1993 (9) TMI 166

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....e assessment by his order dated 21-3-1986 on a total income of Rs. 6,86,800 against 'Nil' income claimed by the assessee. While completing the assessment, the ITO had not allowed investment allowance of Rs. 7,90,983 claimed by the assessee. Aggrieved by the said disallowance, assessee preferred appeal to the ITAT, Hyderabad Benches, Hyderabad. The ITAT in IT Appeal No. 974/Hyd/88, vide its order dated 16-6-1989 allowed the claim of the assessee. Consequently, the Assistant Commissioner of Income-tax, Company Circle 4(2), Hyderabad, passed modificatory order dated 28-10-1989, and determined the refund at Rs. 61,452, which includes an amount of Rs. 22,112 being advance tax paid in two equal instalments on 15-6-1982 and 15-9-1982 respectively.....

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....bsp;                                                         Rs. 40,000                                                               ---------- (b) The assess....

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....llate order passed by an appellate authority, the refund has to be effected under section 240 and section 214 has no application. Hence, when such refund of income-tax including advance tax is to be effected, the ITO is under obligation to refund the amount within three months from the date of such appellate order and the assessee is entitled to simple interest on such refundable amount only after the expiry of the three months' period specified in section 244(1). Their Lordships of the Andhra Pradesh High Court were dealing with a case, where advance tax was paid for assessment years 1968-69 and 1969-70. Even in assessment proceedings, assessee claimed exemption under section 11 of the Income-tax Act, which was denied. However, the exempti....

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....significance only till the initial regular assessment is made and thereafter it has no separate existence by itself but gets merged in the tax demand payable by the assessee. Therefore, payment of advance tax can be worked into the provisions of section 244(1A). On the language of section 219, the advance tax paid is treated as a payment of tax for the assessment year and is given credit for at the time of the regular assessment. This means that when the regular assessment is made in the first instance, the advance tax paid earlier is treated as having been paid in pursuance of the regular assessment and in satisfaction thereof. Thus, the advance tax paid earlier will get converted into a payment on the date of the initial assessment of the....

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.... ascertained at Rs. 61,452, out of the total tax paid of Rs. 62,112. Under this modificatory order, both the advance tax paid as well as the regular tax paid were found to be in excess of the tax due. Thus, according to the Delhi High Court decision, after the amendment to section 244(1A) and also under the clear ambit of sub-section (2) of section 214, the assessee is entitled to interest on the excess of the advance tax as well as on the excess of the tax paid. 5. The contention of the assessee was also supported by another decision of the Punjab & Haryana High Court reported in CIT v. Leader Engg. Works [1989] 178 ITR 529. The question considered in that case was whether the advance tax adjusted towards the demand assessed, was a paym....