TaxTMI 
TaxTMI 
2009 (5) TMI 568
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.... entitled to payment of interest on the amount of refund in accordance with the provisions of section 244(1A) and section 214 of the Act as interpreted in Sandvik Asia Ltd.'s case [2006] 280 ITR 643 ?" C. W. P. No. 10223 of 2007-Assessment year 1978-79 2. On December 13, 1977, the assessee-petitioner had paid advance tax amounting to Rs. 1,47,000. Thereafter, return was filed declaring loss of Rs.3,77,096. The assessment was completed under section 143(3) of the Act onMarch 26, 1981at an income of Rs. 2,17,720. The tax liability was assessed at Rs. 1,37,164 on account of income-tax and surcharge. After adjusting the tax liability from the advance tax of Rs. 1,47,000 deposited by the assessee- petitioner balance of Rs. 9,836 was ordered to be refunded. The interest amount of Rs. 3,430 was also determined to be paid under sec-tion 214 of the Act. 3. It is also pertinent to mention that in respect of the previous years 1976-77 and 1977-78 a rectification order was passed under section 154 of the Act onJanuary 28, 1984, and the assessee-petitioner was given the benefit of unabsorbed depreciation in respect of those years. Consequently, refund order amounting to ....
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....come of Rs. 11,71,840. The assessee was found liable to pay Rs. 7,93,781 on account of income-tax and surcharge which was adjusted out of the advance tax of Rs. 8,22,097. The balance refund of Rs. 22,361 was determined. The Assessing Officer also fixed interest under section 214 of the Act amounting to Rs. 7,805. Subsequently, some orders under sections 154, 263 and 143(3) of the Act were passed resulting in nominal change in the demand or refund. As per the order datedAugust 22, 1985passed under section 154 of the Act, the income of the assessee-petitioner for the period under consideration became nil after granting benefit of the unabsorbed brought forward depreciation/losses for the ear-lier years, viz., 1976-77 to 1978-79. Accordingly, refund of Rs. 7,46,657 was issued to the petitioner. The assessee-petitioner filed an application : No. RMI DIR : 858 datedDecember 2, 1986, vide which he requested for interest amounting to Rs. 6,48,837. As per the calculations by the assessee-petitioner the interest has been demanded from the dates of payment of advance tax, i.e., June 14, 1978, September 15, 1978 and December 14, 1978 whereas as per the provisions of section 214(1) of the Act,....
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....OnFebruary 28, 2003the assessment was completed under section 143(3) of the Act at an income of Rs.45,77,520. The assessee was found liable to pay Rs. 29,52,500 on account of income-tax and surcharge and interest, etc. After adjustment ofthe advance tax of Rs. 12,90,000, balance demand of Rs. 16,62,500 was created against the assessee-petitioner. After completion of assessmentproceed-ings under section 143(3) of the Act, the assessee-petitioner paid Rs. 10,00,000 against the outstanding demand of Rs. 16,62,500. Some amounts were recovered from the assessee-petitioner out of the refunds payable to the assessee for different years. Subsequently, some orders under section 154 of the Act were passed resulting in nominal change in demand. The assessee-petitioner was also allowed waiver of interest charged under sections 215 and 139(8) of the Act by the Commissioner of Income-tax. As per the order dated November 8, 1985, passed by the Assessing Officer to give to appeal effect to the order of the Commissioner of Income-tax, the asses-see-petitioner's income for the year under consideration was reduced to Rs. 3,73,370 and giving benefit of unabsorbed brought forward depreca-tion/losses fo....
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....d as payable to the assessee-petitioner after giving appeal effect to the Com-missioner of Income-tax (Appeals) order datedMay 15, 1991. As per the order passed in appeal the income of the assessee-petitioner was reduced from Rs. 3,00,859 to nil and refund of Rs. 1,88,250 was determined. The assessee-petitioner filed an application onOctober 8, 1991, with a request for payment of interest amounting to Rs. 3,04,259 after calculating the same on the refund amount of Rs. 1,88,250 in respect of the period fromJune 14, 1979toApril 15, 1991. The request made by the assessee-petitioner was rejected by the Assessing Officer, vide order datedMarch 6, 1992(P.7). It is further pertinent to mention that the application filed by the assessee-petitioner under section 264 of the Act was rejected by the Commissioner of Income-tax, vide order dated September 8, 1992 by observing that the assessee-petitioner was not entitled to interest under section 244(1A) of the Act in respect of the amount paid as advance tax and reliance was placed on a Full Bench judgment of the Gujarat High Court in the case Bardolia Textile Mills v. ITO [1985] 151 ITR 389. The Full Bench relied upon a circular issued by the ....
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....e orders of the rectification and orders giving appeal effect are passed under different sections and hence cannot be termed as orders of regular assessment. Therefore, `regular assessment' as mentioned in section 214(1) means only the assessment made under section 143 or 144. Thus, a combined reading of section 214(1) and section 2(40) makes it unambiguously clear that interest under section 214(1) was to be payable up to the date of regular assessment only. The operation of section 244(1A) was to come into force only when the excess payment had been made in pursuance of the order passed after March 31, 1975, and interest was to be paid from the date of payment to the date of refund. It was not for nothing that the two separate sections, i.e., 214(1) and 244(1A) were on the statute book, each operated in different spheres." 11. After placing reliance on some judgments of the Tribunal, Bombay High Court and Kerala High Court, the Commissioner concluded that the asses-see-petitioner had been correctly paid interest under section 214(1) of the Act on the excess amount of advance tax and interest under section 244(1A) of the Act. The Commissioner also dealt with the judgment o....
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....hat where the amount so found to be in excess was paid in installments, such interest shall be payable on the amount of each such installment or any part of such installment, which was in excess, from the date on which such installment was paid to the date on which the refund is granted : Provided further that no interest under this sub-section shall be payable for a period of one month from the date of passing of the order in appeal or other proceedings: Provided also that where any interest is payable to an assessee under this sub-section, no interest under sub-section (1) shall be pay-able to him in respect of the amount so found to be in excess." 14. A perusal of the aforesaid provisions show that any amount paid by the assessee after March 31, 1975 and if any refund or part of refund in respect of the aforesaid amount is due to the assessee on account of any order of assessment or penalty having been found in appeal or other proceedings under the Act to be in excess of the amount which such assessee is liable to pay as tax or penalty, then such an assessee is entitled to simple interest at 12 per cent. per annum as per the provisions of section 244(1A) ....
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....he appellant is entitled to interest under section 244 and/or section 244A of the Act in accordance with the terms and provisions of the said sections. The interest previously granted to it has been computed up toMarch 27, 1981andMarch 31, 1986(under different sections of the Act) and its present claim, is for compensation for periods of delay after these dates." 16. The hon'ble Supreme Court also considered the question whether on general principle the assessee ought to have been compensated for inordinate delay in receiving the money due to it. The hon'ble the Supreme Court placed reliance on the circular issued by the Central Excise Depart-ment on the subject of refund of deposits and concluded in paragraph 78 of the report as under (page 675) : "A close scrutiny of the contents of the circular datedJanuary 2, 2002, would disclose as to the modalities for return of pre-deposits. It again reiterated that in terms of the Supreme Court order such pre-deposit must be returned within 3 months from the date of the order passed by the Tribunal, court or other fiscal authority unless there is a stay of the order of the fiscal authority, Tribunal, court by a superior cour....