TaxTMI 
TaxTMI 
2006 (9) TMI 119
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....ed single judge was impugned in this writ petition. The learned single judge held, inter alia, as follows: "After hearing the parties and after analysing the decisions cited before me by the learned advocates appearing on behalf of the parties I do not have any hesitation to hold that as has been held by the High Courts that there is no enabling provision in the Act to direct payment of interest on the tax deducted at source. As has been submitted by the learned advocate appearing on behalf of the respondent authority I do not have any hesitation to endorse the same view as has been expressed by the different High Courts. I also do not have any hesitation to accept the contention of the learned advocate appearing on behalf of the respondent authority and in my opinion, at the relevant assessment year, there is no specific provision conferring any right upon the assessee to get interest on the excess amount paid by way of tax deducted at source. The differential treatment had been set at rest after enactment of the provisions of section 244A which became effective and applicable from the assessment year 1989. Such section cannot be interpreted in such a manner which would enable th....
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....in a case where the interest is reduced, the Assessing Officer shall serve on the assessee, a notice of demand in the prescribed form specifying the amount of the excess interest payable and requiring him to pay such amount; and such notice of demand shall be deemed to be a notice under section 156 and the provisions of this Act shall apply accordingly. (2) On any portion of such amount which is refunded under this Chapter, interest shall be payable only up to the date on which the refund was made. (3) This section and sections 215, 216 and 217 shall not apply in respect of any assessment for the assessment year commencing on the 1st day of April, 1989, or any subsequent assessment year and, in the application of the said sections to the assessment for any earlier assessment year, references therein except in sub-section (1A) and sub-section (3) of section 215 to the other provisions of this Act shall be construed as references to those provisions as for the time being in force and applicable to the relevant assessment year." "240. Where, as a result of any order passed in appeal or other proceeding under this Act, refund of any amount becomes due to the assessee, the Assessing ....
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....t where the amount so found to be in excess was paid in instalments, such interest shall be payable on the amount of each such instalment or any part of such instalment, which was in excess, from the date on which such instalment 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 the passing of the order in appeal or other proceeding: Provided also that where any interest is payable to an assessee under this sub-section, no interest under sub-section (1) shall be payable to him in respect of the amount so found to be in excess. 244A.(1) Where refund of any amount becomes due to the assessee under this Act, he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated in the following manner, namely:- (a) where the refund is out of any tax paid under section 115WJ or collected at source under section 206C or paid by way of advance tax or treated as paid under section 199, during the financial year immediately preceding the assessment year, such interest shall be calculated at the ....
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....d sections it appears to us that the Legislature thought it fit that when the assessee is burdened with payment of interest on a delayed payment of tax there should be a corresponding provision for payment of interest in case any refund is made at a belated stage by the Revenue. Under section 214 the Central Government was obliged to pay interest on the amount of advance tax during any financial year from April 1 of the next financial year to the date of regular assessment. This would mean that in the case of advance tax paid by an assessee in excess of the actual tax payable for a particular financial year he would be entitled to interest on such excess advance tax so refunded from April 1 of the next financial year till the date of regular assessment. Under section 240 in case an order of assessment is modified so merged in the order of the appellate authority and any refund becomes due under such order the refund is to be made to the assessee without insisting upon an application to be made on that count. Under section 243 in case the refund is not granted within the stipulated period the Central Government is to pay interest at the stipulated rate on the amount directed to b....
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....of the appellate authority would be the date of regular assessment. (ii) Modi Industries Ltd. v. CIT [1995] 216 ITR 759 (SC) : The three-judge Bench decision of the apex court while dealing with the subject controversy virtually upset the decision of the learned single judge in the case of Chloride India Ltd. [1977] 106 ITR 38 (Cal). Their Lordships interpreted regular assessment as an assessment made under section 143 or 144 meaning thereby the original assessment and not any assessment made in terms of the order of the appellate authority. Their Lordships put emphasis on the definition as stipulated in section 2(40) and held that regular assessment could only mean the original assessment made under sections 143 and 144 and not for any other purpose. The decision in the case of Chloride India Ltd. [1977] 106 ITR 38 (Cal) was virtually upset by the apex court in Modi Industries Ltd. [1995] 216 ITR 759. On the issue of interest the apex court in this judgment observed that if any refund is made as a result of any appeal or other order interest on such refundable amount should be paid under section 244(1A) and not under section 214. Their Lordships further held that with effect from....
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....ned in the preamble. Most of the refund in the instant case was a result of the orders passed in terms of the order of the appellate authority after March 31, 1975, and before April 1, 1989. Hence, this was to be guided under section 244(1A). The order impugned in the writ petition was passed by the authority expressing inability to pay interest in view of the provisions of section 244A(4). The authority was right to the extent that since the period of assessment order was prior to April 1, 1989, the assessee was not entitled to interest under section 244A(4). The authority, however, did not appreciate that the subject issue was covered under section 244 (1A) and not section 244A. The authority should have examined the claim for refund under section 244(1A) to find out whether the assessee was entitled to interest or not. Such attempt was not made while rejecting the prayer for refund. The matter proceeded on a wrong footing from the initial stage. The authority rejected the prayer on the ground that it was not covered under section 244A(4). The assessee pressed its claim on the basis of a decision of this court reported in Central Concrete and Allied Products Ltd. v. Deputy CIT [1....
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....ary due to reduction or enhancement of tax as a result of any subsequent proceeding. But with effect from April 1, 1985, while the period for which interest was payable remained constant, the amount on which the interest was payable, varied with the variation in the quantum of refund as a result of any subsequent orders. (ii) If any tax paid pursuant to an assessment order after March 31, 1975, (which will include tax deducted at source and advance tax to the extent the same has been retained and treated by the Income-tax Officer as payment of tax in discharge of the assessee's tax liability in the assessment order), becomes refundable wholly or in part as a result of any appellate or other order passed, the Central Government will have to pay the assessee interest on the refundable amount under section 244(1A). For the purpose of this section, the amount of advance payment of tax and the amount of tax deducted at source must be treated as payment of income-tax pursuant to an order of assessment on and from the date when these amounts were set off against the tax demand raised in the assessment order, in other words the date of the assessment order. (iii) With effect from April 1....