TaxTMI 
TaxTMI 
2003 (2) TMI 23
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....ms of section 10(29) of the Income-tax Act, 1961 (hereinafter referred as "the Act"), in the case of an authority constituted under any law for the marketing of commodities, any income derived from the letting of godowns or warehouses, for storage, processing or facilitating the marketing of commodities, is not to be included in computing the total income of a previous year of any person. As such the said income derived from letting of godown or warehouses for storage, processing or facilitating the marketing of commodities is excluded and does not form part of the income which is chargeable to income-tax. Despite this clear provision, the Income-tax Officer (Companies-cum Special Circle), Chandigarh (Respondent No.2), issued demand notice under section 156 of the Act for the payment of advance taxes in terms of section 210 in respect of the assessment year 1973-74 on June 19, 1972, and January 2, 1973 (revised February 24, 1974), revised again calling upon the petitioner-corporation to pay advance tax of Rs. 11,89,673 on its total income which included the aforesaid excluded income in terms of section 10(29) of the Act. The petitioner-corporation deposited the entire amount as dem....
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....sessment on November 23, 1978 (annexure P-3), which is said to be in accordance with the return of the petitioner, i.e., return filed for a sum of Rs. 2,14,053. There was, however, a minor addition of Rs. 2,085. The petitioner-corporation now claims that it is entitled to interest on refund of the excess payment made by way of advance tax as well as further payment of Rs. 1,87,762 made on March 10, 1976, in accordance with law up to the date of refund. Respondent No.2 made a refund of Rs. 12,52,556 on December 21, 1978. This represents the amount of excess advance tax paid and tax subsequently paid on March 10, 1976. This amount has been refunded without any interest to the petitioner-corporation, on account of non-grant of interest, the petitioner-corporation filed a revision petition under section 264 of the Act, before the Commissioner of Income-tax, Patiala (respondent No.1), who vide his order dated May 5, 1982 (annexure P-5), rejected the revision petition of the corporation. It is against the said order that the present writ petition has been filed assailing the same. Notice was issued in the case and the respondents filed their written statement, in which the factual asp....
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....ax charged was Rs. 13,884 and a refund of Rs. 97,111 was made by the respondents on December 21, 1978. On March 13, 1973, the advance tax deposited by the petitioner-corporation was Rs. 9,67,683 and this amount was refunded on December 21, 1978. The amounts as stated were deposited by the petitioner-corporation during the period 1972-73. Thereafter, on March 10, 1976, the advance tax deposited was Rs. 1,87,762 which was also refunded on December 21, 1978. In this manner interest at the rate of 12 per cent. per annum is claimed on the sum of Rs. 97,111 plus Rs. 9,67,683 for the period from April 1, 1973, to December 20, 1978, amounting to Rs. 7,31,295. On the amount of Rs. 1,87,762 interest amounting to Rs. 62,717 is claimed for the period from March 10, 1976, to December 20, 1978. In this manner, the interest on the amount of refund has been made, which amounts to Rs. 7,31,295. It is contended by learned counsel for the petitioner-assessee that on a consideration of section 214 especially sections 214(2), 219, 240 and 244(1A), the interest is to be paid on refund whatever view may be taken of the expression "regular assessment". This it is contended to be so in view of the introduc....
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....uced, the interest shall be reduced accordingly and the excess, if any, paid shall be deemed to be tax payable by the assessee 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." "219. Any sum, other than a penalty or interest, paid by or recovered from an assessee as advance tax in pursuance of this Chapter shall be treated as a payment of tax in respect of the income of the period which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable, and credit therefor shall be given to the assessee in the regular assessment." "244. Interest on refund where no claim is needed. - (1) Where a refund is due to the assessee in pursuance of an order referred to in section 240 and the Income-tax Officer does not grant the refund within a period of three months from the end of the month in which such order is passed, the Central Government shall pay to the assessee simple interest at twelve per cent. per annum on the amount of refund due from the date immediately f....
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.... to 213 exceeds the amount of tax determined on regular assessment, from the first day of April next following the said financial year to the date of the regular assessment for the assessment year immediately following the said financial year, and where any such instalment is paid after the expiry of the financial year during which it is payable by reason of the provisions of section 213, interest as aforesaid is also payable on that instalment from the date of its payment to the date of the regular assessment. Sub-section (1A) of section 214 provides that where on completion of the regular assessment the amount on which interest was paid under sub-section (1) is reduced, the interest shall be reduced accordingly and the excess, if any, paid shall be deemed to be tax payable by the assessee and the provisions of the Act shall apply accordingly. Sub-section (2) of section 214 provides that on any portion of such amount which is refunded under Chapter XVII, interest shall be payable only up to the date on which the refund was made. Section 219 provides that any sum other than a penalty or interest paid by or recovered from an assessee as advance tax in pursuance of Chapter XVII is....
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....me of the relevant assessment period. In other words, by legal fiction, the amount of advance tax paid by or recovered from the assessee is treated as payment of income-tax in respect of income of the period 'which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable'. Once the amount of advance tax is treated as payment of tax in respect of income of the relevant previous year and credit as such for the amount has been given to the assessee in the assessment order, amount loses its character of advance tax and becomes income-tax paid in t of the income of the relevant previous year. The interest payable under section 214 on any excess amount standing to the credit of the assessee is limited date of the order of assessment and not to the date of the refund. The amount retained by the Income-tax Officer towards satisfaction of the demand raised in the assessment order must be treated as payment of income-tax by assessee. If the liability is reduced in appeal, refund will be ordered of the amount of income-tax which was paid in excess of the reduced demand. Interest under section 214 is payable only up to the d....
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....ble only up to the date when the amount of advance tax is treated as payment of income-tax and is set off against the income-tax demand raised, in the assessment order and the interest on the delayed payment is to be paid under section 243. The Commissioner of Income-tax following a decision of this court in CIT v. Rohtak Delhi Transport Pvt. Ltd. [1981] 130 ITR 777, disentitled the assessee for interest on the refunded amount. This court in the said decision held that the provisions of section 214 of the Act deal with the grant of interest for the period from April 1, next following the financial year during which the tax was paid up to the date of the regular assessment period and not other period. It was held that where the advance tax paid is not more than as determined to be payable on regular assessment, the provisions of section 214 will not entitle the assessee to get interest on the amount which may become refundable to the assessee on the reduction of tax in an appeal. On the regular assessment as framed on January 30, 1976, no refund was due and, therefore, the provisions of section 214 were rightly held not to entitle the assessee for any interest. Therefore, in term....
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.... under section 219 as it only provides that advance tax paid under Chapter XVII is to be treated as payment of tax in respect of the income of the period which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable. In the case in hand, the initial assessment was made on January 3D, 1976, which was set aside in appeal because procedure provided for under section 144B of the Act was not followed. The assessment was again made on March 22, 1976, in which the previous computation of income earlier made was reiterated and a demand of Rs. 13,77,435 was made. This again was set aside in appeal by the Appellate Assistant Commissioner, Ambala Range, Ambala, vide order dated May 10, 1978 (annexure P2). It is in compliance with the said order in appeal that the Income-tax Officer, Circle Office, Chandigarh (respondent No.2), passed an assessment on November 23, 1978 (annexure P-3), which was in accordance with the return of the petitioner-corporation except for minor addition of Rs. 2,085. In Modi Industries [1995] 216 ITR 759 (SC) on the core question, viz., the meaning and purport of the expression "regular assessme....
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....ed by the Taxation Laws (Amendment) Act, 1975, with effect from October 1, 1975. In support of his contention learned counsel for the petitioner-corporation relies upon the judgment in the case of CIT v. Udhoji Shrikishandas [1996] 222 ITR 736, in which a Division Bench of the Madhya Pradesh High Court held that the fact that the assessee had quoted a wrong provision of law could not be a good reason to deny relief if otherwise the assessee was entitled to it. In the said case the contention urged by the applicant was that the assessee had claimed relief under section 244(1A) of the Act, the appellate authority should not have directed consideration of the claim under sections 214 and 244 of the Act and mere quoting of a wrong provision was not a good reason to deny relief if otherwise he is entitled to it. There is no dispute to this proposition of law. However, the petitioner-corporation is not entitled to interest on the refunded amount as no refund was made out after the initial assessment framed on January 30, 1976. It is only in consequence of the decision of the Appellate Assistant Commissioner and the subsequent assessment order dated November 23,1978 (annexure P3), that....
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....far as the amount of Rs. 1,87,762 deposited on March 10, 1976, is concerned (i.e., after March 31, 1975) it may be noticed that the same was deposited in terms of the assessment order dated January 30, 1976, whereby a demand of Rs. 13,77,435 was raised by the Income-tax Officer. The petitioner-corporation filed an appeal against the assessment order dated January 30, 1976, which was quashed on the ground that the Income-tax Officer had not complied with the provisions of section 144B of the Act. The petitioner-corporation in its petition has itself claimed that the original assessment dated January 30, 1976, was wholly non est. Therefore, it cannot be said that the deposit of Rs. 1,87,762 on March 10, 1976 was in pursuance of an order of assessment so as to claim interest in terms of sub-section (1A) of section 244 of the Act. The Income-tax Officer on March 22, 1976, reiterated his previous computation of income by raising a demand of Rs. 13,77,435. This was again assailed by the petitioner-corporation and its appeal was accepted by the Appellate Assistant Commissioner, Ambala Range, Ambala, vide order dated May 10, 1978 (annexure P2), and the assessment order was set aside. The I....