V M SALGAOCAR AND BROS P LTD Vs. INCOME TAX OFFICER
LAWS(IT)-1989-8-13
INCOME TAX APPELLATE TRIBUNAL
Decided on August 31,1989

Appellant
VERSUS
Respondents

JUDGEMENT

R.N. Puri, Accountant Member - (1.)THE appeals filed by the assessee in respect of assessment years 1973-74, 1974-75 and 1977-78 were, for the sake of convenience, consolidated and heard together. THEse appeals are directed against the orders of the Commissioner of Income-tax (CIT) passed under Section 263 of the Income-tax. Act, 1961. After considering the rival submissions, these appeals are being disposed of as under.
(2.)The question to be decided in these appeals is whether, under Section 244(1A), the assessee was entitled to get interest on the refund of the amounts paid by it by way of interest under Sections 215, 217(1A) and 220(2). The assessee had paid certain amounts of interest under Sections 215, 217(1A) and 220(2). Interest is payable under Section 215 where the assessee has under-estimated his income liable to tax. Where the advance tax paid by the assessee on the basis of his own estimate is less than 75% of the assessed tax, interest under Section 215 is payable upon the amount by which the advance tax paid falls short of the assessed tax. It may so happen that subsequent to the completion of the assessment, the total income determined may get reduced as a result of appeal or revision or rectification. It is, hence, provided that if the amount on which interest was payable has been reduced, the interest levied shall be reduced accordingly and the excess interest paid, if any, shall be refunded. Interest under Section 217(1A) is char geable where the advance-tax payable by an assessee exceeds by one-third the tax demanded and the assessee does not send an estimate of his income and pay higher advance tax, as required by the provisions of Section 212(3A). Here also it is provided that in case the amount on which interest was payable under this section is subsequently reduced, interest is to be reduced accordingly and the excess amount paid is to be refunded. Interest under Section 220(2) is chargeable, if the amount specified in any notice of demand under Section 156 is not paid within the specified period. This interest is also required to be reduced, where, as a result of the subsequent modification of the total income, the amount on which interest was payable had been reduced and the excess interest paid, if any, is to be refunded.
On the respective amounts, on which these interests had been charged, being reduced subsequently, these interests were also correspondingly reduced. The amounts paid in excess of what were required to be paid were refunded to the assessee. The ITO allowed interest under Section 244(1A) on the amounts refunded to the assessee, The CIT was of the view that the ITO was in error in allowing interest under Section 244(1 A) on the amounts refunded to the assessee. He, hence, revised the orders of the ITO under Section 263. He directed the ITO to withdraw interest allowed by him under Section 244(1A) on the refund of the amounts which had been paid by the assessee by way of interest under Sections 215, 217(1A) and 220(2). Being aggrieved by the orders of the CIT, the assessee has come up in appeal before us. The contention of the assessee is that interest under Section 244(1A) was very much admissible to it on the refund of the amounts of interests paid by it under Sections 215, 217(1A) and 220(2).

(3.)WE have considered the matter carefully. The provisions of Section 244 which provide for allowance of interest on refund are as under:
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 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 following the expiry of the period of three months aforesaid to the date on which the refund is granted.

(1A) Where the whole or any part of the refund referred to in Sub-section (1) is due to the assessee, as a result of any amount having been paid by him after the 31st of March, 1975, in pursuance of any order of assessment or penalty and such amount or any part thereof having been found in appeal or other proceeding under this Act to be in excess of the amount which such assessee is liable to pay as tax or penalty, as the case may be, under this Act, the Central Government shall pay to such assessee simple interest at the rate specified in Sub-section (1) on the amount so found to be in excess from the date on which such amount was paid to the date on which the refund is granted:

Provided that, 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.

(2)...

Sub-section (1A) was inserted by the Taxation Laws (Amendment) Act, 1975 with effect from 1-10-1975.



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