K.C.AGRAWAL, J. - (1.) THE assessee is a limited company doing business in banking. The assessment years in question are 1969 -70 and 1970 -71 and the corresponding previous years are the years ending on 31st Dec., 1968, and 31st Dec., 1969.
(2.) IT appears that by the assessment order passed on 28th Dec., 1970, in respect of the year 1969 -70, the ITO found that the gross tax payable by the assessee was Rs. 1,05,402. Out of this amount, Rs. 91,576 had been deducted at source, while the assessee had paid advance tax in the sum of Rs. 58,882. The assessment order in respect of the year 1970 -71 was passed by the ITO on 22nd Feb., 1971, determining the gross tax payable by the petitioner to be Rs. 75,444. Out of this amount, Rs. 91,035 had been deducted at source and Rs. 46,519 had been deposited by the assessee by way of advance tax. The ITO did not grant any interest on the amounts which had been deposited by the assessee over and above the amounts found due from the assessee on the ground that the advance tax paid was less than the gross tax. Aggrieved by the judgments and orders of the ITO refusing to award interest, the assessee appealed to the AAC. He accepted the appeals and directed that the assessee's claim should be allowed. The Revenue, thereupon, filed appeals before the Tribunal. It was contended on its behalf that the assessee was not entitled to interest. The Tribunal held that the assessee was entitled to interest on Rs. 37,056 for the first year and on Rs. 46,519 for the second year. It may be stated that these were the amounts which were deposited by the assessee by way of advance tax in the years 1969 -70 and 1970 -71, respectively. The Tribunal further found that the assessee was not entitled to any interest on the amount of tax deducted at source. Thereupon, the assessee filed two applications for the asst. yrs. 1969 -70 and 1970 -71 under sub -s. (1) of S. 256 of the IT Act, for making a reference to this Court. On being satisfied that the questions raised by the assessee were of law, the Tribunal referred the following three questions to the High Court for its opinion : " 1. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the tax determined to be payable by the assessee would be tax payable by him after it is given credit for tax deducted at source ? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the interest under S. 214 was payable on Rs. 37,056 for the asst. year 1969 -70 and on Rs. 46,519 for the asst. year 1970 -71 ? 3. Whether, on the facts and in the circumstances of the case, the Tribunal was legally correct in holding that the assessee was not entitled to any further interest under S. 214 for the asst. yr. 1970 -71 on excess tax deducted at source in addition to the interest payable on the advance tax of Rs. 46,519 ?"
(3.) IT would be seen from the above that the first question that arises for our decision is whether the assessee was entitled to get interest on the amounts paid as advance tax. Learned counsel for the Revenue urged that the interest under S. 214 would be payable only on the difference between the advance tax paid and the gross tax payable, and, therefore, if the advance tax paid is less than the gross tax payable, the assessee would not be entitled to get interest on the advance tax. In this connection, the learned counsel also urged that the amounts deducted at source under the provisions of the IT Act had to be ignored for the purposes of payment of interest under S. 214 of the Act.;