Suhas Chandra Sen, J. - (1.) THE Tribunal has referred the following three questions of law to this Court under s. 256 (1) of the IT Act, 1961 at the instance of the assessee : "1. Whether on the facts and in the circumstances of the case the Tribunal was justified in law in upholding the impugned order passed by the CIT under s. 263 of the IT Act, 1961 on a ground different from the one considered, adjudicated upon and decided by the CIT ? 2. If the answer to the question No. 1 is in the affirmative and in favour of the Revenue, whether on the facts and circumstances of the case, the Tribunal was justified in law in upholding the order passed by the CIT under s. 263 of the IT Act, 1961 on the ground that the interest payable under s. 244/243 (1)(a) of the said Act was not correctly allowed by the ITO in his order dt. 5th July, 1979 ? 3. Whether, on the facts and circumstances of the case, the Tribunal was justified in law in holding that the interest under s. 244/243 (1)(a) of the IT Act, 1961 was not admissible to the assessee company in respect of the period 1st April, 1975 to 9th March, 1977 ?"
(2.) AT the instance of the CIT the following question of law has also been referred to this Court : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that interest under s. 214 of the IT Act should be computed upto the date of giving effect to the Tribunal order instead of upto the date of regular assessment within the meaning of s. 2 (40) of the IT Act, 1961 ?" The relevant assessment year is 1972-73 for which the assessee's accounting year ended on 31st Dec., 1971. The facts as narrated by the Tribunal in the statement of case are as under : other sources. For the year in question, a loss return of Rs. 2,39,491 was filed. The assessment was regularly completed by the ITO under s. 143 (3) of the IT Act, 1961 on 6th Dec., 1974 in which the net loss was computed at Rs. 62,429 after adjusting income from other sources, etc. The ITO allowed the loss as well as the absorbed depreciation to be carried forward. The assessee claimed credit for tax deducted at source, but in the absence of certificate the credit was not given. The ITO, however, directed that the credit should be given for the advance tax paid by the assessee under s. 210. He also allowed interest under s. 214.
(3.) THE assessee went up in appeal and ultimately the Tribunal vide its order dt. 5th Jan., 1979 in ITA No. 3667/C/77-78 has allowed further relief to the assessee,. THE ITO gave effect to the order of the Tribunal and the loss was taken at Rs. 1,35,816. Thus after giving effect to the order of the Tribunal, the computation resulted in a loss. THE ITO gave credit for the advance tax paid and also allowed interest under s. 214 for the period from 1st April, 1972 to 9th March, 1977 on Rs. 10,000 which worked out to Rs. 5,900. THE ITO allowed interest under s. 243 (1) for the period from 1st April, 1975 to 9th March, 1977 on Rs. 13,217 which worked out to Rs. 3,036. Thus, the total amount of interest allowed under both sections came to Rs. 8,936. Of course, the ITO adjusted the amount already refunded earlier on 9th March,1977. The CIT was of the view that the ITO had allowed interest in excess in giving effect to the Tribunal's order. The order passed by the ITO on 5th July, 1979 giving effect to the order of the Tribunal was erroneous and prejudicial to the interest of Revenue. Accordingly, a notice was issued on 1st June, 1981 pointing out to the assessee the mistake in the order and his proposal to pass suitable order under s. 263. The CIT took note of the following facts : (1) The assessee had paid advance tax for the year amounting to Rs. 10,000 (2) This amount became refundable to the assessee alongwith interest under s. 214. (3) The refund was somehow not given. (4) The Tribunal passed it order on the assessee's appeal on 5th Jan., 1979 granting further relief to the assessee. (5) On 5th July, 1979 the ITO gave effect to the Appellate order in which the following calculation was made : "Tax Calculation : Tax payable Rs. Nil Tax paid under s. 210 Rs. 10,000 ;