HARINAGAR SUGAR MILLS LTD Vs. FIRST INCOME-TAX OFFICER

JUDGEMENT

(1.) BY this petition under article 226 of the Constitution of India, the petitioner has challenged the order of the Income-tax Officer dated August 24, 1981, granting interest of Rs. 29,972 under section 214 on Rs. 7,49,447. Briefly stated, the relevant facts are that the petitioner is a company. The proceedings relate to its assessment for the assessment year 1978-79. The previous year ended on September 30, 1977. Advance tax was payable by the petitioner for the year on June 15, 1977, September 15, 1977 and December 15, 1977. However, two installments totalling Rs. 6,07,716 were paid on January 25, 1978, and February 16, 1978, i. e. , after the due date but before the end of the financial year 1977-78. Provisional assessment under section 141 was made on August 7, 1978, resulting in a refund of Rs. 13,81,186. However, the same was received by the petitioner on October 15, 1978. As against the provisional claim for interest under section 214 on the excess amount of Rs. 13,81,186 from April 1, 1978, the Income-tax Officer granted the petitioner interest on Rs. 7,49,447 only and that too for the period from April 1, 1978, to august 7, 1978.

(2.) AN appeal against the short allowance of interest under section 214 was filed before the commissioner (Appeals) who allowed the appeal. However, the Department preferred an appeal before the Tribunal and succeeded as, according to the Tribunal, the interest payable under section 214, was not appealable. It is in these circumstances that this petition has been filed before this court.

(3.) THE first question involved herein is whether the petition is entitled to interest on the entire amount of tax paid in excess of the tax payable by it and refunded to it as such, i. e. , Rs. 13, 81,186 or only on Rs. 7,49,447, which represented the excess of amounts paid as advance tax on due dates over its tax liability. This court in CIT v. Traub (India) Pvt. Ltd. [1979] 118 ITR 525, rejected the Department's contention that interest under section 214 is payable only in respect of payment of advance tax in accordance with the dates prescribed and held that the question whether that was a proper reading of section 214 was debatable. Observing that delayed payment of instalment of advance tax was accepted by the Department as payment of advance tax and the other requirements of section 214 were satisfied, the court further held that the conclusion that the assessee was entitled to interest on the actual amount of excess was not even required to be referred to the court. The ratio of this decision is applicable in this case. The petitioner is, therefore, entitled to interest in terms of the provisional assessment order dated August 7, 1978.