High Court Of Delhi
Sag Construction Associates vs. Union Of India & Ors.
R.C. Lahoti & C.K. Mahajan, JJ.
Civil Writ No. 2644 of 1991
28th July, 1998
Dharam Vir Singh Gupta, for the Petitioner : Sanjeev Khanna with Ms. Premlata Bansal, for the Respondent
R.C. Lahoti, J. :
This is a petition by an assessee seeking direction to respondent No. 5 to release payment of interest to the petitioner under s. 244(1A) of the IT Act, 1961.
2. The facts relevant may briefly be noticed. An amount of Rs. 7,235 was deducted as TDS from the assessee. The assessee filed a return and an order of assessment was made on 22nd Feb., 1983. There was an appeal wherein by order dt. 13th Dec., 1985, the Asstt. CIT set aside the order of assessment. Thereafter a fresh order of assessment was made on 6th March, 1988. On 31st March, 1988, the petitioner moved an application to the ITO for awarding interest on the amount of Rs. 7,235 which fell due and payable to the petitioner consequent upon the order of assessment. The prayer was rejected. The petitioner preferred an appeal which was held to be not maintainable. Thereafter the petitioner moved an application under s. 264 of the Act to the CIT. By order dt. 22nd June, 1990, the petitionerâs application was rejected holding that s. 244(1A) was not attracted to the facts of the case. The writ petition has thereafter been filed by the petitioner.
3. The issue arising for decision is no more res integra and stands concluded by the law laid down by the Supreme Court in Modi Industries Ltd. vs. CIT (1995) 128 CTR (SC) 361 : (1995) 216 ITR 759 (SC) : TC 43R.422. At p. 780, their Lordships have approved the view taken by the Punjab & Haryana High Court in the case of CIT vs. Leader Engineering Works (1990) 81 CTR (P&H) 222 : (1989) 178 ITR 529 (P&H) : TC 43R.824, holding that the advance tax paid lost its identity, the moment it was adjusted towards the tax liability created under the regular assessment and took the shape of payment of tax in pursuance of the order of assessment. At p. 787, their Lordships have held : “If the assessment order is set aside by a higher authority in its entirety and a direction is given to pass a fresh assessment order, the position will remain the same. The amount of advance tax paid by the assessee loses its character by virtue of s. 199 as soon as the first assessment order is made and the advance tax is set off against the demand raised in the assessment order. If the assessment order is set aside, the adjusted amount of tax or the amount of tax refunded or refundable does not regain its character of advance tax once again. The argument made on behalf of the Revenue that in such a case a fresh assessment may be treated as âregular assessmentâ is misconceived and is not in consonance with the scheme of the Act and the language of various sections dealing with regular assessment.”
4. It is, therefore, clear that with the passing of the order of assessment dt. 22nd Feb., 1983, without regard to the fact that the assessment order was set aside by the Asstt. CIT the amount of TDS lost its such character and the same was deemed to have been paid in pursuance of the order of assessment. Hence, s. 244(1A) would be clearly attracted.
5. The petition is, therefore, allowed. The order of the CIT dt. 22nd June, 1990 (p. 26 of the paper-book), and the order of the ITO dt. 22nd June, 1991 (copy not filed)âboth declining payment of interest to the petitioner are hereby quashed and set aside. Admittedly, the refund voucher was issued to the petitioner on 16th March, 1988. Respondent No. 5 shall within two months from the date of production of a copy of this order before him, calculate the interest due and payable to the petitioner in accordance with the provisions of s. 244(1A) of the IT Act, 1961, on an amount of Rs. 7,235 for the period 22nd March, 1983 (the date falling one month after the date of the first order of assessment) to 16th March, 1988 the date of refund voucher and release the same to the petitioner within one month thereafter.
The petition stands disposed of accordingly.
No order as to the costs.
[Citation : 234 ITR 501]