Madras H.C : Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee is entitled to interest under s. 18 of the Companies (Profits) Surtax Act, 1964, r/w s. 244(1A) of the IT Act, 1961, on the excess payment of provisional tax paid by the assessee?

High Court Of Madras

CIT vs. Ashok Leyland Ltd.

Sections 244(1A), 256(2), Surtax 18

Asst. Year 1979-80

R. Jayasimha Babu & N.V. Balasubramanian, JJ.

Tax Case Petn. No. 567 of 1997

24th June, 1998

Counsel AppearedC.V. Rajan, for the Petitioner : None, for the Respondent

JUDGMENT

N.V. BALASUBRAMANIAN, J. :

The CIT has filed this petition for a direction to the Tribunal, Madras Bench, to state a case and refer the following question of law:

“Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that the assessee is entitled to interest under s. 18 of the Companies (Profits) Surtax Act, 1964, r/w s. 244(1A) of the IT Act, 1961, on the excess payment of provisional tax paid by the assessee?”

The order of assessment made in the assessee’s case under the Surtax Act for the asst. yr. 1979-80 was the subject-matter of further proceeding under s. 14 of the Companies (Profits) Surtax Act, 1964, consequent to the revision of the assessee’s related income-tax assessment. The said order passed under s. 14 of the Act had resulted in a refund to the assessee of a sum of Rs. 3,72,981. The assessee, no doubt, was granted the refund, but the AO rejected the claim of the assessee for interest under s. 244(1A) of the IT Act r/w s. 18 of the Act holding that the entire amount, a part of which has become refundable, has been paid by the assessee as per the order of a provisional assessment and, therefore, the assessee was not entitled to interest under s. 244(1A) of the IT Act, 1961. The assessee preferred an appeal before the CIT(A) (sic) holding that the assessee was entitled to interest under s. 244(1A) of the IT Act. The Tribunal rejected the reference application filed by the Revenue on the ground that no referable question of law arose from its order. Consequently, this petition has been filed.

The short point for consideration is whether there is a referable question arising out of the order of the Tribunal holding that the assessee was entitled to interest under s. 244(1A) of the IT Act which provides for grant of interest where the whole or any part of the refund is due to the assessee in cases where any amount was paid by an assessee after the 31st March, 1975, in pursuance of any order of assessment and it was found in appeal or other proceedings that the amount paid was in excess of the sum due.

The tax paid by the assessee in pursuance of the provisional order of assessment under s. 6 of the Surtax Act is undoubtedly an amount paid by the assessee in pursuance of an order of assessment. Sec. 244(1A) of the IT Act employs the expression, “any order of assessment” and the said expression would comprehend in its scope not only regular assessments but also the provisional orders of assessment made by the Surtax Officer under s. 6 of the Surtax Act as well. The expression, “any order of assessment” should be considered widely, particularly in the context of s. 244(1A) of the IT Act, and keeping in view the object of the said section. Therefore, it must be held that the tax paid in pursuance of a provisional order of assessment made by the Surtax Officer is also a tax paid within the meaning of s. 244(1A) of the IT Act. It was a lawful demand by the AO initially and it was a payment made by the assessee in pursuance of an order of assessment, though the order is stated to be a provisional assessment. The mere fact that it is termed provisional demand would not render the tax paid as not one paid in pursuance of an order of assessment. Later on the tax paid by the assessee was refunded to the assessee consequent on the proceedings taken by the AO under s. 14 of the Surtax Act.

The contention of learned counsel for the Revenue was that the amount was refunded not in pursuance of an appellate order and, therefore, the assessee was not entitled to any interest. We are of the view that this contention is also not sustainable as s. 244(1A) of the IT Act provides for grant of interest in case of refund of amount paid which was later on found to be not due not only in the appeal proceedings but also in the proceedings under the Act. The term “any other proceedings” in the IT Act is a fairly wide expression and it would comprehend in its scope the proceedings initiated pursuant to an appellate order and it will include the proceedings under s. 14 of the Surtax Act, as the assessment under the Surtax Act is dependent on the result of the proceedings under the IT Act. Therefore, on the plain terms of s. 244(1A) of the IT Act, the assessee has satisfied all the requirements found in s. 244(1A) of the IT Act and is eligible for interest, as it has satisfied all the statutory requirements prescribed for the grant of interest.

We are, therefore, of the opinion that the order of the Tribunal holding that the assessee is entitled to interest under s. 244(1A) of the IT Act is justifiable and hold that no referable question of law arises out of the order of the Tribunal. Accordingly, the tax case petition is liable to be dismissed and it is dismissed.

There is no order as to costs.

[Citation : 240 ITR 899]

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