2004 (12) TMI 60 - HC - Wealth-tax

Interest on refund - Whether Tribunal was correct in holding that interest under section 34A(3A) of the Wealth-tax Act is allowable on refunds paid after March 31, 1975, where the payment made prior to March 31, 1975, under section 15B are adjusted against the wealth-tax demands on the completion of assessments? - Whether the Tribunal was correct in holding that the payments made under section 15B should be deemed to be payment in pursuance of the orders of assessments and will qualify for interest under section 34A(3A) of the Wealth-tax Act in respect of the assessment years 1971-72, 1975-76 to 1977-78? - We answer the questions referred to us in the affirmative, i.e., in favour of the assessee, and against the Revenue.

Issues Involved:
1. Whether interest under section 34A(3A) of the Wealth-tax Act is allowable on refunds paid after March 31, 1975, where payments made prior to March 31, 1975, under section 15B of the Wealth-tax Act are adjusted against wealth-tax demands on the completion of assessments.
2. Whether payments made under section 15B should be deemed to be payments in pursuance of the orders of assessments and qualify for interest under section 34A(3A) for the assessment years 1971-72, 1975-76 to 1977-78.
3. Whether interest under section 34A(3A) was allowable on the payment made prior to March 31, 1975, in respect of the assessment year 1971-72.

Detailed Analysis:

Issue 1: Allowability of Interest under Section 34A(3A) on Refunds Paid After March 31, 1975
The respondent assessee made payments under section 15B of the Wealth-tax Act before March 31, 1975, which were later adjusted against wealth-tax demands upon assessment completion. The assessments for the years 1970-71 to 1974-75 were completed on March 20, 1979, leading to refunds due to the respondent. The Inspecting Assistant Commissioner initially denied interest under section 34A(3A), arguing that the interest is only allowable on payments made after March 31, 1975. The Tribunal, however, upheld the respondent's claim, relying on the decision in *National Agricultural Co-operative Marketing Federation of India Ltd. v. Union of India [1981] 130 ITR 928*, which recognized that payments made under section 15B should be deemed as payments made on the date of assessment.

Issue 2: Deeming Payments under Section 15B as Payments Pursuant to Assessment Orders for Interest Qualification
For the assessment years 1971-72, 1975-76 to 1977-78, the respondent sought interest under section 34A(3A) on refunds resulting from appellate orders. The Commissioner of Wealth-tax (Appeals) initially denied the claim, distinguishing between payments made under section 15B and those made pursuant to assessment orders. The Tribunal, however, followed its earlier decision and allowed the interest, treating self-assessment tax payments under section 15B as equivalent to payments made pursuant to assessment orders, thereby qualifying for interest under section 34A(3A).

Issue 3: Allowability of Interest on Payments Made Prior to March 31, 1975, for Assessment Year 1971-72
The Tribunal allowed interest on payments made prior to March 31, 1975, for the assessment year 1971-72, interpreting section 15B to mean that such payments should be treated as made on the date of assessment. The Tribunal's decision was based on the principle that self-assessment tax payments under section 15B, once adjusted in the assessment order, should be treated as payments made in pursuance of the assessment order.

Legal Reasoning and Precedents:
The court considered various precedents, including the Supreme Court's decision in *Modi Industries Ltd. v. CIT [1995] 216 ITR 759*, which held that advance tax and self-assessment tax should be treated as payments made pursuant to an assessment order from the date of the assessment order. This principle was applied to interpret section 34A(3A) and section 15B of the Wealth-tax Act, leading to the conclusion that self-assessment tax payments should be treated as made on the date of the assessment order for the purpose of calculating interest on refunds.

Conclusion:
The court affirmed the Tribunal's decision, holding that the deeming provision under section 15B should be given full effect, and self-assessment tax payments should be treated as payments made pursuant to an assessment order from the date of the assessment order. Consequently, interest under section 34A(3A) is allowable on such amounts. The questions referred to the court were answered in the affirmative, in favor of the assessee and against the Revenue.

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