1991 (3) TMI 18 - HC - Income Tax

Summary

Issues:
1. Interpretation of the term "regular assessment" under section 214 of the Income-tax Act, 1961.
2. Entitlement to interest on the refundable amount from the first day of the assessment year until the date of refund.
3. Calculation and payment of interest under section 214(2) until the date of payment.

Detailed Analysis:
1. The main issue in this judgment is the interpretation of the term "regular assessment" under section 214 of the Income-tax Act, 1961. The court held that "regular assessment" includes the final effect-giving assessment order made by the Income-tax Officer after taking into account all relevant material, including the appellate decision. The court relied on binding precedents from the Calcutta High Court to support this interpretation, emphasizing that the assessment order giving effect to the appellate decision is part of the regular assessment process.

2. Another significant issue addressed in the judgment is the entitlement to interest on the refundable amount from the first day of the assessment year until the date of refund. The court considered the argument that successful appeal by the assessee should entitle them to interest from the beginning of the assessment year until the refund date. The court agreed with this contention and directed the Income-tax Officer to calculate and allow interest to the assessee at the prescribed rate from the start of the assessment year until the date of the correct fresh assessment order.

3. The judgment also discussed the calculation and payment of interest under section 214(2) until the date of payment. The court referred to a Delhi High Court decision supporting the payment of interest to the assessee up to the date of refund. The court accepted this argument and directed the Income-tax Officer to consider the question of interest up to the date of the order to be passed based on the court's directions. The court emphasized the importance of expeditious settlement of dues and directed the Income-tax Officer to complete the correction process within six weeks.

Overall, the judgment clarifies the interpretation of "regular assessment" under the Income-tax Act, highlights the entitlement of the assessee to interest from the beginning of the assessment year, and emphasizes the calculation and payment of interest until the date of refund. The court's decision provides guidance on these key issues and directs the Income-tax Officer to comply with the specified calculations and timelines.