2006 (7) TMI 97 - HC - Income Tax

Appeals to Commissioner (A) Appeal made by assessee before the CIT (A) with regard to AO order not touching the aspect of interest u/s 214 and 214(A) Appeals maintainable

Summary

Issues:
Interpretation of appellate provisions regarding interest under sections 214 and 244(1A) in relation to Assessing Officer's order.

Analysis:
The main issue in this case revolved around the interpretation of appellate provisions concerning interest under sections 214 and 244(1A) in connection with the Assessing Officer's order. The question raised was whether the Appellate Tribunal was correct in holding that an appeal is competent before the Commissioner of Income-tax (Appeals) regarding the Assessing Officer's order not addressing the aspect of interest under sections 214 and 244(1A).

Arguments by Revenue:
The counsel for the Revenue contended that if the Assessing Officer does not make an order in favor of the assessee regarding interest while refunding the excess tax paid, then no appeal lies to the appellate authority. It was argued that as per section 214, orders related to interest are not appealable, even when the Assessing Officer is implementing the appellate court's order.

Arguments by Assessee:
On the other hand, the counsel for the assessee referred to judgments by the Bombay High Court in the matters of Empire Industries Ltd. and Caltex Oil Refining (India) Ltd. The counsel argued that orders by the Assessing Officer to comply with appellate orders result in assessments and should be appealable if interest is not granted. The appellate provisions were to be reasonably construed, and if the appellate authority modifies the Assessing Officer's order, any further compliance order should be appealable.

Judicial Precedents:
The Bombay High Court in the case of Empire Industries Ltd. observed that orders by the Income-tax Officer to give effect to appellate orders constitute assessments and can be treated as orders under section 154, making them appealable. Similarly, in the case of Caltex Oil Refining (India) Ltd., the High Court held that interest under section 214 is part of the assessment and is deemed to be tax for the purposes of the Act, making it appealable under section 246.

Court's Decision:
The High Court, concurring with the Bombay High Court judgments, ruled that appeals against orders refusing to grant interest are maintainable as interest under section 214 is considered part of the assessment and deemed to be tax. The appeal before the appellate authority was deemed maintainable, and the reference was answered against the Revenue's interests, disposing of the reference with no costs incurred.