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Issues:
1. Entitlement to interest on excess tax paid and refunded 2. Calculation of interest up to the date of provisional assessment order Analysis: Issue 1: Entitlement to interest on excess tax paid and refunded The petitioner, a company, challenged the Income-tax Officer's order granting interest of Rs. 29,972 under section 214 on Rs. 7,49,447 for the assessment year 1978-79. The petitioner contended that interest should be paid on the entire amount of tax paid in excess and refunded, i.e., Rs. 13,81,186, not just on the excess amount paid as advance tax. The court referred to a precedent in CIT v. Traub (India) Pvt. Ltd. [1979] 118 ITR 525, where it was held that interest under section 214 is payable even if advance tax payments were delayed but met the requirements. The court ruled in favor of the petitioner, stating that they were entitled to interest in line with the provisional assessment order dated August 7, 1978. Issue 2: Calculation of interest up to the date of provisional assessment order The second question revolved around whether interest should be paid up to the date of the provisional assessment order or the date when the order was served on the petitioner. Citing Associated Cement Companies Ltd. v. CIT [1983] 141 ITR 318, the petitioner argued for interest up to the assessment order date and from that date to the refund date. However, the court noted that as per the proviso to sub-section (1) of section 214, no interest is payable post the provisional assessment date. Additionally, sub-section (2) of section 214 applies to refunds under Chapter XVII, not Chapter XIV, as in this case. Thus, the court found no legal error in the Income-tax Officer's decision to grant interest up to the provisional assessment order date. Consequently, the petitioner was awarded interest on the entire refund amount of Rs. 13,57,063 from April 1, 1978, to August 7, 1978.
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