1986 (4) TMI 30 - HC - Income Tax

Summary

Issues:
1. Entitlement to interest on refund of advance tax
2. Applicability of sections 214 and 244(1A) of the Income-tax Act
3. Referral of questions to the High Court

Analysis:
The judgment revolves around the entitlement to interest on the refund of advance tax by the assessee, a private limited company, for the accounting period ending December 31, 1974. The Income-tax Officer initially denied interest on the grounds of late payment of advance tax and refunds not being granted due to regular assessment. However, the Commissioner of Income-tax, on appeal by the assessee, allowed interest under section 214 of the Income-tax Act. The Revenue's appeal to the Tribunal was unsuccessful, leading them to seek a referral of questions under section 256(1) of the Act, which was dismissed. The Revenue then filed an application under section 256(2) for a mandamus to the Tribunal to refer the questions.

The first question raised was whether interest under section 214 could be allowed despite advance payments made after stipulated dates. The second question pertained to the entitlement of interest on refunds granted post regular assessment. The third question queried the validity of allowing interest under section 244(1A) for refunds from advance tax paid before March 31, 1975. The fourth question concerned the Tribunal's decision to allow interest under sections 214 and 244(1A) despite the controversial nature of the issue.

The court noted that question No. 1 was not pursued by the Revenue due to a precedent. For question No. 2, the court acknowledged it as a legal issue but deemed it settled by the Supreme Court, citing precedents from other High Courts. The court highlighted that a refusal by the Supreme Court to grant leave to appeal does not confirm the lower court's decision. The court cited its contrary view in a previous case and directed the Tribunal to refer question No. 2 to the High Court. Question No. 3 was deemed obvious under section 219 of the Act and did not require a referral. Question No. 4 was disregarded as it was not raised before the Tribunal. Ultimately, the court issued a mandamus to the Tribunal to refer only question No. 2 for the High Court's opinion, without awarding costs.