1986 (4) TMI 42 - HC - Income Tax

Summary

Issues:
1. Interpretation of sections 244(1A) and 244(2) of the Income-tax Act, 1961 regarding the grant of interest on a refund.
2. Whether the provisions of section 154 of the Income-tax Act, 1961 can be invoked in a case where the interpretation of the relevant sections is debatable.

Analysis:

Issue 1: Interpretation of sections 244(1A) and 244(2)
The case involved a dispute over the grant of interest on a refund due to the assessee. The Income-tax Officer initially awarded interest under section 244(1A) but later sought to rectify the order, claiming that excess interest had been granted. The Commissioner of Income-tax (Appeals) upheld the decision, stating that interest should be granted under section 244(2) as the refund was withheld under section 241. The Tribunal disagreed, emphasizing that the introduction of a new section like 244(1A) with specific benefits should not be curtailed by existing sections. It held that the case fell under section 244(1A) and that the issue was debatable on whether section 244(2) curtailed the operation of 244(1A) in such cases.

Issue 2: Applicability of section 154 in debatable matters
The Revenue contended that the provisions of section 154 should apply as the correct interpretation was clear, citing precedents where mistakes apparent on the face of the record were rectified. However, the assessee argued that section 154 should not be invoked if there were two possible interpretations. The High Court agreed with the assessee, noting that the matter was debatable and that the Income-tax Officer should not have invoked section 154. Citing relevant case law, the Court emphasized that a mistake apparent on the record must be obvious and patent, which was not the case here, where two plausible interpretations existed.

In conclusion, the High Court declined to answer the first question and ruled in favor of the assessee on the second question. The Court highlighted that the interpretation of the sections was debatable, and it was not within its purview to definitively determine the correct view.