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Issues Involved:
1. Meaning of the term "regular assessment" under Section 14A(7) of the Excess Profits Tax Act, 1940. 2. Entitlement to interest on the refunded excess tax amount under Section 14A(7). Issue 1: Meaning of "Regular Assessment" under Section 14A(7) The core issue in this appeal is the interpretation of "regular assessment" as used in Section 14A(7) of the Excess Profits Tax Act, 1940. The appellants argue that "regular assessment" refers exclusively to the initial assessment order passed under Section 14, whereas the respondents contend that it includes any subsequent assessment orders passed pursuant to appellate directions. The court analyzed the language of Section 14A(7), which provides for interest on excess tax paid under provisional assessment when the regular assessment determines a lesser tax liability. The term "regular assessment" is not explicitly defined in the Act, but Section 14A(1) indicates it refers to assessments under Section 14. The court found no textual basis to limit "regular assessment" to the initial assessment order, especially when subsequent orders are made following appellate directions. The court emphasized that the legislative intent behind Section 14A(7) is to ensure fairness by compensating the assessee with interest on excess tax collected provisionally. Therefore, the term "regular assessment" should include any assessment order passed under Section 14, whether initial or subsequent, following appellate directions. Issue 2: Entitlement to Interest on Refunded Excess Tax Amount The respondents sought interest on Rs. 1,08,579, refunded following an appellate order, arguing that it should be treated as part of the "regular assessment" under Section 14A(7). The appellants contended that interest was only due on the amount initially refunded (Rs. 1,11,421) under the first assessment order. The court noted that Section 14A(7) specifies interest calculation from the date of excess tax payment to the date of the refund order. Given that the Act allows for multiple refund orders, the court concluded that each refund order, whether initial or subsequent, should be treated as arising from a "regular assessment" under Section 14. This interpretation aligns with the legislative intent to provide interest on any excess tax collected provisionally, ensuring fairness to the assessee. The court supported this view by referencing the Punjab High Court's decision in CIT v. R. B. Jodhamal Kuthiala, which interpreted "regular assessment" to include the last assessment made under Section 14, as it is only then that an order for refund can be made. Although the facts differed slightly, the principle that interest is due on excess tax up to the date of the refund order was upheld. The court also distinguished the case from the Full Bench decision in CIT v. Carona Sahu Co. Ltd., which interpreted "regular assessment" in the context of the Income-tax Act, 1961, and found it inapplicable due to differences in statutory schemes and provisions for interest calculation. Conclusion The court concluded that the term "regular assessment" under Section 14A(7) includes any assessment order passed under Section 14, whether initial or subsequent. Consequently, the respondents were entitled to interest on the refunded amount of Rs. 1,08,579 from the date of provisional tax payment to the date of the refund order. The appeal was dismissed with costs, upholding the trial judge's decision.
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