1980 (8) TMI 44 - HC - Income Tax

Summary

Issues:
1. Entitlement to interest on excess tax paid for the assessment year 1943-44.
2. Interpretation of the proviso to sub-s. (7) of s. 66 of the Indian I.T. Act, 1922.
3. Application of legal principles regarding refund of overpaid tax with interest.

Detailed Analysis:
1. The petitioner sought interest on the excess tax paid for the assessment year 1943-44, contending that the Commissioner is legally obligated to order a refund with interest on overpaid tax. The petitioner argued that the Commissioner cannot refuse to pay interest, as it is not permissible under the law. The respondent, however, maintained that no interest was payable as there was no reference made to the High Court for the specific assessment year in question.

2. The proviso to sub-s. (7) of s. 66 of the Indian I.T. Act, 1922, was central to the dispute. The petitioner's counsel argued that the proviso does not mandate a reference to the High Court for the same year but entitles the taxpayer to interest on overpaid tax when the assessment amount is reduced as a result of any reference. The respondent's counsel, on the other hand, relied on the clear provisions of the law to assert that interest is only payable if a reference for that particular assessment year had been made to the High Court.

3. The judgment referred to the decision of the Madras High Court in S.V.P.N. Sithambara Nadar Sons v. CIT [1968] 67 ITR 45, which emphasized that the provisions of s. 66(7) and its proviso deal with the same assessment subject to a reference. The court highlighted the conditions necessary for the proviso to apply, including the reduction of the tax amount as a result of a reference, payment of tax as per the assessment, and the subsequent refund of the overpaid tax with interest. The court rejected the petitioner's argument that the principle settled by the High Court in one reference should be extended to subsequent years, as it was not permissible under the interpretation of the relevant provisions.

In conclusion, the court dismissed the petition, ruling that the petitioner was not entitled to interest on the overpaid tax for the assessment year 1943-44, as there was no reference made to the High Court for that specific year. The judgment upheld the legal interpretation that interest on overpaid tax is only payable when a reference for the particular assessment year has been made, as per the provisions of the Indian I.T. Act, 1922.