1979 (7) TMI 57 - HC - Income Tax

Excess Profits Tax, Interest On Tax, Orders Passed, Provisional Assessment, Regular Assessment

Summary

Issues:
1. Dispute over excess profits tax assessment for the calendar year ending on December 31, 1942.
2. Refund of excess tax paid by the petitioner.
3. Entitlement to interest on the refunded amount.
4. Interpretation of "regular assessment" under Section 14A(7) of the Act.

Analysis:
1. The petitioner, a public limited company, was assessed under the Excess Profits Tax Act, 1940 for the year ending December 31, 1942. Initially, a provisional assessment demanded a tax of Rs. 2,20,000, which was later reduced to Rs. 1,08,579 after appeal proceedings.

2. The petitioner appealed the final assessment order, leading to a refund of the excess amount paid. The petitioner then sought interest on the refunded sum, as per Section 14A(7) of the Act, which provides for interest on excess tax paid. The petitioner's request for interest was initially partially granted by the 1st respondent, and further directions were given by the 2nd respondent to award full interest.

3. The main contention revolved around the interpretation of "regular assessment" under Section 14A(7) regarding the entitlement to interest. The petitioner argued that interest should be granted on the refunded amount of Rs. 1,08,579, as the term "regular assessment" encompasses all assessments under the Act, including those by appellate authorities. The revenue, on the other hand, claimed that interest was not due as of the final assessment date.

4. The judge, in line with the petitioner's argument, held that "regular assessment" includes assessment orders by appellate authorities. Citing a precedent from the Punjab High Court, the judge emphasized that interest should be calculated from the date of payment to the date of the refund order, irrespective of the assessing authority. The judge deemed the denial of interest on the refunded amount as illegal and ruled in favor of the petitioner, directing the respondents to pay the interest along with costs within a specified timeframe.