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Issues Involved:
1. Classification of the petitioner company for tax purposes. 2. Entitlement to interest under section 214 and section 244 of the Income-tax Act, 1961. 3. Definition and scope of "regular assessment" under section 214 of the Income-tax Act, 1961. Summary: 1. Classification of the Petitioner Company: The Income-tax Officer initially assessed the petitioner, a public limited company, for the assessment year 1964-65, treating it as a company in which the public were not substantially interested, resulting in an additional tax demand of Rs. 2,62,239. On appeal, the Appellate Assistant Commissioner reversed this decision, recognizing the petitioner as a company in which the public were substantially interested, fulfilling the conditions laid down u/s 2(18)(b) of the Income-tax Act, 1961. Consequently, the Income-tax Officer revised the assessment and computed a refundable amount of Rs. 4,28,260.40. 2. Entitlement to Interest under Section 214 and Section 244: The Income-tax Officer refused to allow interest on the refundable amount under sections 214 and 244 of the Income-tax Act, 1961. The petitioner applied for revision u/s 264, claiming interest of Rs. 48,280 u/s 244 and Rs. 23,752 u/s 214. The Commissioner allowed the claim for interest u/s 244 but rejected the claim u/s 214, stating that no part of the advance tax became refundable on the basis of the regular assessment made on December 19, 1966, and hence, section 214 was not applicable. 3. Definition and Scope of "Regular Assessment": The core issue was the interpretation of "regular assessment" u/s 214. The court held that "regular assessment" should include assessments made by the Income-tax Officer pursuant to the directions of the Appellate Assistant Commissioner. The court referenced section 2(40) of the Income-tax Act, which defines regular assessment as an assessment made u/s 143 or 144. The court concluded that an order passed by the Income-tax Officer to give effect to the appellate authority's direction is a regular assessment. The court rejected the revenue's reliance on previous cases and sections, emphasizing that the context of section 214 supports a broader interpretation of "regular assessment" to include subsequent assessments following appellate modifications. Judgment: The court set aside the Commissioner's order dated November 7, 1972, which held that the petitioner was not entitled to interest u/s 214, and directed the Commissioner to reconsider the matter in accordance with the law and the court's observations. The rule was made absolute to the extent indicated, with no order as to costs, and the operation of the order was stayed for six weeks.
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