1986 (10) TMI 53 - AT - Income Tax

Summary

Issues:
1. Allowability of interest under s. 244 (1A) r/w s. 214 of the Act on payments made under s. 140A and advance-tax payment.
2. Entitlement for interest under s. 244(1A) of the IT Act on advance-tax and s. 140A tax payments.

Analysis:

In the present case, the Revenue raised common grounds challenging the decision of the ld. CIT(A) regarding the grant of interest under s. 244 (1A) r/w s. 214 of the Act on payments made under s. 140A and advance-tax payment. The dispute primarily revolved around the interpretation of the relevant provisions and whether the payments made by the assessee were eligible for interest under the said sections.

For the assessment year 1977-78, the assessee became entitled to a refund, which included advance tax, self-assessment tax under s. 140A, and interest charged under s. 215. The ITO rejected the application for interest under s. 244, stating that it was applicable only to payments made prior to March 31, 1975. The CIT(A) reversed this decision, allowing interest under s. 244 (1A) r/w s. 214 on advance-tax and s. 140A tax payments. The CIT(A) relied on precedents and directed the ITO to grant the interest.

Similarly, for the assessment year 1978-79, a refund was granted to the assessee, and the claim for interest under ss. 244 and 244 (1A) was rejected by the ITO. The CIT(A) allowed the claim based on the same reasoning applied for the previous year, emphasizing that advance tax and tax under s. 140A were entitled to interest under s. 244(1A).

The Revenue challenged the CIT(A)'s decision, arguing that s. 244(1A) did not apply to tax payments in the pre-assessment period, citing a Full Bench decision of the Gujarat High Court. The assessee, on the other hand, supported the CIT(A)'s order, referring to relevant case laws and details supporting the claim for interest under s. 214/244(1A) for both years.

Upon considering the arguments, the Tribunal found that interest under s. 214 and s. 244(1A) were both relevant to the case, despite the absence of specific mention in the previous orders. The Tribunal acknowledged the conflicting decisions of different High Courts but ultimately followed the Gujarat High Court's ruling, which held that s. 244(1A) did not apply to advance tax payments. Consequently, the Tribunal allowed the Revenue's appeals, subject to the direction to grant interest under s. 214 of the Act.

In conclusion, the Tribunal's decision was based on the interpretation of the relevant provisions and the application of precedents, ultimately denying the assessee's claim for interest under s. 244(1A) while directing the ITO to regulate interest under s. 214 in accordance with the judgment.