1989 (9) TMI 140 - AT - Income Tax

Summary

Issues:
1. Interpretation of provisions under sections 140A(1) and 244(1A) of the IT Act.
2. Whether interest is payable on excess payment under section 140A.
3. Refusal to refer a question of law by the Tribunal.

Detailed Analysis:
1. The primary issue in this case revolved around the interpretation of provisions under sections 140A(1) and 244(1A) of the IT Act. The assessee had paid advance tax and additional amounts under section 140A(1) for the assessment year 1976-77. Subsequently, after appealing before the CIT(A) and obtaining relief, a refund was granted to the assessee. The assessee claimed interest under section 244(1A) on the refunded amount. The dispute arose when the ITO granted interest only on a portion of the refunded sum. The CIT(A) directed the ITO to grant interest on a larger amount, but rejected the claim for interest from an earlier date. The Tribunal upheld the CIT(A)'s order, emphasizing that the payment under section 140A should be deemed as payment towards regular assessment post the completion of assessment under sections 143 or 144. Therefore, any excess amount refunded would attract interest as per section 244(1A) of the IT Act.

2. Another issue addressed in the judgment was whether interest is payable on excess payment under section 140A. The Department argued that no interest was payable on excess payment under section 140A as it was not a payment pursuant to an order of assessment. The Department relied on a previous court decision, which had not been accepted by the Department and was under interim stay by the Supreme Court. However, the Tribunal rejected this argument, emphasizing the explicit provisions of section 140A(2) which deem the payment under section 140A as payment towards regular assessment post-assessment completion. Therefore, any excess amount refunded to the assessee would attract interest under section 244(1A) of the IT Act.

3. The final issue pertained to the refusal of the Tribunal to refer a question of law to the High Court as requested by the Revenue. The Revenue sought a reference on the question of law regarding the justification of allowing the assessee's claim for interest under section 244(1A) of the IT Act. However, the Tribunal declined to draw up a statement of the case as it believed that no question of law arose in this matter. The Tribunal's decision to reject the reference application was based on its interpretation of the relevant provisions of the IT Act and the lack of legal ambiguity in the case.

In conclusion, the judgment clarified the interpretation of provisions under sections 140A(1) and 244(1A) of the IT Act, established the liability of interest on excess payments under section 140A, and highlighted the Tribunal's discretion in deciding whether a question of law arises for reference to the High Court.