1992 (8) TMI 105 - AT - Income Tax

Summary

Issues: Appeals by the assessee regarding interest under s. 214 of the IT Act for excess advance tax refund and Department's appeals against CIT(A)'s order directing interest under s. 244(1A) from the date of advance tax adjustment to refund payment.

Analysis:

1. Assessee's Appeals - Interest under s. 214 of the IT Act:
The assessee contended that the CIT(A) erred in not granting interest under s. 214 for the excess advance tax refund due to an order under s. 155(1) of the IT Act. The ITAT referred to a Bombay High Court case where it was held that interest is admissible on the amount refundable due to an order of rectification until the date of regular assessment, based on a circular by CBDT. Despite the difference in legal positions, the Court emphasized that the circular would bind the Field Officer, and interest should be allowed on the excess advance tax refunded by the order under s. 155(1). The ITAT found the assessee's claim well-founded and directed the ITO to grant interest accordingly.

2. Department's Appeals - Interest under s. 244(1A) on Advance Tax:
The Department appealed against the CIT(A)'s order directing interest under s. 244(1A) from the date of advance tax adjustment to the refund payment. The ITAT analyzed whether advance tax could be considered a payment made in pursuance of an order of assessment. Referring to relevant sections of the IT Act, the ITAT highlighted the distinction between advance tax and self-assessment tax payments. Despite conflicting judicial decisions, the ITAT held that s. 244(1A) does not apply to advance tax payments as they are not considered payments in pursuance of an assessment order. Citing the statute's requirement to treat advance tax as payment towards the income of the previous year, the ITAT reversed the CIT(A)'s decision and held that the relief under s. 244(1A) was not justified for excess advance tax paid by the assessee.

In conclusion, the ITAT allowed both the appeals by the assessee and the Department, ruling in favor of the assessee regarding interest under s. 214 and against the Department concerning interest under s. 244(1A) on advance tax payments.