1991 (12) TMI 108 - AT - Income Tax

Summary

Issues Involved:
1. Entitlement to interest on excess advance tax payments under Section 214.
2. Entitlement to interest on delayed refunds under Section 243.
3. Entitlement to interest on refunds under Section 244.
4. Calculation and verification of interest due.

Detailed Analysis:

1. Entitlement to Interest on Excess Advance Tax Payments under Section 214:
The assessee, a Hindu undivided family, claimed interest on excess advance tax payments for the assessment years 1969-70, 1970-71, and 1971-72. The Income-tax Officer rejected these claims, stating that the payments were not made in accordance with Section 211 and were therefore not eligible for interest under Section 214. The Tribunal, however, noted that Section 214 provides for interest on excess advance tax paid during the financial year, even if not paid on the due dates, as long as it was paid before the end of the financial year. The Tribunal referenced several High Court decisions supporting this interpretation and concluded that the assessee was entitled to interest on the excess advance tax payments from the dates they were paid to the dates of regular assessments.

2. Entitlement to Interest on Delayed Refunds under Section 243:
The assessee also claimed interest under Section 243 for the delayed refunds. The Tribunal noted that Section 243 provides for interest on delayed refunds from the date immediately following the expiry of three months from the date the refund became due. However, the Tribunal clarified that Section 243 applies to refunds of tax and not to interest on tax. Therefore, the assessee was not entitled to interest under Section 243 on the interest due under Section 214.

3. Entitlement to Interest on Refunds under Section 244:
The assessee claimed interest under Section 244 on the interest due under Section 214. The Tribunal held that Section 244 provides for interest on refunds due as a result of any order passed in appeal or other proceedings under the Act, including assessments. The Tribunal concluded that the aggregate amount of the refund plus the interest due under Section 214 becomes a refund due to the assessee under Section 240. If this aggregate amount is not refunded within the stipulated period, the Central Government is obligated to pay interest under Section 244. Therefore, the assessee was entitled to interest under Section 244 on the interest due under Section 214 and on the refunds due as a consequence of assessments made.

4. Calculation and Verification of Interest Due:
The Tribunal directed the Income-tax Officer to verify the dates of payments and calculate the interest due to the assessee for all relevant years. The Tribunal emphasized that the long periods during which the refunds remained unpaid should be verified for their correctness for the purpose of calculating interest. The Tribunal criticized the Department's attitude in keeping the refunds unadjusted, stating that it was not in the public interest.

Conclusion:
The Tribunal allowed the appeals, directing the Income-tax Officer to calculate and grant the interest due to the assessee under Sections 214 and 244, while denying interest under Section 243. The Tribunal emphasized the need for timely adjustment of refunds and criticized the Department's delay in processing the refunds.