1986 (2) TMI 140 - AT - Income Tax

Summary

Issues Involved:
1. Delay in filing the appeal.
2. Entitlement to interest under Section 214 of the Income-tax Act, 1961, on the refund of excess tax paid.
3. Maintainability of the additional ground regarding non-granting of interest under Section 214.

Detailed Analysis:

1. Delay in Filing the Appeal:
The appeal filed by the revenue was marked as time-barred by one day. The delay occurred in transit by post, as the papers were sent by the Income Tax Officer (ITO) via registered post, acknowledgment due, on 25-1-1985, but were received by the Tribunal on 29-1-1985. The Tribunal was satisfied with the revenue's explanation for the delay and condoned it, allowing the appeal to proceed.

2. Entitlement to Interest under Section 214:
The appeal arose from the income-tax assessment of Sitalakshmi Ginning Factory for the assessment year 1980-81. The main objection was the Commissioner's direction to the ITO to grant interest under Section 214 on the refund of Rs. 22,568, which the ITO had described as "tax paid otherwise" instead of advance tax under Section 209A. The Commissioner (Appeals) found that the assessee had paid advance tax in three installments totaling Rs. 85,000, although using the incorrect form (Form No. 29 instead of Form No. 28A). The Commissioner (Appeals) held that the actual payment should be regarded as advance tax payment, citing the Tribunal's decision in ITO v. Balasubramania Mills Ltd. and the Madras High Court's decision in Addl. CIT v. Chitra Sagar. The Tribunal agreed with the Commissioner (Appeals), noting that the revenue did not dispute the facts or the applicability of the cited decisions, including the latest Madras High Court decision in CIT v. T.T. Investments & Trades (P.) Ltd. The Tribunal upheld the Commissioner (Appeals)'s direction to grant interest under Section 214.

3. Maintainability of the Additional Ground:
The revenue raised an objection regarding the maintainability of the additional ground filed by the assessee before the Commissioner (Appeals) concerning the non-granting of interest under Section 214. The revenue argued that no appeal would lie against an order disallowing interest under Section 214, citing the Special Bench decision in ITO v. India Tyre & Rubber Co. (I) (P.) Ltd. The assessee's counsel countered by citing the Madras High Court's decision in Rajyam Pictures v. Addl. CIT, which held that while no appeal lies against the imposition of interest alone, it can be challenged in an appeal against the assessment. The Tribunal reviewed the Special Bench decision and the Madras High Court's decisions, including CIT v. City Palayacot Co. and Triplicane Urban Co-operative Society Ltd. The Tribunal concluded that the additional ground was maintainable and rightly entertained by the Commissioner (Appeals), as the assessee had filed an appeal against the assessment order, which included the non-granting of interest under Section 214.

Conclusion:
The Tribunal dismissed the revenue's appeal, upholding the Commissioner (Appeals)'s direction to grant interest under Section 214 and affirming the maintainability of the additional ground raised by the assessee. The Tribunal's decision was based on the consistent application of relevant legal precedents and the specific facts of the case.