1971 (2) TMI 23 - HC - Income Tax

Estate Duty Act, 1953 - interest on amount paid in excess when the assessment is reduced on reference to HC - Assistant Controller of Estate Duty holding that petitioner is not entitled to interest as there is not provision for payment of interest in the Estate Duty Act prior to its amendment in 1958, which came into force with effect from July 1, 1960 - held that order of Assistant Controller was not justified

Summary

Issues:
- Entitlement to interest under sub-section (7) of section 64 of the Estate Duty Act prior to its amendment in 1958.
- Application of sub-section (7) of section 64 to assessment proceedings initiated before July 1, 1960.

Analysis:
The judgment pertains to a writ petition challenging the Assistant Controller of Estate Duty's order denying the petitioner's claim for interest under sub-section (7) of section 64 of the Estate Duty Act. The petitioner's father passed away in 1955, leaving behind joint family properties. Initially, the Assistant Controller assessed the estate duty based on the assumption that the properties were the deceased's separate and self-acquired properties. However, a subsequent reference to the High Court established that the properties were ancestral, leading to a reduced assessment. The petitioner sought interest on the overpaid amount following the High Court's decision.

The petitioner argued that sub-section (7) of section 64, introduced in 1958 and effective from July 1, 1960, mandates the refund of overpaid amounts with interest upon a reduction in assessment by the High Court. The respondent contended that the provision is not retrospective and does not apply to assessments initiated before July 1, 1960. The court examined the language of sub-section (7) and emphasized that it does not restrict its application based on the initiation date of assessment proceedings. The court held that once a reference to the High Court results in a reduced assessment, the Controller must refund the overpaid amount with interest at his discretion. The court cited precedent to support the view that beneficial provisions introduced during pending proceedings must be given effect.

Consequently, the court found the Assistant Controller's denial of interest erroneous and directed the respondent to pay interest on the overpaid amount as deemed reasonable. A writ of mandamus was issued in favor of the petitioner, allowing the writ petition with costs. The judgment underscores the mandatory nature of interest refund under sub-section (7) of section 64 and rejects the argument that the provision's application is limited to assessments initiated post its enactment.