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TMI Blog1990 (8) TMI 197X X X X Extracts X X X X X X X X Extracts X X X X ..... r 1975-76. The assessee was granted a refund of Rs. 7,17,724, which included an amount of Rs. 1,70,130 on account of interest paid under sections 215 and 216. The assessee then moved an application under sec. 154 to the assessing officer seeking the payment of interest admissible under sec. 244(1A) of the Act. The assessing officer vide order dated 18-12-1980 allowed interest amounting to Rs. 1,00,113, which was calculated only on the amount of income-tax refunded. The assessee again moved an application dated12-1-1981under sec. 154 claiming interest on the sum of Rs. 1,70,130 that had been paid as interest under sections 215 and 216 of the Act. This application was rejected by the assessing officer vide order dated29-1-1981as, according to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n (1) is due to the assessee, as a result of any amount having been paid by him after the 31st day of March, 1975, in pursuance of any order of assessment or penalty and such amount or any part thereof having been found in appeal or other proceeding under this Act to be in excess of the amount which such assessee is liable to pay as tax or penalty, as the case may be, under this Act, the Central Government shall pay to such assessee simple interest at the rate specified in sub-sec. (1) on the amount so found to be in excess from the date on which such amount was paid to the date on which the refund is granted. " The learned counsel contended that interest under sec. 244(1A) is admissible on the amount which is found in excess over the tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... thdraw such interest. 5. On the other hand, the learned Departmental Representative contended that by referring to tax or penalty in sec. 244(1A) the Legislature has clearly indicated that interest under this section was admissible only on the excess of tax or penalty and not on any excess of interest paid by the assessee under sec. 215 or 216 or any other section of the Act. It was contended that the Legislature had in mind the difference between the nature of various payments under the Act, i.e., tax, penalty, interest and fine and, therefore, when the Legislature has used the words 'tax' or 'penalty' in sec. 244(1A) the words have to be deemed to have been used in their correct and strict sense and they cannot be given a wider meaning. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Wanchoo Committee, sec. 244(1A) was introduced w.e.f. 1-10-1975 to grant interest in respect of payments made after 31-3-1975 from the date of payment to the date of refund. Sec. 244(1A) is therefore, an enlargement of sec. 244(1) and it is unthinkable that while under sec. 244(1) interest was payable on the entire amount of refund, under sec. 244(1A) interest was payable only on that portion of the refund that represented income-tax and penalty. The use of the words "found .... to be in excess of the amount which such assessee is liable to pay as tax or penalty" does create some prima facie difficulty in interpretation to support the view taken by the assessing officer, but as soon as we set out to analyse the provisions of sec. 244(1A) c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er and above the amount of income-tax and penalty ultimately found due, would be eligible for grant of interest. This, in our view, is not correct. Had this been the intention of the Legislature the words "tax or penalty" would have been used in the initial portion of sec. 244(1A) which would have read as under : " (1A) where the whole or any part of the refund referred to in sub-section (1) is due to the assessee, as a result of any amount having been paid by him after the 31st day of March, 1975 as tax or penalty, in pursuance of any order of assessment or penalty and such amount or any part thereof having been found in appeal or other proceeding under this Act to be in excess of the amount which such assessee is liable to pay as tax or ..... X X X X Extracts X X X X X X X X Extracts X X X X
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