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TMI Blog2010 (4) TMI 887X X X X Extracts X X X X X X X X Extracts X X X X ..... me-tax (Appeals) dated September 10, 2001 in respect of the assessment years 1986-87 and 1988-89. The grounds of appeal for both the years are identical and they read as under : "(1) The learned Commissioner of Income-tax (Appeals) has erred in law and on facts in directing to allow the interest under sections 214(1A) and 244(1A). (2) The learned Commissioner of Income-tax (Appeals) has erred in law and on facts in ignoring Explanation 1 to section 214 of the Income-tax Act, 1961, wherein the tax on which interest under section 214 is allowable has been defined. (3) The learned Commissioner of Income-tax (Appeals) has erred in law and on facts in ignoring the Board's instruction issued under F.No. 12/12/68-IT(A-II) dated December 11, 1968 wherein the amount on which interest under section 214 is allowable has been clarified. (4) The learned Commissioner of Income-tax (Appeals) has erred in law and on facts in directing to allow interest under section 244(1A) on the amount of prepaid taxes ignoring the facts that interest under section 244(1A) is payable only on refund of amount paid in pursuance of any order of assessment or penalty. (5) The order of the learned Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer rejected the claim of the assessee relying on the decision of the hon'ble Allahabad High Court in the case of Lala Laxmipat Singhania v. CIT [1977] 110 ITR 289." 3. The learned Commissioner of Income-tax (Appeals) has granted the relief to the assessee following the decision of the Supreme Court in the case of Modi Industries Ltd. v. CIT [1995] 216 ITR 759 . The learned Commissioner of Income-tax (Appeals) has held that the assessee is entitled to receive interest under section 214(1A) on the difference between the advance tax and the tax assessed under section 251 from the first day of the assessment year till the day of passing the regular assessment under section 143(3). In respect of interest under section 244(1A) the learned Commissioner of Income-tax (Appeals) has held that the same should be allowed to the assessee firstly from the date of regular assessment till the date of grant of refund on the amount of prepaid tax found in excess of the tax assessed under section 251 and further interest from the date of payment of regular tax Rs. 11,30,671 till the date of grant of fund in respect of the assessment year 1986-87 and similar directions were given for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 214 is payable from the first day of April of the relevant assessment year to the date of the first assessment order. The amount on which the interest is to be paid is the amount of advance tax paid in excess of the tax payable by the assessee as calculated in the regular assessment (the first assessment order). The amount on which interest was payable did not vary due to reduction or enhancement of tax as a result of any subsequent proceeding. But with effect from April 1, 1985, while the period for which interest was payable remained constant, the amount on which the interest was payable, varied with the variation in the quantum of refund as a result of any subsequent orders. ( ii ) If any tax paid pursuant to an assessment order after March 31, 1975 (which will include tax deducted at source and advance tax to the extent the same has been retained and treated by the Income-tax Officer as payment of tax in discharge of the assessee's tax liability in the assessment order), becomes refundable wholly or in part as a result of any appellate or other order passed, the Central Government will have to pay the assessee interest on the refundable amount under section 244(1A). F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... extent that the assessee became entitled to claim a refund of a part of the advance tax paid by him. The assessee made a claim that the interest on the excess amount of advance tax be paid to him but the Income-tax Officer turned down its claim under section 214 as well as under section 244(1A) of the Act. The hon'ble High Court allowed the appeal in favour of the assessee both under section 214 and section 244(1A) following the judgment of the apex court in Modi Industries Ltd. v. CIT [1995] 216 ITR 759 . CIT v. Motor Industries Co. (No. 1) [1998] 219 ITR 126 (Kar.) Facts During the previous year ending on December 31, 1982, pertaining to the assessment year 1983-84, the assessee had paid advance tax to the tune of Rs. 9,07,19,323. There was also deduction of tax at source to the extent of Rs. 44,427. The original assessment for the period was completed under section 143(3) of the Act on February 25, 1985. The tax assessed was at Rs. 9,16,05,911. Thus, as per the original assessment order, the petitioner was required to pay an additional amount by way of tax to the extent of Rs. 8,42,161. Issue Whether, the Tribunal was right in holding that the assessee was ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 244(1A). It is important to note that the assessment year involved in that case was the assessment year 1977-78 which is prior to the aforementioned amendment but still their Lordships of the hon'ble Punjab and Haryana High Court have held that such interest was payable to the assessee. It is equally important to note that while granting the relief to the assessee their Lordships of the hon'ble Punjab and Haryana High Court have referred to the decision of the hon'ble Supreme Court in the case of Sandvik Asia Ltd. v. CIT [2006] 280 ITR 643 , wherein their Lordships of the hon'ble Supreme Court have observed that even that (headnote of 280 ITR) "even assuming that there is no provision for payment of compensation, compensation for delay is required to be paid as the Act itself recognises in principle the liability of the Department to pay interest when excess tax was retained and the same principle should be extended to cases where interest was retained". 11. In the case of Motor Industries Co. ( supra ) the hon'ble Karnataka High Court has also expressed a similar view when the said case was relating to the assessment year 1983-84 and the assessee was required to ..... X X X X Extracts X X X X X X X X Extracts X X X X
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