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TMI Blog2005 (2) TMI 792X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.. In respect of the assessment year 1996-97, the petitioner submitted its return of turnover claiming an amount of Rs. 4,40,965 as excess tax paid and, therefore, refundable to the petitioner under the provisions of the Act. The petitioner, on August 18, 1999, filed a refund application claiming the aforesaid amount of Rs. 4,40,905. Thereafter, the assessment for the said year 1996-97 was completed by the assessing authority on March 23, 2000 determining a sum of Rs. 4,45,985 as excess tax paid by the petitioner during the aforesaid assessment year. It may be noticed at this stage that the assessment made for the years 1995-96 and 1996-97 have become final. It must also be noticed herein that in the refund applications filed by the petitioner, the petitioner had prayed for adjustment of the excess tax paid against the liabilities for the subsequent assessment years. 4.. For the assessment year 1997-98, the petitioner submitted its return and the same was assessed by the assessing officer on September 7, 2000 holding an amount of Rs. 1,78,789 as payable on account of tax and a further amount of Rs. 1,23,360 as payable on account of interest. Simultaneously, a notice of demand f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... indefinitely because the officer vested with the power to grant refund may choose not to so act for no conceivable reason. Arguing further, learned counsel has pointed out that while refund attracts interest at the rate of 12 per cent payable to the assessee, tax due attracts interest at the rate of 24 per cent payable by the assessee and the net result of a literal interpretation of rule 36(6) may bring about a situation where the assessee will have to be treated to be in default and made liable to pay interest for no fault of the assessee. Dr. Saraf has contended that the provisions of rule 36(6), which provide that refund, even by way of adjustment, can follow only upon the refund being sanctioned, must be interpreted by the court not to apply to refund by way of adjustment and the refund contemplated by rule 36(6) is refund by way of actual payment. Placing reliance on a judgment of the Privy Council in the case of Commissioner of Income-tax v. Mahaliram Ramjidas reported in [1940] 8 ITR 442, Dr. Saraf has contended that rule 36 contains the machinery provisions for payment of refund and such machinery provisions ought to be interpreted in the light of the provisions contained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e claim lodged by the petitioner. As the claim of refund for the assessment year 1995-96 and the finalisation of the assessment for the year 1996-97 was prior to the date of impugned demand notice, the submission advanced is that once the refund claim of the petitioner is sanctioned, the same will necessarily relate to an anterior date in which event no question of default or liability to pay interest can arise in so far as the petitioner is concerned. 7.. Opposing the submissions advanced on behalf of the petitioner, Shri K.N. Chaudhury, learned Additional Advocate-General, Assam, has submitted that in view of the clear and express language appearing in rule 36(6) of the Rules and there being no challenge to the validity of the said provisions of the Rules, there will be no occasion for this Court to embark upon a judicial interpretation of rule 36 to reconcile any inconsistency, as pointed out on behalf of the writ petitioner, with regard to the meaning of the rules with a view to restricting or limiting the operation and effect of the rules. The learned Additional Advocate-General has further argued that the entitlement of an assessee to refund of excess tax paid for a partic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Court was considering the question as to whether in a situation where under section 16(3) of the Income-tax Act, 1922, the profit or loss from the business of a wife or minor child included in the total income of an assessee should be treated as the profit or loss from a business carried on by him for the purpose of carrying forward and set-off of such loss under section 24(2) of the Act. While answering the aforesaid question, which answer is happened to be in affirmative, the apex Court taking into account the illustration of possible inequity and injustice that may result, as set out in paragraph 40 of the judgment, had held that though normally equity and taxation are strangers, an attempt should be made to ensure that they do not remain so and if an interpretation would bring in equity rather than injustice the same should be preferred. The observation of the apex Court with regard to equity and taxation must, therefore, be necessarily understood in the context of the specific problem arising before the apex Court and not to be laying down a law of general application. In the State of Tamil Nadu v. Kodaikanal Motor Union (P.) Ltd. [1986] 62 STC 272; (1986) 3 SCC 91, the apex C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etitioner. Moreover, in a situation where a refund claim is unjustly kept pending and an assessee entertains a grievance notwithstanding that the refund due will carry interest at the stipulated rate, such an assessee is not without a remedy. It will always be open to an assessee to knock the doors of the court against any action of arbitrary dealing or inaction on the part of the authority. The possible prejudice that may be caused to the assessee on being held to be a defaulter in a situation where money on account of refund was all along due to the assessee and further being made liable to pay interest at a rate higher than what is allowable to the assessee on account of delayed payment of refund is again a situation that the courts are not entirely powerless to deal with, an aspect, that this order will presently analyse and deal with while answering the alternative argument raised. There are inbuilt safety devices inherent in the judicial process to take care of such assumed situations. This Court is, therefore, left with the impression that in the present case, there is no scope to interpret rule 36(6) in any other manner than what has been expressly manifested. In the abs ..... X X X X Extracts X X X X X X X X Extracts X X X X
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