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TMI Blog1972 (9) TMI 25X X X X Extracts X X X X X X X X Extracts X X X X ..... 36,034 as profit in respect of sales of building, plant and machinery as coming within the second proviso to section 10(2)(vii) of the Indian Income-tax Act, 1922 (hereinafter called "the Act"). The said assessment was challenged unsuccessfully before the Appellate Assistant Commissioner. There was an appeal to the Tribunal by the petitioners contending that no part of the profit on the sale of the building, plant and machinery could be assessed to tax under the second proviso to section 10(2)(vii) and that if any portion of the profit is so assessable, it was only Rs. 3,2 3,461. Having failed before the Trbunal on both the grounds, there was a reference to this court at the instance of the petitioners. This court on reference held by its judgment dated December 7, 1960, in T. C. No. 74 of 1959 that the petitioners were not liable to be assessed on the profit on the sale of building, plant and machinery under the second proviso to section 10(2)(vii). Consequent on the said decision of this court, the Tribunal passed the consequential order on May 30, 1961, under section 66(5) holding that the total income assessable for the assessment year 1956-57 was "nil" and directing the refund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of various payments of tax till May 29, 1961, on the said amount of Rs. 2,04,160 which has been refunded to the petitioners. According to the petitioners they are statutorily entitled to the refund of the amounts overpaid with such rate of interest as the Commissioner may allow and the Commissioner was in error in allowing interest only from the date of the follow-up order of the Tribunal under section 66(5) and disallowing interest from the date of over-payment. It is the contention of the petitioners that the discretion given to the Commissioner under the proviso to section 66(7) is only as regards the rate of interest and not as regards the date from which the interest is payable, that interest is payable under the proviso from the date of the over-payment and not from the date of the consequential order of the Tribunal passed under section 66(5) and that the view of the respondent that interest is payable only from the date of the consequential order of the Tribunal is quite arbitrary. The revenue, on the other hand, contends that the discretion given to the Commissioner under the proviso to section 66(7) extends not only to the rate of interest but also to the fixation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant to extract section 66(7) of the Act and the proviso thereto: Section 66(7): " Notwithstanding that a reference has been made under this section to the High Court, income-tax shall be payable in accordance. with the assessment made in the case : Provided that, if the amount or an assessment is reduced as a result of such reference, the amount over-paid shall be refunded with such interest as the Commissioner may allow unless the High Court, on intimation given by the Commissioner within thirty days of the receipt of the result of such reference that he intends to ask for leave to appeal to the Supreme Court, makes an order authorising the Commissioner to postpone payment of such refund until the disposal of the appeal to the Supreme Court." It is significant that there is considerable departure between the other provisions of the Act relating to refund and this provision, Chapter VII deals with refund of tax paid under various circumstances, Section 48(1) provides that if the amount of tax paid by a person for any year exceeds the amount with which he is properly chargeable under the Act for that year, he shall be entitled to a refund of any such excess. Section 48(2) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nts under section 48 or under the other provisions occurring in Chapter VII. But, if the assessee fails before the Tribunal and takes up the matter to the High Court on reference and succeeds, the assessee will be entitled not only to the refund of the tax paid but also to such interest which the Commissioner may allow on the refunded amount as per the proviso to section 66(7). While as a result of the order of the Tribunal the assessee becomes entitled only to the refund of the amount paid without any interest, he becomes entitled not only to the refund of the amount but also to the interest thereon, if the Tribunal's order has been successfully challenged on a reference to the High Court. We have to, therefore, construe section 66(7) as giving a special privilege to the assessee as a result of the matter being taken to the High Court on reference. In our view the object of the provision in section 66(7) appears to be that where by an erroneous order of the Tribunal in appeal, amounts found legally due to the assessee by the High Court on reference had been withheld by the revenue, such amounts are to be refunded with interest. It is in this background the question whether interes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... main sub-section which says that income-tax shall be payable in accordance with the assessment made in the case, notwithstanding that a reference has been made under that section, clearly supports an inference that the proviso is intended to cover the amounts of tax collected or retained after a reference has been made. Even in this case, if the petitioners had succeeded before, the Tribunal instead of before the High Court, the petitioners will not be entitled to claim interest on the amounts of tax over-paid. This position is conceded by the learned counsel for the petitioners. The fact that the petitioners have succeeded before this court on reference will not entitle them to get interest for the period before the order of the Tribunal which right they would not have, if they have obtained the relief from the Tribunal. As per section 66(5) as soon as the High Court passes an order on reference, the Tribunal should dispose of the case conformably to that order. But that does not mean that the assessee gets a right to refund in pursuance of the consequential order of the Tribunal. The consequential order of the Tribunal under section 66(5) takes the place of the original order it ..... X X X X Extracts X X X X X X X X Extracts X X X X
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