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TMI Blog2004 (7) TMI 87X X X X Extracts X X X X X X X X Extracts X X X X ..... ng that the amount received by the assessee as interest under section 214 of the Act is of income nature and assessable in the year in which the right to the income has accrued - We are of the view that it would be better to introduce a provision empowering the officer to suitably amend the order of assessment in case the assessee is required to pay back the refund amount within a specific period from the date of repayment of excess interest refunded by the assessee which will obviate the difficulty faced by the assessee and which will bring in fairness in the administration of tax law. X X X X Extracts X X X X X X X X Extracts X X X X ..... inion arose between the two learned members of the Appellate Tribunal who heard the appeal as the learned Accountant Member of the Appellate Tribunal held that the interest received by the assessee under section 214 of the Act was income in nature as it accrued in the previous year relevant to the assessment year 1985-86 and it was rightly assessed for the assessment year 1985-86, whereas the learned Judicial Member took a different view and held that though interest received under section 214 of the Act was income in nature, the question whether it is liable to be taxed in the year 1985-86 would depend upon the final outcome of the appeal filed against the order of assessment for the assessment year 1981-82 and hence, he remanded the matte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the file of the Appellate Tribunal on the date when the refund was granted, and therefore the interest was not income in the hands of the assessee till finality was reached in respect of the assessment for the assessment year 1981-82 as the question whether there was any payment of excess advance tax would depend upon the final outcome of the assessment which attained finality only in the year 1995-96. He therefore submitted that the interest received by the assessee was not income in nature on the date when it was granted and received as the assessment proceedings for the assessment year 1981-82 had not reached finality. Mr. Nareshkumar, learned junior standing counsel for the Department, on the other hand, submitted that the interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd it is taxable in the year in which it was granted. Following the decisions of this court, the Patna High Court and the Karnataka High Court, we hold that the interest granted under section 214 of the Act by the Central Government on the excess amount of advance tax paid by the assessee is liable to be taxed as income of the assessee as it is a revenue receipt and it is neither a capital receipt, nor a casual receipt. We hold that the Appellate Tribunal was correct in holding that the receipt of interest is of income nature. The next question that arises for consideration is in which year the interest is liable to be taxed. We are of the view that though the interest was paid with reference to the excess advance tax paid during the previ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed upon the decision of the Supreme Court in K.C.P. Ltd. v. CIT [2000] 245 ITR 421. We have carefully considered the submissions of Mr. P.P.S. Janarthana Raja, learned counsel for the assessee. We are of the view that the decision of the Supreme Court in K.C.P. Ltd.'s case [2000] 245 ITR 421 really supports the case of the Revenue. The interest granted on the excess advance tax paid by the assessee was received by the assessee without any condition attached to it to refund the same, nor there was a liability to refund the same. Though the assessment proceedings for the year 1981-82 was the subject matter of appeal, the amount of interest was quantified and was granted and also was received by the assessee, and it is a pure revenue receipt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty, the Legislature should step in and make a suitable provision in the Income-tax Act providing for reduction of the amount of income in the year of receipt so that there may not be any difficulty in the administration of tax law and the assessee is also not required to pay more tax than that is due by him. We find that the Legislature has made a provision in section 41(2) of the Act in the case of transfer of capital assets to recapture the depreciation granted on the transfer of assets and on the same analogy, we are of the view that it would be better to introduce a provision empowering the officer to suitably amend the order of assessment in case the assessee is required to pay back the refund amount within a specific period from the d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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