9911796707
TMI Blog2003 (2) TMI 23X X X X Extracts X X X X X X X X Extracts X X X X ..... is dismissed - - - - - Dated:- 5-2-2003 - Judge(s) : S. S. SARON. JUDGMENT S. S. SARON J. - The present petition has been filed by the petitioner-Punjab State Warehousing Corporation ("Corporation" for short) for quashing the orders passed by the Commissioner of Income-tax, Patiala (respondent No.1) and the Income-tax Officer, Companies-cum-Special Circle, Chandigarh (respondent No.2), declining to allow interest on the amount retained by the respondents as advance tax on various dates during the accounting period relevant to the assessment year 1973-74 till the date of its refund on December 20, 1978. The petitioner-corporation is a statutory corporation incorporated under the Warehousing Corporations Act, 1962. It earns income primarily from maintaining and letting of godowns or warehouses for storage, processing or facilitating the marketing of agricultural commodities. It is claimed that in terms of section 10(29) of the Income-tax Act, 1961 (hereinafter referred as "the Act"), in the case of an authority constituted under any law for the marketing of commodities, any income derived from the letting of godowns or warehouses, for storage, processing or facilitating the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order on the short ground that the Income-tax Officer had not complied with the provisions of section 144B of the Act. The Income-tax Officer was directed to proceed in accordance with law after complying with the provisions of section 144B of the Act. It was stated that it was thus clear that the original assessment dated January 30, 1976, was thus wholly non-est. The Income-tax Officer, however, on March 22, 1976, reiterated his previous computation of income by ignoring the provisions of section 10(29) of the Act and raised a demand of Rs. 13,77,435. The petitioner-corporation again went in appeal challenging the legality and validity of the assessment, which was accepted by the Appellate Assistant Commissioner, Ambala Range, Ambala, vide her order dated May 10, 1978 (annexure P-2). It is in compliance of the said order that the Income-tax Officer, Circle Office, Chandigarh (respondent No.2), passed an assessment on November 23, 1978 (annexure P-3), which is said to be in accordance with the return of the petitioner, i.e., return filed for a sum of Rs. 2,14,053. There was, however, a minor addition of Rs. 2,085. The petitioner-corporation now claims that it is entitled to intere ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessment order against the assessee-petitioner. It is admitted that the revision petition was filed by the assessee-petitioner which it is stated has been rightly dismissed by the Commissioner of Income-tax (respondent No.1). Consequently, it is prayed that the writ petition be dismissed. I have heard learned counsel for the parties and with their assistance gone through the records of the case. Sri B. K. Jhingan, learned counsel for the petitioner-corporation, has contended that the corporation is entitled to the sum of Rs. 7,94,012 by way of interest on the refund amount of Rs. 12,52,556. It is contended that this refund was received by the petitioner-corporation on December 21, 1978. The petitioner-corporation deposited advance tax of Rs. 1,10,995 on September 8,1972, and this was the tax finally charged. Then on December 14, 1972, advance tax amounting to Rs. 1,10,995 was deposited on which tax charged was Rs. 13,884 and a refund of Rs. 97,111 was made by the respondents on December 21, 1978. On March 13, 1973, the advance tax deposited by the petitioner-corporation was Rs. 9,67,683 and this amount was refunded on December 21, 1978. The amounts as stated were deposited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... paid during any financial year in which they are payable under sections 207 to 213 exceeds the amount of the tax determined on regular assessment, from the 1st day of April next following the said financial year to the date of the regular assessment for the assessment year immediately following the said financial year, and where any such instalment is paid after the expiry of the financial year, during which it is payable by reason of the provisions of section 213, interest as aforesaid shall also be payable on that instalment from the date of its payment to the date of the regular assessment: Provided that in respect of any amount refunded on a provisional assessment under section 141A, no interest shall be paid for any period after the date of such provisional assessment. (1A) Where on completion of the regular assessment the amount on which interest was paid under sub-section (1) has been reduced, the interest shall be reduced accordingly and the excess, if any, paid shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly. (2) On any portion of such amount which is refunded under this Chapter, interest shall be payable only ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd is withheld under the provisions of section 241, the Central Government shall pay interest at the aforesaid rate on the amount of refund ultimately determined to be due as a result of the appeal or further proceeding for the period commencing after the expiry of three months from the end of the month in which the order referred to in section 241 is passed to the date the refund is granted." The case of learned counsel for the petitioner in the first instance is that the petitioner-corporation is entitled to interest on the refund of the amount as claimed in accordance with the provisions of section 214(2) read with section 219 of the Act. Section 214(1) provides that the Central Government is to pay simple interest at 12 per cent. per annum on the amount by which the aggregate sum of any instalments of advance tax paid during any financial year in which they are payable under sections 207 to 213 exceeds the amount of tax determined on regular assessment, from the first day of April next following the said financial year to the date of the regular assessment for the assessment year immediately following the said financial year, and where any such instalment is paid after the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cause the liability to pay advance tax has been imposed by sections 207 and 208 and is calculated on the basis of the income computed in the latest previous assessment and adjusted in the manner laid down in section 209. This is not the same thing as the charge of income-tax imposed by section 4 on the total income of the previous year which has to be computed in the manner laid down in Chapter XIV of the Act. The purpose of collection of advance tax is stated in section 199 which declares that the amount of advance tax paid by the assessee is to be treated as payment of income-tax which is levied by section 4 on the total income of the previous year. The Income-tax Officer will have to determine the amount of income-tax payable by the assessee in the assessment order. At that stage, he has to treat the amount of advance tax paid by the assessee as payment of income-tax in respect of the income of the relevant assessment period. In other words, by legal fiction, the amount of advance tax paid by or recovered from the assessee is treated as payment of income-tax in respect of income of the period 'which would be the previous year for an assessment for the assessment year next follow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uant to an order of assessment" In so far as the applicability of section 214 is concerned the same has been held that the interest payable thereunder on any excess amount standing to the credit of assessee is limited to the date of the order of assessment and not to the date of the refund. Besides, if the liability is reduced in appeal, refund will be ordered of the amount of income-tax which was paid in excess of the reduced amount. However, interest under section 214 is payable only up to the date when the amount of advance tax is treated as payment of income-tax and is set off against the income-tax demand raised in the assessment order. In terms of section 214 interest payable on an excess amount standing to the credit of the assessee is limited to the date of the order of assessment and not to the date of refund. Besides, if the liability is reduced interest under section 214 is payable only up to the date when the amount of advance tax is treated as payment of income-tax and is set off against the income-tax demand raised, in the assessment order and the interest on the delayed payment is to be paid under section 243. The Commissioner of Income-tax following a decision of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rest on securities or dividends, within three months from the end of the month in which the total income is determined under this Act, and (b) in any other case, within three months from the end of the month in which the claim for refund is made under this Chapter, the Central Government shall pay the assessee simple interest at 12 per cent. per annum on the amount directed to be refunded from the date immediately following the expiry of the period of three months aforesaid to the date of the order granting the refund. Explanation. - If the delay in granting the refund within the period of three months aforesaid is attributable to the assessee, whether wholly or in part, the period of the delay attributable to him shall be excluded from the period for which interest is payable." The position, therefore, that emerges is that the petitioner-corporation is not entitled to interest under section 219 as it only provides that advance tax paid under Chapter XVII is to be treated as payment of tax in respect of the income of the period which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable. In the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ount and interest under section 214 of the Act is payable only up to the date when the amount of advance tax is treated as payment of income-tax and is set off against the income-tax demand raised in the assessment order. Therefore, in terms of the assessment order dated January 30, 1976, the advance tax was adjusted. It is in consequence of the appellate decision that the Income-tax Officer (respondent No.2) passed an assessment order dated November 23, 1978 (annexure P3), which created the refund and the refund was paid on December 21, 1978. Learned counsel for the petitioner contends that even if in terms of section 214 of the Act, the petitioner-corporation is not entitled to the relief claimed, the same can be granted in terms of section 244(1A) of the Act as in the instant case the assessment orders were passed after March 31, 1975, and sub-section (1A) to section 244 was inserted by the Taxation Laws (Amendment) Act, 1975, with effect from October 1, 1975. In support of his contention learned counsel for the petitioner-corporation relies upon the judgment in the case of CIT v. Udhoji Shrikishandas [1996] 222 ITR 736, in which a Division Bench of the Madhya Pradesh High Cou ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny amount having been paid by him after the March 31, 1975, in pursuance of any order of assessment or penalty." Therefore, the refund as a result of any amount having been paid by the assessee after March 31, 1975, is to be in pursuance of any order of assessment. In the case in hand, as already noticed, the petitioner-corporation made payment of advance tax amounting to Rs. 1,10,995 on September 8, 1972 ; amounting to Rs. 1,10,995 on December 14, 1972, and amounting to Rs. 9,67,683 on March 13, 1973, for the assessment year 1972-73. A refund of Rs. 97,111 out of the sum of Rs. 1,10,995 deposited on December 14, 1972, and the entire sum of Rs. 9,67,683 deposited on March 13, 1973, was made on December 21, 1978. Therefore, these amounts which have been deposited before March 31, 1975, interest on the refunded amount cannot be claimed in terms of section 244(1A) of the Act. In so far as the amount of Rs. 1,87,762 deposited on March 10, 1976, is concerned (i.e., after March 31, 1975) it may be noticed that the same was deposited in terms of the assessment order dated January 30, 1976, whereby a demand of Rs. 13,77,435 was raised by the Income-tax Officer. The petitioner-corporati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been given in the assessment order, the amount loses its character of advance tax and becomes income-tax paid in respect of the income of the relevant previous year. Therefore, on this account the petitioner-corporation is not entitled to any interest on the refunded amount. The first regular assessment for the purposes of section 214(1) in respect of the petitioner-corporation was framed on January 3D, 1976, and the assessee was not held entitled to any refund. It is on account of the decision of the Appellate Assistant Commissioner, as also the subsequent assessment order dated November 23, 1978, that some refund became due to the assessee. The interest claimed in terms of section 244(1A) is also not admissible as has been discussed above. The petitioner, in the circumstances, is not entitled to claim interest on delayed refunds in terms of section 243(1)(a) or (b) of the Act. To claim interest in terms of section 243(1) it is to be shown that the total income of the assessee does not consist solely of income from securities and dividends and in any other case within three months from the end of the month in which the claim for refund is made under Chapter XIX. The claim of the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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