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TMI Blog2002 (6) TMI 36X X X X Extracts X X X X X X X X Extracts X X X X ..... t for the period it was lying in deposit? The petitioner is a partnership business which was running a cardamom and tea estate known as Kurumber Betta Estate in the Nilgiris. The partnership consisted of three partners, one of whom, S. Chenniah, was a resident of Mysore, Karnataka and the other two partners were residents of Kerala State. The said Chenniah was a defaulter of tax and accumulated income-tax arrears. All his properties in Karnataka were subjected to recovery proceedings by the income-tax authorities. A notice dated December 28, 1968, was issued by the Tax Recovery Officer, Mysore, addressed to Kurumber Betta Estate ordering that the share of the said S. Chenniah in Kurumber Betta Estate and the profits of the said property we ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the partnership firm. Since the assets of partnership comprised immovable properties of large value, they were obliged to seek permission from the Income-tax Department. When the Income-tax Department was moved for permission to sell the estate, the Department agreed to grant such permission on condition that one-third of the sale price be kept in deposit or secured by way of bank guarantee for meeting the final income-tax dues of the deceased S. Chenniah. On March 14, 1987, vide exhibit P-4, the managing agent of Kurumber Betta Estate addressed a letter to the Tax Recovery Officer and offered to deposit the amount required and not to go in for bank guarantee, as it was anxious to complete the sale without further delay. The offer was to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... towards the firm of Kurumber Betta Estate. In other words only after settlement of the legal position relating to the share of the late Sri S. Chenniah in the proceeds of the estate--whether it is 1/3 of the total sale price, or only 1/3 of the balance after deducting the liabilities of the estate--the D.D. in whole or in part can be appropriated". After having deposited Rs. 11,67,000 towards one-third of the gross sale proceeds, Kurumber Betta Estate agitated the issue before this court as to whether the deposit had to be of one-third of the gross sale proceeds or the net proceeds after deducting the liability of the estate. Finally, in the judgment delivered in O.P. No. 9337 of 1990--Kurumber Betta Estate v. ITO (Fourth) [1992] 197 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 910. By a letter of January 14, 1994, the managing agent of Kurumber Betta Estate raised a contention with the Commissioner of Income-tax, Karnataka-III, Bangalore, that the period of calculation of interest was wrong and that the estate was entitled to interest at 15 per cent. right from July 6, 1987, on which date the deposit was made. Hence, they claimed interest on Rs. 11,67,000 from July 6, 1987 to February 17, 1989. This claim was rejected. Kurumber Betta Estate brought O.P. No. 3579 of 1995 (Kurumber Betta Estate v. ITO [1996] 217 ITR 631), claiming the aforesaid amount. The learned single judge who heard the petition dismissed the petition by holding that there was no liability to pay interest. Being aggrieved, the estate is in appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nstructions of the Central Board of Direct Taxes, at the instance of the Tax Recovery Officer, that the amount in deposit was appropriated on February 17, 1989, towards meeting the tax liability of S. Chenniah. On and from that date the amount became liable to fetch interest under the provisions of the Income-tax Act under section 244A. Prior thereto, it was retained by the Income-tax Department as a non-interest bearing deposit. There is no other provision in the Income-tax Act to pay interest except under section 244. Section 244A would spring into action only in the event of refund of excess amount of tax, penalty, tax collected at source or paid as advance tax, or treated as paid under section 199. The liability of the Revenue to pay in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , irrespective of any other provision of law, if the Revenue held excess money to the tune of Rs. 10,01,311 from July 6, 1987 to February 16, 1989, then equity demands that the Revenue should be directed to pay interest at the same rate as paid subsequent to February 17, 1989. It is an accepted proposition in tax jurisprudence that tax laws know no equity. There cannot be a direction to the Revenue to pay interest in equity, when there is no such provision in the Income-tax Act. (See in this connection, the judgment of the Supreme Court in Modi Industries Ltd. v. CIT [1995] 216 ITR 759, 790). What learned counsel really wants is that the Revenue should be directed to pay damages. We hardly think that such an exercise can be carried out in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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