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TMI Blog1999 (4) TMI 11X X X X Extracts X X X X X X X X Extracts X X X X ..... s also entitled to credit of Rs.94,030 by way of tax deducted at source of different incomes earned by him. In the first instance the assessee was granted a refund of Rs.62,144 on which interest in terms of section 214 was also granted which amounted to Rs.25,960. In giving this refund credit of tax deducted at source was not taken into account. As a result of the order of the Commissioner of Income-tax (Appeals), dated July 1, 1988, for giving effect thereto further refund of Rs.85,603 was, calculated by order dated March 14, 1988, by taking into account credit to the assessee on account of tax deducted at source. However, on this additional sum of refund no interest was calculated. The assessee, therefore, made an application dated May 23, 1989, claiming interest under section 214 of the Income-tax Act, 1961. In its order dated August 30, 1989, captioned under section 154 the Deputy Commissioner of Income-tax (Assessment), Special Range, Ahmedabad, worked out the computation of amount refundable vide order dated March 14, 1988, as under: Rs. "Tax payable as per order dt. 14th March, 1988 1,91,283 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ner of Income-tax (Appeals) on January 7, 1988, the total tax payable for the assessment year 1984-85 came to Rs.1,91,283, for the satisfaction of which two amounts were to the credit of the assessee, viz., advance tax deposited by the assessee at. Rs.2,45,000 and tax deducted at source on the income accrued or received by the assessee by the person from whom such income was to flow. The Assessing Officer has given the credit of advance tax deposit by the assessee in the first instance and calculated the amount of refund on that basis, then adjusted the amount of refund. already made and thus finding that out of advance tax deposited extra sum has been refunded found outstanding to be recoverable from the assessee, then adjusted the same from the tax deducted at source amount and the balance was found refundable. In the order he also mentioned that on the initial amount of refund interest under section 214 was calculated and granted to the assessee. As will be seen presently the ground in which the Commissioner of Income-tax (Appeals) has allowed the claim of interest to the assessee, that in the first instance the amount of tax deducted at source ought to have been adjusted and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in. It further said that where the total advance tax payable by him did not exceed fifteen hundred rupees, the assessee other than a company, a local authority or a registered firm, shall not be liable to pay advance tax. Section 209 provides for computation of advance tax payable by the assessee. The provision clearly envisages that the liability to pay advance tax is to be computed only after giving credit of tax deducted at source from the tax payable. We reproduce the relevant provision for the present purposes sub-section (1)(a) of section 209 as it stood during the relevant assessment year: "209. (1) The amount of advance tax payable by an assessee in the financial year shall, subject to the provisions of sub-sections (2) and (3), be computed as follows: (a) (i) his total income of the latest previous year in respect of which he has been assessed by way of regular assessment shall first be ascertained; (ii) the amount of capital gains and income referred to in sub-clause (ix) of clause (24) of section 2, if any, included in such total income shall be deducted therefrom, and on the balance, income-tax shall be calculated at the rates in force in the financial year ; (i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich advance tax is to be paid by the assessee that the liability of advance tax is computed and the assessee is required to discharge the remaining liability. As a necessary corollary it follows that on computation of tax payable as per the regular assessment, in the first instance credit has to be given to tax deducted at source. If any amount still remains payable it calls for adjustment against advance tax paid, if any, then only the question arises whether to issue a demand or order refund of the amount of balance. Obviously, in the present case, the Assessing Officer has taken the reverse route while adjusting the credits of tax collected on assessee's account against the tax payable. As per the order dated March 14, 1988, before giving credit for the amount of tax deducted at source, he has adjusted advance tax paid under section 210 separately. No credit envisaged under section 199 is given to the assessee of the tax deducted at source. The provisions of sections 191, 199 and 209 have not been kept in view which clearly mandate that advance tax liability itself is to be determined only after adjustment of tax deducted at source. If that process is rectified the questi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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