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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 ..... o 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: &nbs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nbsp; Demand 8,427 Less : TDS payment 94,030 ---------- Refund allowed as per order dt. 14th March, 1988 85,603" ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtra 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 thereafter the advance tax, is faultlessly obvious from the scheme of the Act. The provisions of the Income-tax Act in this connection are clear. There cannot be two opinions, that before the advance tax can be adjusted against the demand, against the computation of tax arrived at as a result of assessment, the tax deducted at source, if any, has to be adjusted. Chapter XVII of the Act deals with modes of collection and recovery of tax payable under the Act. Section 190 prescribes the mode of collection of tax earlier than the regular assessment, in two ways, namely, either it is collected by deduction or collection at source, that i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 ; (iii) the income-tax so calculated shall be reduced by the amount of income-tax which would be deductible during the said financial year in accordance with the provisions of sections 192 to 194, section 194A, section 194C, section 194D and section 195 on any income (as computed before allowing any deductions admissible under this Act) on which tax is required to be deducted under the said sections and which has been taken into account in computing the said total income." Thus, the very liability of advance tax is determined after adjusting the amount of tax deducted at source from the tax payable of the estimated income. This is further clear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 question whether interest is payable under section 214 on the amount of refund which is referable to tax deducted at source would not arise in the present case inasmuch as the entire amount that would be refundable in the present case would be on the basis of excess payment of advance tax over the tax payable after giving the credit of tax deducted at source against the tax payable to which the assessee is entitled under section 1999, read with section 209 before the estimation of advance tax payable under the Act is made. The order of the Commissioner of Income-tax (Appeals) as affirmed by the Tribunal granting rectification by directing computation o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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