9911796707
TMI Blog2000 (8) TMI 52X X X X Extracts X X X X X X X X Extracts X X X X ..... 000 in Account No. 9 of 1985. Thereafter he remitted another sum of US $ 99,995 by opening another Account No. 10 of 1985, on August 10, 1985. On September 10, 1985, the Income-tax Department wrote a letter to the Manager, Indian Overseas Bank, directing the branch manager not to release the said amount to the petitioner. This was followed by attachment orders dated September 12, 1985, and September 18, 1985, in respect of the aforesaid account. These attachment orders remained in force till June 6, 1986, in respect of the first account and January 9, 1986, in respect of the second account when the money was delivered out of these accounts to the Department to the extent of Rs. 6,20,572 (US $ 50,979.99) out of the second account and Rs. 9,96,532 (US $ 80,744) out of the first account as well as the balance lying in the second account. The petitioner filed an appeal, first to the Commissioner of Income-tax (Appeals) (hereinafter referred to as "the CIT(A)") and thereafter to the Income-tax Appellate Tribunal against the aforesaid orders of the Assessing Officer and as a result of the appellate orders, he became entitled to some refund out of the tax realised from the bank from the F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e aforesaid amount in the two SDR accounts opened by him with the Indian Overseas Bank for a period of 30 days. These accounts had matured on August 16, 1985, and September 9, 1985, respectively. The petitioner is claiming interest with effect from August 17, 1985, and September 10, 1985, onwards. On the other hand, the Department has paid him interest in respect of these accounts starting from June 6, 1986, and January 9, 1986, respectively, that is the dates on which money was actually received by the Department from the bank. The other bone of contention is in respect of the rate of interest. Whereas the Department had paid interest at the rates prescribed under section 244A of the Income-tax Act, the petitioner is claiming interest as per RBI circulars. His submission is that at the time of deposit of FCNR/SDR the rate of interest was 13 per cent. and 12 per cent. per year to be computed at six monthly rates and he should be entitled to the interest as per these rates. We may state at the outset that Mr. R. D Jolly, learned counsel appearing for the Income-tax Department, had argued that once order dated January 21, 1997, was passed by the Commissioner of Income-tax (Appeals) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... refore, the direction contained in the judgment dated May 21, 1993, directing the respondents to deposit back the amount in question in the FCNR/SDR accounts of the petitioner along with "interest accrued" thereon should mean the interest which would have accrued on FCNR-SDR accounts of the petitioner. As would be noticed later, after the initial period of one month deposit was over, the petitioner had not given any instructions to the bank to renew the same. The attachment order was made much thereafter. However, the petitioner is claiming interest for this period also on the ground that but for this attachment, the petitioner could have given the instructions to the bank to renew the FCNR-SDR even after the initial period of deposit had expired and on such instructions being given he would have become entitled to the interest from back date, i.e., August 16, 1985, and September 9, 1985, respectively, when these deposits had initially matured. On the other hand, Mr. R. D. Jolly, learned counsel appearing for the Income-tax Department, argued that the petitioner was not entitled to any interest from the date anterior to the date when the money was in fact delivered to the Departm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e bank. 12-9-85 : Attachment orders in respect of Account No. 9 of 1985, passed by the Income-tax Department. 18-9-85 : Attachment orders in respect of Account No. 10 of 1985, passed by the Income-tax Department. 6-6-86 : Rs. 6,20,572 (US $ 50,979.99) out of the second account and and Rs. 9,96,532 (US $ 80,744) out of the balance of second account and the first account 9-1-86 received by the Department. On the basis of the aforesaid facts and after giving our anxious thoughts to the points urged by both the parties, we proceed to decide both the aspects. Period of interest : As pointed out by the Commissioner of Income-tax (Appeals) in his order dated January 21, 1999, the period of interest can be split into two parts as follows : (a) First Account (No. 9 of 1985) : (1) Interest from the date of maturity August 17, 1985, to the date of restraint/attachment, i.e., September 10, 1985, and (2) Interest from the date of restraint/attachment, i.e., September 10, 1985, to the date of payment of the amount by the bank to the D ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ioned that the petitioner has not received interest on his accounts lying with the bank during this period in the absence of any instructions to the bank to renew the deposits. Although the petitioner has submitted that he could not have given any such instructions in view of restraint/attachment orders issued by the Income-tax Department, he could not satisfactorily answer the argument of the respondents to the effect that the restraint orders dated September 10, 1985, and the attachment orders dated September 12, 1985, and September 18, 1985, only placed the restrictions on the bank not to release or deliver the money lying in these accounts to the petitioner and this attachment was a provisional attachment in terms of section 281B of the Income-tax Act. Section 281B of the Income-tax Act reads as under : "Where, during the pendency of any proceeding for the assessment of any income or for the assessment or reassessment of any income which has escaped assessment, the Assessing Officer is of the opinion that for the purpose of protecting the interests of the Revenue it is necessary so to do, he may, with the previous approval of the Chief Commissioner or Commissioner, by order i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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