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TMI Blog1986 (1) TMI 85X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs. 5,75,264 and that it should be reduced by a sum of Rs. 2,10,264 ? " The sole question referred to us in I.T.R.C. No. 273 of 1985 reads thus : " Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the sum of Rs. 2,10,264 being the amount of interest granted under section 214 of the Income-tax Act, 1961, in respect of income-tax assessments (provisional under section 141 A) for 1967-68 and 1968-69 and withdrawn in the previous year relevant to the assessment year 1973-74 on completion of regular assessments under section 143(3) was not an admissible deduction for the assessment year 1973-74 ? " M/s. Syndicate Bank Ltd. was one of the banking companies nationalised by the Government of India with effect from July 19, 1969, under the Banking Companies Nationalisation Scheme of the country. On and after such nationalisation, the banking business of the company is carried on by an undertaking called " Syndicate Bank" which is the assessee in these cases. For the assessment years 1967-68 and 1968-69 relevant to the accounting years ending on December 31, 1966, and December 31, 1967, respectively, the bank had paid consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee claimed the sum of Rs. 2,10,264 repaid by it as excess or difference of interest as deduction under section 37 of the Act, which was rejected by the Income-tax Officer and the Appellate Assistant Commissioner holding that the same did not fall within the purview of section 37 or any other specific provision of the Act. In the second appeal filed by the assessee against those orders, the Tribunal did not grant the same on the ground that it had granted relief to the assessee in its order dated May 17, 1977, for the assessment year 1971-72. While question No. 1 in I.T.R.Cs. Nos. 189 and 190 of 1978 has been referred at the instance of the Revenue, the sole question in I.T.R.C. No. 273 of 1985 has been referred at the instance of the assessee. Sri K. Srinivasan, learned senior standing counsel for the Income-tax Department appearing for the Revenue, contends that the total sum of Rs. 5,75,264 received by the assessee on or before December 31, 1970, as interest under section 214 of the Act in its entirety had to be treated as " income " for the assessment year 1971-72, and its chargeability to tax decided on that basis without reference to the later reduction at the regul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee. Therefore, even if it can be said that there is some doubt about the interpretation, the interpretation which we have given being favourable to the assessee has to be adopted. In this view of the matter, we uphold the order of the Appellate Assistant Commissioner." Whether this view is sound or not falls for our examination. The assessee does not dispute that it had received a sum of Rs. 5,75,264 before December 31, 1970, as interest under section 214 of the Act. The assessee does not also dispute that this receipt was not capital receipt and was a revenue receipt for that year. What is once treated as a revenue receipt must normally be treated as such for that very amount, as we apprehend, is even elementary and is the normal rule in income-tax law. The Act nowhere provides for treating the same otherwise, that too with reference to later events to sustain the reasoning and conclusion of the Tribunal and the Appellate Assistant Commissioner. In the absence of any such specific provision in the Act, we are clearly of the view that the later events cannot affect the earlier nature of receipt as also the quantum of that receipt. On this conclusion itself, we fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be treated as that something else with the attendant consequences, but it is not something else. " We are of the view that these principles are apposite in construing the true scope and ambit of section 214(1A) of the Act. When we apply these principles, it is clear that the excess interest paid to the assessee earlier and later repayable by him is not really tax levied under the Act on income but is treated as tax for purposes of the Act. The deeming or declaration made in section 214(1A) of the Act is only to facilitate its recovery under the Act, but that cannot and does not make that a tax levied on income under the Act. We see no merit in this alternative contention urged by Sri Kumar to concur with the view expressed by the Tribunal. On the foregoing discussion, it follows that our answer to question No. (1) must be in the negative, in favour of the Revenue and against the assessee. We now pass on to examine the other question referred to us at the instance of the assessee in I.T.R.C. No 273 of 1985. While examining question No. (1) in I.T.R.C. Nos. 189 and 190 of 1978, we have noticed that the assessee was paid a sum of Rs. 5,75,264 as interest under section 214 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e administration of tax laws also in the country. We are also of the view that the construction of section 37 of the Act and its application to the facts and circumstances is in accord with the progressive rule of construction of taxing statutes enunciated by the Supreme Court in K. P. Varghese v. ITO [1981] 131 ITR 597, reiterated in CIT v. Gotla [1985] 156 ITR 323 (SC). We are also of the view that in the rulings relied on by Sri Srinivasan, the precise question in the manner it has arisen did not arise and, therefore, the ratio in those cases does not bear on the point. On the foregoing discussion, we hold that the question referred to us in I.T.R.C. No. 273 of 1985 has to be answered in the negative, in favour of the assessee and against the Revenue. We now pass on to examine question No. (2) in I.T.R.C. Nos. 189 and 190 of 1978 which reads thus : " (2) Whether, on the facts and in the circumstances of the case, the inclusion of Rs. 1,00,060 representing the actual realisation of interest on U.P. Zamindari Bonds was correct in law? " On this very question, for another assessment year, between the same parties, a Division Bench of this court consisting of Chandrashekha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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