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TMI Blog1980 (1) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... s. 35B to Rs. 13,387 as against Rs. 54,546. The AAC allowed the three amounts as ultimately pressed before him. The result was that the ITO came to pass an order on 21st January, 1976, resulting in a refund of Rs. 52,121. The assessee was not granted any amount as and by way of interest under s. 214 of the I.T. Act, 1961. The assessee filed a revision petition under s. 264 of the Act before the Commissioner claiming that it was entitled to interest under s. 214 of the Act on the sum of Rs. 52,121 which was refunded, on the ground that the order of the ITO giving effect to the appellate order was itself an order under s. 143 of the Act within the meaning of s.2(40) of the Act. The Commissioner by his order dated 15th July, 1976 held that the interest under s. 214 was payable to an assessee only up to the date of regular assessment ". He relied on the definition of " regular assessment in s. 2(40) of the Act as assessment made under s. 143 or s. I44 and also on the decision of the Allahabad High Court in the case of Sir Shadilal Sugar and General Mills Ltd. v. Union of India [1972] 85 ITR 363. As in the regular assessment, there was no refund, he rejected the claim for interest. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest on the amount by which the total of the advance tax paid in any financial year exceeded the amount of the tax determined on regular assessment. The expression " regular assessment " has been defined in s. 2(40) as meaning " the assessment made under section 143 or section 144 ". The starting point of interest is the first day of April next following the financial year in which the advance tax was paid. The terminal is fixed as the date of the regular assessment. Section 214 is the counterpart of s. 18A(5) of the Indian I.T. Act, 1922. The liability to pay tax arises ordinarily upon the making of an assessment order and the issue of a notice of demand as laid down by the Privy Council in. Doorga Prosad v. Secretary of State [1945] 13 ITR 285. Section 18A was introduced with a view to collecting the amount of tax payable by the assessee in advance, that is, even before the assessment order was made and a demand was issued for the payment of tax. Section 18A( 5), as enacted originally, obliged the Central Govt. to pay to an assessee interest on the amount of advance tax paid by him and this was in recognition of the fact that the assessee had been deprived of money belongi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of tax payable by the assessee was increased by proceedings taken under s. 34 of the Act. The result was that the assessee was held as not being liable to pay any interest on the amount subsequently demanded under s. 34, even though the said amount was in excess of the advance tax paid by the assessee. This decision is authority for the proposition that the expression" regular assessment " means only the assessment made under s. 23(3) of the 1922 Act and not a reassessment. The same position will hold good even under the Act of 1961 as the definition in s. 2(40) is identical in text. We have in T.C. Nos. 530 to 532 of 1975, in the case of the Triplicane Urban Co-operative Society Lid v. CIT in the judgment dated 17th July, 1979, -see [1980] 126 ITR 125 (Mad), held that an order passed in pursuance of the appellate order would itself be an order under s. 143 of the Act. However, the question as to whether it was a regular assessment falling under s. 214(1) and whether the assessee would be entitled to interest on the amount being refunded as a result of the appellate order did not come up for consideration in that case. It is clear from s. 214(1) that the assessee would be entitl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here. The section would make sense even if the word is not there and its addition, as seen above, does not improve matters. It has thus to be concluded that the word is only a surplusage and need not be given any special significance. As the first part of s. 214 granted a right to interest to the assessee up to the date of the regular assessment, it may be asked as to why sub-s. (2) provided for payment of interest up to the date on which the refund was made. Sub-section (1) does not, however, provide for any refund to the assessee. It is only designed to grant a right to interest on the advance tax paid in excess. Section 219 provides for the adjustment of advance tax paid against the tax demand and the refund in consequence of the credit would follow. In other words, while sub-s. (1) gave a right to the assessee to the interest at a particular rate from the 1st day of April next following the financial year in which the advance tax was paid, it does not provide for any refund, as such. With reference to the amount that is refunded under the Chapter, i.e., by virtue of the credit contemplated by s. 219, sub-s. (2) of s. 214 provides that interest has to be paid up to the date on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng effect to the order of the AAC, there was a surplus to be refunded to the assessee and the question was whether the assessee was entitled to the interest on the said amount up to the date of the order giving effect to the order of the AAC. The learned single judge of the Calcutta High Court held that the assessee would be entitled to interest on the said amount. However, even in this case, no attention appears to have been paid to s. 214(2), and, therefore, the learned judge had not to pronounce on it. Section 215(3) provides for the reduction of interest payable by an assessee consequent on the modification of assessment by rectification or by the appellate and other orders. The absence of a provision for payment of interest by the Government consequent on similar modification of assessment was emphasised as showing the legislative intent not to grant interest in such cases. We do not consider that this contention has any force in the context of our conclusion based on s. 219 read with s. 214(2). The result is that the assessee would be entitled to interest under s. 214(2) up to the date on which the refund was made. Sub-section (1) of s. 214 provides for interest being pai ..... 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