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TMI Blog2001 (8) TMI 270X X X X Extracts X X X X X X X X Extracts X X X X ..... sing Officer and paid by the appellant. Appellant was also charged interest under section 220(2) of the Income-tax Act. Consequently on reduction of penalty, interest charged was also reduced and appellant entitled to refund of interest as interest charged was already paid. While refunding the interest, the learned Assessing Officer did not grant interest on refund of interest paid under section 220(2)." The CIT (Appeals) rejected the appeal of the assessee with following observations:- 'In both these appeals filed from the orders giving effect to the Tribunal's order, the grievance of the appellant is that no interest has been allowed under section 244(1A) on the refund of interest paid earlier by the appellant under section 220(2). I find that section 244(1A) applies only in the case of payment of tax or penalty. It does not cover the case of payment of interest under section 220(2)." 3. The learned AR of the assessee contended that the assessee is entitled for interest on the entire refundable amount including interest paid under section 220(2). He relied on ajudgment of Hon'ble Gujarat High Court D.J. Works v. Dy. CIT [1992] 195 ITR 227. 4. The learned Departmental R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se" "to seek after', "to aim at', "to continue", 'proceed in compliance with', "proceed along", "continue follow". According to Biswas Encyclopaedic Law Dictionary, "inpursuance of" means 'under or under the authority of or by virtue of". According to Mukherjee's The Law Lexicon, the words "in pursuance of' do not mean what would be conveyed by 'in exercise of powers conferred by". The words "in pursuance of' have several meanings and the most appropriate in the instant case would be 'conformable to' or "in accordance with" (see Sadaria v. Rajasthan Board of Revenue AIR 1954 Raj. 224 at 225. 7. The Hon'ble Supreme Court had also considered the word 'pursuant' in case of Modi Industries Ltd. (the relevant page 808) that for the purpose of section 244(1A), the amount of advance payment of tax and the amount of tax deducted at source must be treated as payment of incometax pursuant to an order of assessment The relevant head note of that judgment is reproduced as under:- "(ii) If any tax paid pursuant to an assessment order after March 31, 1975 (which will include tax deducted at source and advance tax to the extent the same has been retained and treated by the Income-tax Offi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Allahabad Saint Paul Society [1995] 216 ITR 863. The head-note of the judgment is reproduced as under: "The assessee claimed that it was a wholly charitable institution and its income should not be subject to tax under sections 12 and 13 of the Income-tax Act, 1961. The Income-tax Officer rejected the contention and assessed the tax and also charged interest for non-payment of tax. The Tribunal held that the assessee was a charitable institution and the assessment under sections 12 and 13 was bad in law. On a reference: Held, that the finding of the Tribunal was not perverse. Since the assessment was not valid, interest imposed for non-payment of tax was erroneous.' 9. Further, there is no express or implied prohibition in section 244(1 A) of the Act that interest shall not be paid on interest collected under section 220(2) of the Act. 1O. Under the facts and circumstances of the case under appeal, interest under section 244(1A) is payable to assessee with a view to doing full and complete justice with party. To support the above view, one can rely on the judgment of Hon'ble Supreme Court Raja Ram Kumar Bhargava v. Union of India [1988] 171 ITR 254. The relevant head ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion "amount" found in the earlier part to mean only 'tax or penalty'. As already seen, the function of the later part of section 244(1A) of the Act is to find out the excess of the amount which the assessee paid by way of tax or penalty and that is the reason the expression "tax or penalty" has been employed. However, to determine the amount on which the Revenue is liable to pay interest, section 244(1A) gives emphasis on the amount paid by the assessee in pursuance of the order of assessment and the amount, in our opinion, cannot be limited to the amount of tax or penalty, but would encompass the amount of interest paid by the assessee. To clear intention of Parliament is that the right to interest will compensate the assessee for the excess payment during the intervening period when the assessee did not have the benefit of use of such money paid in whatsoever character. In addition, if a literal meaning is given to the expression, 'tax' found in the later part of section 244(1A) of the Act, it will create an anomalous situation resulting in exclusion of the concept of the interest. In our opinion, the word 'tax' in the later part of section 244(1A) has to be construed in the lig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the rate of 15 per cent per annum from the date it became payable to the date it is actually paid. The decisions, which were cited at the Bar do not have a direct bearing on the above question and, therefore, we do not propose to refer to or deal with them. On general principles, we are of the opinion that the Government is liable to pay interest, at the rate applicable to the excess amount refunded to the assessee, on the interest amount which had become due under section 214(1) of the Act. In the light of the above discussion, this petition must succeed." The Hon'ble Jurisdictional High Court of Gujarat had also interpreted the provisions relating to interest payable to assessee in the case of Laxmiben Hemdas Patel v. S.B. Rohtagi, ITO [1994] 209 ITR 267. The Hon'ble Court was of the view that there is no reason to restrict the interpretation of section 244(1A) only to some orders by which refund of excess tax or penalty is granted and not cover orders passed under section 154 of the Act. The relevant observations at page 270 are reproduced as under: '(1A) Where the whole or any part of the refund referred to in sub section (1) is due to the assessee, as a result of any amou ..... X X X X Extracts X X X X X X X X Extracts X X X X
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