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TMI Blog1994 (8) TMI 64X X X X Extracts X X X X X X X X Extracts X X X X ..... at nil. Since the assessee had paid tax of Rs. 75,520, the same was found to be refundable. The Assessing Officer worked out interest under section 244(1A) of the Act on the aforesaid amount of Rs. 75,520 at Rs. 26,425. The assessee had also paid interest under section 220(2) of the Act amounting to Rs. 8,490 on 3-2-1987. This was also held refundable by the Assessing Officer because total demand had been reduced to nil. Thus the total amount refundable to the assessee for assessment year 1980-81 was worked out to Rs. 1,10,435 (Rs. 75,520 + Rs. 26,425 + Rs. 8,490). No interest under section 244(1A) of the Act was, however, allowed on the aforesaid amount of Rs. 8,490. 3. The assessee preferred an appeal before the learned CIT(A) who dism ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... considered it fair and reasonable to award interest on the amount paid in excess and there was no reason why the same principle should not be extended to the payment of interest which had been wrongfully withheld by the Assessing Officer or the Government. The High Court, therefore, held that the assessee was entitled to interest on interest under section 214 of the Act. From the above, it is clear that the said decision which has not been rendered in the context of appeal or reference, but in the context of writ petition is under section 214 of the Act and does not make any discussion about section 244(1A) of the Act which is before us in the present proceedings. 9. As regards the Gujarat High Court decision in the case of Chimanlal S. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 244(1) and not under section 244(1A) of the Act. In that case, for assessment years 1961-62 to 1963-64, certain refunds became due to the assessee as a result of the orders passed by the Supreme Court. These amounts consisted of income-tax, penalty and interest paid under section 220 of the Act. While the Assessing Officer allowed interest under section 244 of the Act in respect of the amounts representing income-tax and penalty, no such interest under section 244 was allowed in respect of the interest collected under section 220 of the Act. The High Court examined the provisions of sections 220, 240 and 244 and observed that section 240 of the Act is a general provision which envisages refund of any amount that becomes due to the assess ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n defined in section 2(43) of the Act as under : "2(43) : tax in relation to the assessment year commencing on the 1st day of April, 1965, and any subsequent assessment year means income-tax chargeable under the provisions of this Act, and in relation to any other assessment year income-tax and super-tax chargeable under the provisions of this Act prior to the aforesaid date." This definition also does not include the word "interest". 13. In the case of Bhor Industries Ltd. v. CIT [1961] 42 ITR 57, the Supreme Court while considering the question as to whether or not the interest that was charged to the company under section 18A of the Indian Income-tax Act should be deducted along with income-tax before the fictional dividends as co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s that interest charged is not part of the tax though it is recoverable along with it. 16. The upshot of the above discussion is that tax, penalty and interest are distinct concepts and they have to be understood in the context in which they are used in different provisions of the Act. 17. Section 240 of the Act stipulates that where as a result of any order passed in appeal or other proceedings under the Act, refund of "any amount" becomes due to the assessee, the Assessing Officer shall refund "the amount" to the assessee. Obviously, "any amount" would include tax, penalty, interest, etc. Section 244(1) lays down that where a refund is due to the assessee in pursuance of an order referred to in section 240 of the Act and the Assessing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he above, it is clear that though section 244(1) talks of any refund to the assessee under section 240(1), sub-section (1A) of section 244, however, carves out an exception. Interest under section 244(1) of the Act is allowable only where the refund has arisen as a result of the excess payment of tax or penalty. There is nothing in this sub-section to suggest that the term "tax" includes "interest" also. Indeed, it has been noted in earlier part of this order that "interest" and "tax" are different concepts under the Act. It is also significant to note that first proviso to section 220(2) stipulates that where as a result of rectification, appeal, revision, etc., the amount on which interest under section 220(2) was payable had been reduced ..... X X X X Extracts X X X X X X X X Extracts X X X X
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