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Vit v. Smt.S. Sultana - INCOME TAX REFERENCE No. 264 of 1991 [2005] RD-AH 427 (15 February 2005)


This is an UNCERTIFIED copy for information/reference. For authentic copy please refer to certified copy only. In case of any mistake, please bring it to the notice of Joint Registrar(Copying).


Court no.37

I.T.R. No.264 of 1991

The Commissioner of Income Tax,


Smt. Shahida Sultana.

Hon'ble R.K.Agarwal, J.

Hon'ble Prakash Krishna, J.

The Income Tax Appellate Tribunal, Delhi, has referred following question of law under section 256 (1) of the Income Tax Act, 1961 ( here in after referred to as the Act) for opinion to this Court:-

"Whether on the facts and in the circumstances of the case the  Tribunal was in law justified in  holding that the assessee is eligible for interest u/s 244 (1A) of the I.T. Act, 1961?"

Briefly stated the facts involved in the present case are as under:-

The reference relates to the assessment year 1984-85. The respondent-assessee is assessed to income tax in the status of individual. For the assessment year in question  she was granted a refund of Rs.52,531/- at the time of original assessment. Subsequently an order under section 145 of the Act was passed and the respondent assessee became entitled to additional refund of Rs.24,195/-. She  claimed interest under section 214 of the Act on the additional refund of Rs.24,195/- granted to her as a consequence of rectificatory order passed under section 145 of the Act. The claim was rejected by the Assessing Officer on the ground that the refund on the additional amount was eligible for payment of interest only from 1.4.1985 because the Act provided for payment of interest in the case of enhancement of refund to be effective from 1.4.1985 only. The alternative submission to allow the interest under section 244 (1A) of the Act was rejected on the ground that the amount so paid by her was advance income tax and did not amount to payment made under order passed by the Assessing Officer. Feeling aggrieved the respondent assessee preferred appeal before the Commissioner of Income Tax (Appeals) who did not agree with the plea raised by the respondent assessee and dismissed the appeal. Still feeling aggrieved the respondent assessee preferred  second appeal before the Tribunal. The Tribunal did not accept the plea of  the respondent assessee regarding the interest under section 214 of the Act. However, the claim of interest under section 244 (1A) of the Act was upheld by the Tribunal by placing reliance on the decision of Delhi High Court in the case of National Agrigultural Cooperative Marketing Federation of India Limited Vs. Union of India (1998) 130 ITR 928.

We have heard Sri A.N.Mahajan, learned Standing Counsel for the Revenue and Shri Vikram Gulati the learned counsel for the respondent-assessee.

We find that the controversy has been set at rest by the Apex Court in the case of Modi Industries Ltd. and others Vs. Commissioner of Income Tax (1995) 216 ITR 759. The Apex Court  has held as follows:-

"If any tax is 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 Officer as payment of tax in discharge of the assessee's tax liability in the assessment order), becomes refundable wholly or in part as a result of any appellate or other order passed, the Central government will have to pay the assessee interest on the refundable amount under section 244 (1A). For the purpose of this section, the amount of advance payment of tax and the amount of tax deducted at source must be treated as payment of income tax pursuant to an order of assessment on and from the date when these amounts were set off against the tax demand raised in the assessment order, in other words, the date of the assessment order."

Respectfully following the aforesaid decision, interest under section 244 (1A) of the Act is payable on the amount of excess advance payment of tax from the date of assessment order till the date of  refund.

We, therefore, answer the question referred to us in affirmative i.e. in favour of assessee and against the Revenue. However, there shall be no order as to costs.




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