Judge s H K SEMA B L HANSARIA JUDGMENT B L HANSARIA J The petitioner is an income tax assessee Its assessment for the year 1977 78 was completed on March 22 1979 under section 143 3 of the Income tax Act 1961 for short the Act and sum of Rs 813 was found refundable on account of excess payment of advance tax A rectification proceeding was subsequently initiated This was relatable to the loss of the previous year which was not set off The assessment was accordingly modified and a sum of Rs 35 696 became refundable The petitioner claimed interest up to the date of rectification which was January 5 1981 This was disallowed A revision was thereafter preferred before the Commissioner of Income tax who also refused to pay interest up to the date of rectification Feeling aggrieved this petition has been flied by the assessee The question for determination is whether interest in a case of the present nature was payable till the date of rectification or the entitlement of the assessee to receive interest was confined to the date of assessment first made under section 143 3 of the Act The answer to this question depends on the interpretation of the expression regular assessment finding place in section 214 of the Act Let us read the section as it stood at the relevant time 214 1 The Central Government shall pay simple interest at twelve per cent per annum on the amount by which the aggregate sum any instalments of advance tax paid during any financial year in which the are payable under sections 207 to 213 exceeds the amount of the tax determined on regular assessment from the 1st day of April next following the said financial year to the date of regular assessment for the assessment year immediately following the said financial year and where any such instalment is paid after the expiry of the financial year during which it is payable by reason of the provisions of section 213 interest as aforesaid shall also be payable on that instalment from the date of its payment to the date of regular assessment Provided that in respect of any amount refunded on a provisional assessment under section 141A no interest shall be paid for any period after the date of such provisional assessment 1A Where on completion of the regular assessment the amount on which interest was paid under sub section 1 has been reduced the interest shall be reduced accordingly and the excess if any paid shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly 2 On any portion of such amount which is refunded under this Chapter interest shall be payable only up to the date on which the refund was made It may be pointed out that the expression regular assessment has been defined in section 2 40 of the Act to mean unless the context otherwise requires assessment made under section 143 or section 144 of the Act The contention of the Department is that the expression regular assessment finding place in the aforesaid section refers to the first order of regular assessment whereas according to the assessee the meaning of the expression cannot be confined to the first order of regular assessment it would also take within its fold the assessment made pursuant to the rectification proceedings or orders passed on remand after the matter has been sent back by the appellate revisional authority There has been a cleavage of opinion among the different High Courts of the country right from 1957 which had dealt with the present question in the context of the Indian Income tax Act 1922 The first decision which is cited in this connection is that of Chagla C J in Sarangpur Cotton Manufacturing Co Ltd v CIT 1957 31 ITR 698 Bom It was held in this Division Bench decision that the mere fact that an assessment made under section 23 of the old Act was set aside on appeal by the Appellate Assistant Commissioner and a fresh assessment was made on a subsequent date would not entitle the assessee to interest on the advance tax up to the date of the subsequent assessment inasmuch as liability to pay arises once an assessment is made This decision was referred with approval in Sir Shadilal Sugar and General Mills Ltd v Union of India 1972 85 ITR 363 All This decision held that the expression regular assessment refers to the first or one might say original assessment order made by the Income tax Officer It was pointed out that after the original assessment order is made and a notice of demand is issued the assessee is under an obligation to pay the tax demanded and no question can arise of his being compensated by way of interest for any payment made by him in satisfaction of the demand The compensation is intended only for the period during which there was no obligation to pay the tax that is up to the date of the first assessment by the Income tax Officer Shri Goswami has however referred to Chloride India Ltd v CIT 1977 106 ITR 38 wherein a learned single judge of the Calcutta High Court Sabyasachi Mukharji J as his Lordship then was took the view that regular assessment means the assessment as modified pursuant to appeal etc In coming to this decision reference was made to sections 209 and 210 of the Act and it was pointed out that regular assessment of which these sections speak was not confined to the first assessment but would include the assessment made by the Income tax Officer pursuant to the direction of the appellate authority This decision of the Calcutta High Court was not approved in Lala Laxmipat Singhania v CIT 1977 110 ITR 289 All The Division Bench of the Allahabad High Court did not agree with the Calcutta High Court view by pointing out that though the meaning of the expression regular assessment in sections 209 and 210 of the Act may lead to anomaly if the meaning is confined to the first regular assessment that is no reason for giving a wider meaning to the expression in so far as section 214 of the Act is concerned The Division Bench therefore expressed their dissent with the Calcutta view and followed what was stated by Chagla C J in Sarangpur Cotton Mills case 1957 31 ITR 698 Bom and what was decided in Sir Shadilal s case 1972 85 ITR 363 All It was stated that the context may otherwise require in finding out the meaning of the expression regular assessment as finding place in sections 209 and 210 but there is no such compulsion in finding out the meaning of this expression as used in section 214 The matter came to be examined again by the Calcutta High Court in General Fibre Dealers Ltd v ITO 1979 116 ITR 40 This is a decision by the learned judge who had decided Chloride India s case 1977 106 ITR 38 Cal and on attention being drawn to the disagreement of the Allahabad High Court to the views expressed in Chloride India Ltd s case 1977 106 ITR 38 Cal the learned judge observed that the same meaning has to be given to a word or expression appearing in the same Chapter of an enactment and no good reason was found to confine the meaning of the expression regular assessment to the first assessment It was however held in National Agricultural Co operative Marketing Federation of India v Union of India 1981 130 ITR 928 Delhi that the expression regular assessment in section 214 should be construed as referring only to the first or initial regular assessment and not to subsequent modification thereof It was pointed out in Trustees of H E H Nizam s Religious Endowment Trust v ITO 1980 131 ITR 239 AP that the words regular assessment refer to the assessment made by the Income tax Officer under section 143 or section 144 on the first occasion and do not include the consequential order passed by him as a result of an order under appeal It was pointed out that section 214 is general section dealing with interest on advance tax refundable consequent on regular assessment whereas sections 240 to 244 specifically deal with refund of income tax consequent on the passing of any appellate order As per the view adopted in this decision when refund of income tax including advance tax paid by the assessee is to be effected consequent on the appellate order passed by an appellate authority the refund has to be effected under section 240 section 214 has no application in such a case The same view was reiterated by the Andhra Pradesh High Court in Warner Hindustan Ltd v CIT 1988 171 ITR 224 The Punjab and Haryana High Court in CIT v Ambala Electric Supply Co Ltd 1983 142 ITR 872 followed the views adopted by the Allahabad and Delhi High Courts We may lastly refer to a Full Bench decision of the Bombay High Court in CIT v Carona Sahu Co Ltd 1984 146 ITR 452 in which it was held that the expression regular assessment means only the first order of regular assessment and not the last operative order of regular assessment at any given point of time as a result of appellate or revisional proceedings In this connection reference was made to section 215 of the Act and it was stated that it is a counterpart of section 214 and its interpretation is of cardinal importance in the interpretation of section 214 It was pointed out that section 215 3 creates an obligation to refund the excess interest paid if the amount computed under sub section 1 is reduced consequent upon an order in appeal and or revision There is no such obligation express or implied under sub section 1 or anywhere else Sub section 3 was therefore regarded as not clarificatory nor was it inserted as a measure of abundant caution The court observed that where the Legislature intended to provide for a contingency arising out of an order of appeal on refund specific provision was made It was therefore held that as it was deemed necessary by sub section 3 to provide for the contingency that might arise if the amount computed under sub section 1 was reduced consequent upon an order in appeal or revision the same clearly indicated that the words regular assessment in section 215 means only the first order of regular assessment and not the last operative order of regular assessment at any given point of time passed in an appellate or revisional proceeding We have also to apply our mind to sub section 1A of section 214 of the Act As for this sub section it has been stated in the aforesaid judgment that the same has to be read along with section 141A and the proviso to sub section 1 Accor................Income Tax - Case Law
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