Bombay High Court
Lml Ltd. And Another vs M.K. Venkataraman, Assistant ... on 17 September, 1991
Equivalent citations: [1994]205ITR585(BOM)
Author: Sujata V. Manohar
Bench: Sujata V. Manohar
JUDGMENT
1. For the assessment year 1989-90, the petitioners had claimed a refund of tax which included, inter alia, refund of a sum of Rs. 49,65,878, being the tax deducted at source by two companies, viz., LML Fibres Limited and Prakati Synthetics Ltd., in respect of the interest paid by these two companies to the petitioners.
2. However, this amount of tax deducted at source has been paid into the treasury at later dates in the assessment year 1990-91 as per the order passed in Writ Petition No. 2618 of 1989, filed by these companies against the Deputy Commissioner of Income-tax.
3. In view of the amended section 143 of the Income-tax Act from the assessment year 1989-90 onwards, any refund due on the basis of a return is required to be granted to the assessee at the initial stage. The provision for refund after regular assessment has been deleted. As per the Central Board of Direct Taxes Circular set out at [1990] 182 ITR (St.) 25, no refund can now be granted on completion of assessment under the provisions of section 143(3). Action under section 143(1)(a)(ii) for issue of refund on the basis of the return of income or loss must be completed before the assessment order under section 143(3) is passed in the case, "as otherwise the provisions of section 143(1)(a)(ii) and section 143(3) would get mixed up and make confusion and uncertainty."
4. In the present case, neither for the assessment year 1989-90 nor for the assessment year 1990-91, the petitioners have been given any credit for the tax of Rs. 49,65,878 which has been deducted at source and paid into the treasury by the two companies. In addition, the petitioners have been required to pay this tax of Rs. 49,65,878 for the assessment year 1989-90, by adjusting this amount against the refund due to the petitioners for that assessment year. For the assessment year 1990-91 also, a refund has been refused in respect of this amounts by adjusting this amount against the refund due to the petitioners.
5. Prima facie, therefore, the respondents have retained the said sum of Rs. 49,65,878 received by them from the firms of Messrs LML Fibres Ltd., and Prakati Synthetics Ltd. They have also retained from the refund due to the petitioners the said sum of Rs. 49,65,878 thus recovering the tax twice over on the same income. At the interim stage, we are not going into the question of interest on this amount. At any rate the respondents cannot retain the said sum of Rs. 49,65,878 twice over.
6. Mr. P. S. Jetly, learned counsel appearing for the respondents submitted that refund of the said amount will be given to the petitioners at the stage of final assessment. Looking, however, to the provisions of the amended section 143(3) and the Central Board of Direct Taxes Circular which is binding on the respondents, refund is required to be granted at the stage of section 143(1)(a)(ii).
7. The respondents are, therefore, directed to refund to the petitioners the sum of Rs. 49,65,878 subject to the final orders which may be passed in the petition. The same will be refunded on or before September 27, 1991, as the petitioners have to pay further tax before September 30, 1991.
8. Rule returnable on September 24, 1991.
9. Certified copy expedited.