Income Tax Appellate Tribunal - Ahmedabad
Alembic Chemicals Works Co. Ltd. vs Deputy Commissioner Of Income-Tax on 8 August, 1997
ORDER
H.C. Srivastava, A.M.
1. The regular assessment under s. 143(3) was made in this case on 30th November, 1987 on a total income of Rs. 98,60,320. On 12th August, 1988, an order was passed giving consequential effect to the order of the CIT(A) for asst. yr. 1983-84 whereby the total income was reduced to Rs. 91,82,771. Then the assessee asked for interest under s. 214 upto 12th August, 1988 the AO rejected the plea. He held that the decision of the Gujarat High Court in the case of Bardolia Textile Mill vs. ITO (1985) 151 ITR 389 (Guj) was not applicable to the assessee's case.
2. When the matter was taken to the CIT(A) he held that the decision of the Gujarat High Court in the case of Bardolia Textile Mills (supra) is applicable and the AO was directed to grant interest under s. 214 upto 12th August, 1988. However, the CIT(A) did not accept the assessee's plea that interest on interest should be granted to the assessee. The assessee is in appeal on this account.
3. We have heard the parties. We find that the Hon'ble Supreme Court in the case of Modi Industries Ltd. & Ors. vs. CIT (1995) 216 ITR 759 (SC) is applicable to the facts of the case. It was held that the said decision has overruled the decision of the Gujarat High Court in the case of Bardolia Textile Mills (supra) and, therefore, the assessee is not entitled to interest on interest. The assessee's counsel however submitted that though the decision of the Gujarat High Court in the case of Bardolia Textile Mills (supra) has been overruled, the decision of Gujarat High Court in the case of D.J. Works vs. Dy. CIT (1992) 195 ITR 227 (Guj), had not been overruled. It was submitted that though the decision of the Gujarat High Court in the case of Bardolia Textile Mills (supra) has been overruled by the Supreme Court that will not affect the assessee's claim inasmuch as there is no dispute that the interest under s. 214 was available to this assessee and was not paid in time. As the same was not paid in time, interest has to be allowed on interest. The assessee's counsel further relied upon the decision of the Gujarat High Court in the case of Chimanlal S. Patel vs. CIT (1994) 210 ITR 419 (Guj). It is notable that the Supreme Court has approved the decision of the Bombay High Court in the case of CIT vs. Carona Sahu Co. Ltd. (1994) 146 ITR 452 (Bom). The Hon'ble Supreme Court held that interpretation of s. 214 or any other section of the Act cannot be made on the assumption that the interest has to be paid whenever an amount which has been retained by the tax authority in exercise of the statutory power becomes refundable as a result of any subsequent proceedings. It must be presumed that the legislature was aware of the wide interpretation of the word 'assessment' given under the Indian IT Act, 1922. "Assessment" had been given an inclusive meaning in sub-s. (8) of s. 2. It includes reassessment. "Regular assessment" has been defined in s. 2(40) to mean the assessment made under s. 143 or s. 144. In the context of ss. 140A, 141 and 141A "regular assessment" could only mean the original assessment made under s. 143 or s. 144. Having regard to the scheme of the Act, in s. 214 "regular assessment has been used in no other sense other than the first order of assessment passed under s. 143 or s. 144. If any consequential order has to be passed by the ITO to give effect to an order passed by the higher authority, that consequential order cannot be treated as "regular assessment" nor can be the date of the consequential order be treated as the date of the regular assessment. It is, therefore, obvious, that the assessee will get interest only till the date of the regular assessment. The only question that remains to be settled is whether the interest on the basis of the regular assessment is not given within the time, any further interest can be allowed on the same. We are of the opinion that it is not possible to hold that the decision of the Supreme Court by implication has overruled the decision of the Gujarat High Court in the case of Chimanlal S. Patel (supra) as well. If the interest due on a particular date on the basis of the regular assessment is not paid within the specified time limit, then that interest is entitled to receive interest on the assessee. We also find that the decision of the Gujarat High Court in the case of Chandrakant Damodardas vs. ITO (1980) 123 ITR 740 (Guj) has not been overruled by the Supreme Court. We are, therefore, of the opinion that the decision of the Gujarat High Court in the case of Chimanlal G. Patel (supra) is applicable to the facts of the case and the assessee is entitled to interest on the amount of interest available to the assessee on the basis of the regular assessment.
4. In the result, the appeal is allowed.