Punjab-Haryana High Court
Punjab State Warehousing Corporation vs Commissioner Of Income-Tax And Anr. on 5 February, 2003
Equivalent citations: [2003]264ITR597(P&H)
Author: S.S. Saron
Bench: S.S. Saron
JUDGMENT S.S. Saron, J.
1. The present petition has been filed by the petitioner-Punjab State Warehousing Corporation ("Corporation" for short) for quashing the orders passed by the Commissioner of Income-tax, Patiala (respondent No. 1) and the Income-tax Officer, Companies-cum-Special Circle, Chandigarh (respondent No. 2), declining to allow interest on the amount retained by the respondents as advance tax on various dates during the accounting period relevant to the assessment year 1973-74 till the date of its refund on December 20, 1978.
2. The petitioner-corporation is a statutory corporation incorporated under the Warehousing Corporations Act, 1962, It earns income primarily from maintaining and letting of godowns or warehouses for storage, processing or facilitating the marketing of agricultural commodities. It is claimed that in terms of section 10(29) of the Income-tax Act, 1961 (hereinafter referred as "the Act"), in the case of an authority constituted under any law for the marketing of commodities, any income derived from the letting of godowns or warehouses, for storage, processing or facilitating the marketing of commodities, is not to be included in computing the total income of a previous year of any person. As such the said income derived from letting of godown or warehouses for storage, processing or facilitating the marketing of commodities is excluded and does not form part of the income which is chargeable to income-tax. Despite this clear provision, the Income-tax Officer (Companies-cum-Special Circle), Chandigarh (Respondent No. 2), issued demand notice under section 156 of the Act for the payment of advance taxes in terms of section 210 in respect of the assessment year 1973-74 on June 19, 1972, and January 2, 1973 (revised February 24, 1974), revised again calling upon the petitioner-corporation to pay advance tax of Rs. 11,89,673 on its total income which included the aforesaid excluded income in terms of section 10(29) of the Act. The petitioner-corporation deposited the entire amount as demanded. It deposited Rs. 1,10,995 on September 8, 1972, another sum of Rs. 1,10,995 on December 14, 1972, and Rs. 9,67,683 on March 13, 1973. Thereafter it filed a return dated July 25, 1973, declaring its taxable income from business at Rs. 1,84,203 after excluding the income derived from letting of godowns or warehouses. It was indicated that the tax was being deposited under section 140A under protest as the assessee claimed exemption and was in appeal before the Income-tax Appellate Tribunal, Chandigarh Bench, Chandigarh. After completion of audit of the accounts of the corporation, a revised return was filed in which the total taxable income of the corporation was declared at Rs. 2,14,053. The Income-tax Officer, District III(1), Patiala, however, vide his order dated January 30, 1976, assessed the total income of the petitioner-corporation at Rs. 23,85,169. The difference between the revised return income and the income as finally assessed by the Income-tax Officer was in fact exempted under section 10(29) of the Act which was liable to be excluded in computing the taxable income of the petitioner-corporation. The Income-tax Officer, raised a demand of Rs. 13,77,435. The petitioner-corporation, however, deposited a sum of Rs. 1,87,762 on March 10, 1976. At the same time an appeal was filed by the petitioner-corporation against the assessment order dated January 30, 1976, before the Appellate Assistant Commissioner, Patiala, who quashed the assessment order on the short ground that the Income-tax Officer had not complied with the provisions of section 144B of the Act. The Income-tax Officer was directed to proceed in accordance with law after complying with the provisions of section 144B of the Act. It was stated that it was thus clear that the original assessment dated January 30, 1976, was thus wholly non-est. The Income-tax Officer, however, on March 22, 1976, reiterated his previous computation of income by ignoring the provisions of section 10(29) of the Act and raised a demand of Rs. 13,77,435. The petitioner-corporation again went in appeal challenging the legality and validity of the assessment, which was accepted by the Appellate Assistant Commissioner, Ambala Range, Ambala, vide her order dated May 10, 1978 (annexure P-2). It is in compliance of the said order that the Income-tax Officer, Circle Office, Chandigarh (respondent No. 2), passed an assessment on November 23, 1978 (annexure P-3), which is said to be in accordance with the return of the petitioner, i.e., return filed for a sum of Rs. 2,14,053. There was, however, a minor addition of Rs. 2,085. The petitioner-corporation now claims that it is entitled to interest on refund of the excess payment made by way of advance tax as well as further payment of Rs. 1,87,762 made on March 10, 1976, in accordance with law up to the date of refund. Respondent No. 2 made a refund of Rs. 12,52,556 on December 21, 1978. This represents the amount of excess advance tax paid and tax subsequently paid on March 10, 1976. This amount has been refunded without any interest to the petitioner-corporation, on account of non-grant of interest, the petitioner-corporation filed a revision petition under section 264 of the Act, before the Commissioner of Income-tax, Patiala (respondent No. 1), who vide his order dated May 5, 1982 (annexure P-5), rejected the revision petition of the corporation. It is against the said order that the present writ petition has been filed assailing the same.
3. Notice was issued in the case and the respondents filed their written statement, in which the factual aspects of the pleadings are admitted. It is accepted that a demand notice under section 156 of the Act for payment of advance tax under section 210 of the Act for a sum of Rs. 11,89,673 was issued. These notices were issued in view of the departmental circular dated November 4, 1977. It is also admitted that the Income-tax Officer, District III(1), Patiala, vide his order dated January 30, 1976, assessed the total income of the petitioner-corporation and that the corporation deposited further tax. Assessment was made again and a demand of Rs. 13,77,435 was raised. This assessment was completed on August 10, 1976, and not on March 23, 1976. On August 23, 1976, the assessment order, demand notice and challans were served on the petitioner through registered post. It is also accepted that the assessment order was challenged before the Appellate Assistant Commissioner who remanded the case to the Income-tax Officer to make assessment in accordance with the directions contained in the order dated May 10, 1978 (annexure P2). It is, however, denied that the assessment framed by the Income-tax Officer, in accordance with the directions of the Appellate Assistant Commissioner, was in the nature of framing of first assessment. The assessment framed after remand carried the modifications and directions of the Appellate Assistant Commissioner. The passing of assessment order dated November 23, 1978, is admitted. However, it is denied that the same was the first regular assessment order against the assessee-petitioner. It is admitted that the revision petition was filed by the assessee-petitioner which it is stated has been rightly dismissed by the Commissioner of Income-tax (respondent No. 1). Consequently, it is prayed that the writ petition be dismissed.
4. I have heard learned counsel for the parties and with their assistance gone through the records of the case.
5. Sri B. K. Jhingan, learned counsel for the petitioner-corporation, has contended that the corporation is entitled to the sum of Rs. 7,94,012 by way of interest on the refund amount of Rs. 12,52,556. It is contended that this refund was received by the petitioner-corporation on December 21, 1978.
6. The petitioner-corporation deposited advance tax of Rs. 1,10,995 on September 8, 1972, and this was the tax finally charged. Then on December 14, 1972, advance tax amounting to Rs. 1,10,995 was deposited on which tax charged was Rs. 13,884 and a refund of Rs. 97,111 was made by the respondents on December 21, 1978. On March 13, 1973, the advance tax deposited by the petitioner-corporation was Rs. 9,67,683 and this amount was refunded on December 21, 1978. The amounts as stated were deposited by the petitioner-corporation during the period 1972-73. Thereafter, on March 10, 1976, the advance tax deposited was Rs. 1,87,762 which was also refunded on December 21, 1978. In this manner interest at the rate of 12 per cent. per annum is claimed on the sum of Rs. 97,111 plus Rs. 9,67,683 for the period from April 1, 1973, to December 20, 1978, amounting to Rs. 7,31,295. On the amount of Rs. 1,87,762 interest amounting to Rs. 62,717 is claimed for the period from March 10, 1976, to December 20, 1978. In this manner, the interest on the amount of refund has been made, which amounts to Rs. 7,31,295. It is contended by learned counsel for the petitioner-assessee that on a consideration of section 214 especially sections 214(2), 219, 240 and 244(1A), the interest is to be paid on refund whatever view may be taken of the expression "regular assessment". This it is contended to be so in view of the introduction of section (1A) to section 244 of the Act with effect from October 1, 1975, by the Taxation Laws (Amendment) Act, 1975.
As against this, Shri R. P. Sawhney, learned senior advocate appearing with Shri N.G. Sharma, advocate for the Revenue, has contended that the entire claim of the petitioner-assessee is misplaced and that the order dated May 5, 1982 (annexure P5), passed by the Income-tax Commissioner, Patiala (respondent No. 1), is just and reasonable. He further contends that the first assessment is dated January 30, 1976, and the question whether it is set aside in appeal is inconsequential and what is relevant is the first assessment for the purpose of interest payable.
7. On the basis of the above pleadings and contentions urged by the respective counsel appearing for the parties, the question that is to be seen is whether the petitioner-assessee is entitled to interest on the refunded amount from the date of deposit of the advance tax to the date of refund in the light of the provisions of sections 214(2), 219, 240 and 244(1A) of the Act.
8. In order to appreciate the respective contentions of the parties, the relevant provisions of the Act as they were applicable at the relevant time in respect of the present case may be adverted to. Sections 214, 219 and 244 of the Act read as follows :
"214. (1) The Central Government shall pay simple interest at 12 per cent. per annum on the amount by which the aggregate sum of any instalments of advance tax paid during any financial year in which they 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 the 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 the 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."
"219. Any sum, other than a penalty or interest, paid by or recovered from an assessee as advance tax in pursuance of this Chapter shall be treated as a payment of tax in respect of the income of the period which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable, and credit therefor shall be given to the assessee in the regular assessment."
9. "244. Interest on refund where no claim is needed.
-- (1) Where a refund is due to the assessee in pursuance of an order referred to in section 240 and the Income-tax Officer does not grant the refund within a period of three months from the end of the month in which such order is passed, the Central Government shall pay to the assessee simple interest at twelve per cent. per annum on the amount of refund due from the date immediately following the expiry of the period of three months aforesaid to the date on which the refund is granted.
(1A) Where the whole or any part of the refund referred to in subsection (1) is due to the assessee, as a result of any amount having been paid by him after the 31st day of March, 1975, in pursuance of any order of assessment or penalty and such amount or any part thereof having been found in appeal or other proceeding under this Act to be in excess of the amount which such assessee is liable to pay as tax or penalty, as the case may be, under this Act, the Central Government shall pay to such assessee simple interest at the rate specified in sub-section (1) on the amount so found to be in excess from the date on which such amount was paid to the date on which the refund is granted :
Provided that, where the amount so found to be in excess was paid in instalments, such interest shall be payable on the amount of each such instalment or any part of such instalment, which was in excess, from the date on which such instalment was paid to the date on which the refund is granted :
Provided further that no interest under this sub-section shall be payable for a period of one month from the date of the passing of the order in appeal or other proceeding :
Provided also that where any interest is payable to an assessee under this sub-section, no interest under sub-section (1) shall be payable to him in respect of the amount so found to be in excess.
(2) Where a refund is withheld under the provisions of section 241, the Central Government shall pay interest at the aforesaid rate on the amount of refund ultimately determined to be due as a result of the appeal or further proceeding for the period commencing after the expiry of three months from the end of the month in which the order referred to in section 241 is passed to the date the refund is granted."
10. The case of learned counsel for the petitioner in the first instance is that the petitioner-corporation is entitled to interest on the refund of the amount as claimed in accordance with the provisions of section 214(2) read with section 219 of the Act. Section 214(1) provides that the Central Government is to pay simple interest at 12 per cent. per annum on the amount by which the aggregate sum of any instalments of advance tax paid during any financial year in which they are payable under sections 207 to 213 exceeds the amount of tax determined on regular assessment, from the first day of April, next following the said financial year to the date of the 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 is also payable on that instalment from the date of its payment to the date of the regular assessment. Sub-section (1A) of section 214 provides that where on completion of the regular assessment the amount on which interest was paid under sub-section (1) is 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 the Act shall apply accordingly. Sub-section (2) of section 214 provides that on any portion of such amount which is refunded under hapter XVII, interest shall be payable only up to the date on which the refund was made.
Section 219 provides that any sum other than a penalty or interest paid by or recovered from an assessee as advance tax in pursuance of Chapter XVII is to be treated as a payment of tax in respect of the income of the period which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable, and credit therefor shall be given to the assessee in the regular assessment. The provisions of section 214, therefore, provide that the interest is payable on regular assessment from the first day of April next following the said financial year to the date of the regular assessment for the assessment year immediately following the said financial year. Interest is payable only up to the regular assessment and not up to the date of refund in terms of section 214 of the Act. On any portion of such amount which is refunded under Chapter XVII, interest is payable up to the date on which the refund was made. Section 219 of the Act only provides for giving the credit for advance tax, which is to be given to the assessee in the regular assessment. These provisions were considered by the Supreme Court in Modi Industries Ltd. v. CIT [1995] 216 ITR 759, the Supreme Court considered the provisions of sections 219 and 214 of the Act and held as follows (page 782) :
"This section (i.e., section 219) introduces a legal fiction that the amount of advance tax paid shall be treated as payment of tax in respect of income of the relevant previous year. It also provides that credit for this advance tax has to be given to the assessee in the regular assessment. These provisions were necessary because the liability to pay advance tax has been imposed by sections 207 and 208 and is calculated on the basis of the income computed in the latest previous assessment and adjusted in the manner laid down in section 209. This is not the same thing as the charge of income-tax imposed by section 4 on the total income of the previous year which has to be computed in the manner laid down in Chapter XIV of the Act. The purpose of collection of advance tax is stated in section 199 which declares that the amount of advance tax paid by the assessee is to be treated as payment of income-tax which is levied by section 4 on the total income of the previous year. The Income-tax Officer will have to determine the amount of income-tax payable by the assessee in the assessment order. At that stage, he has to treat the amount of advance tax paid by the assessee as payment of income-tax in respect of the income of the relevant assessment period. In other words, by legal fiction, the amount of advance tax paid by or recovered from the assessee is treated as payment of income-tax in respect of income of the period 'which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable'. Once the amount of advance tax is treated as payment of tax in respect of income of the relevant previous year and credit as such for the amount has been given to the assessee in the assessment order, the amount loses its character of advance tax and becomes income-tax paid in respect of the income of the relevant previous year. The interest payable under section 214 on any excess amount standing to the credit of the assessee is limited to the date of the order of assessment and not to the date of the refund. The amount retained by the Income-tax Officer towards satisfaction of the demand raised in the assessment order must be treated as payment of income-tax by the assessee. If the liability is reduced in appeal, refund will be ordered of the amount of income-tax which was paid in excess of the reduced demand. Interest under section 214 is payable only up to the date when the amount of advance tax is treated as payment of income-tax and is set-off against the income-tax demand raised in the assessment order. The excess amount, if any, after adjustment of the amount of income-tax payable by the assessee will have to be refunded under the provisions of Chapter XIX of the Income-tax Act. Interest on delayed refund, if any, has to be paid under section 243. If in the assessment order, the Income-tax Officer determines that any sum is refundable to the assessee, that sum will have to be refunded under section 237, If the refund is not paid within due time, interest will have to be paid under section 243 on the refundable amount till the date of the order of the refund. The underlying idea behind this section has been taken to the logical conclusion by section 244(1A) which applies where the assessee pays tax or penalty after March 31, 1975, pursuant to an order of assessment or penalty. If as a result of appeal or other proceeding the payment of tax is determined to be in excess of the amount which the assessee was liable to pay, the Central Government has to pay interest to the assessee on the excess amount from the date on which the tax was paid to the date on which the refund was granted (excluding the month in which the order was passed). Payment of tax after March 31, 1975, will include the amount of advance tax which was retained by the Income-tax Officer after March 31, 1975, and was adjusted towards the tax liability of an assessee pursuant to an order of assessment."
In so far as the applicability of section 214 is concerned the same has been held that the interest payable thereunder on any excess amount standing to the credit of assessee is limited to the date of the order of assessment and not to the date of the refund. Besides, if the liability is reduced in appeal, refund will be ordered of the amount of income-tax which was paid in excess of the reduced amount. However, interest under section 214 is payable only up to the date when the amount of advance tax is treated as payment of income-tax and is set off against the income-tax demand raised in the assessment order. In terms of section 214 interest payable on an excess amount standing to the credit of the assessee is limited to the date of the order of assessment and not to the date of refund. Besides, if the liability is reduced interest under section 214 is payable only up to the date when the amount of advance tax is treated as payment of income-tax and is set off against the income-tax demand raised, in the assessment order and the interest on the delayed payment is to be paid under section 243. The Commissioner of Income-tax following a decision of this court in CIT v. Rohtak Delhi Transport Pvt. Ltd. [1981] 130 ITR 777, disentitled the assessee for interest on the refunded amount. This court in the said decision held that the provisions of section 214 of the Act deal with the grant of interest for the period from April 1, next following the financial year during which the tax was paid up to the date of the regular assessment period and not other period. It was held that where the advance tax paid is not more than as determined to be payable on regular assessment, the provisions of section 214 will not entitle the assessee to get interest on the amount which may become refundable to the assessee on the reduction of tax in an appeal. On the regular assessment as framed on January 30, 1976, no refund was due and, therefore, the provisions of section 214 were rightly held not to entitle the assessee for any interest.
11. Therefore, in terms of section 219 by legal fiction the amount of advance tax paid by or recovered from the assessee is treated as payment of income-tax in respect of income of the period, which would be the previous year for an assessment year next following the financial year in which it was payable. Once the amount of advance tax becomes income-tax paid in respect of the income of the relevant previous year and credit as such for the amount has been given to the assessee in the assessment order, the amount loses its character of advance tax and becomes income-tax paid in respect of the income of the relevant previous year. Therefore, section 219 of the Act is inapplicable for the relief as claimed by the petitioner. The excess amount, if any, after adjustment of the amount of income-tax payable is to be refunded under the provisions of Chapter XIX of the Act and interest on delayed payment, if any, is to be paid under section 243. Besides, if in the assessment order the Income-tax Officer determines that any sum is refundable to the assessee, that sum is to be refunded under section 237 and if the interest is not paid within due time the interest is to be paid under section 243 on the refundable amount till the date of the order of the refund. Section 243 of the Act as it was applicable at the relevant time reads as under :
"243. (1) If the Income-tax Officer does not grant the refund, --
(a) in any case where the total income of the assessee does not consist solely of income from interest on securities or dividends, within three months from the end of the month in which the total income is determined under this Act, and
(b) in any other case, within three months from the. end of the month in which the claim for refund is made under this Chapter, the Central Government shall pay the assessee simple interest at 12 per cent. per annum on the amount directed to be refunded from the date immediately following the expiry of the period of three months aforesaid to the date of the order granting the refund.
Explanation. -- If the delay in granting the refund within the period of three months aforesaid is attributable to the assessee, whether wholly or in part, the period of the delay attributable, to him shall be excluded from the period for which interest is payable."
12. The position, therefore, that emerges is that the petitioner-corporation is not entitled to interest under section 219 as it only provides that advance tax paid under Chapter XVII is to be treated as payment of tax in respect of the income of the period which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable.
In the case in hand, the initial assessment was made on January 30, 1976, which was set aside in appeal because procedure provided for under section 144B of the Act was not followed. The assessment was again made on March 22, 1976, in which the previous computation of income earlier made was reiterated and a demand of Rs. 13,77,435 was made. This again was set aside in appeal by the Appellate Assistant Commissioner, Ambala Range, Ambala, vide order dated May 10, 1978 (annexure P2). It is in compliance with the said order in appeal that the Income-tax Officer, Circle Office, Chandigarh (respondent No. 2), passed an assessment on November 23, 1978 (annexure P-3), which was in accordance with the return of the petitioner-corporation except for minor addition of Rs. 2,085. In Modi Industries [1995] 216 ITR 759 (SC) on the core question, viz., the meaning and purport of the expression "regular assessment" in section 214(1) of the Act, it was held to mean and refer to the original assessment made, under section 143/144 of the Act. This conclusion was arrived at after considering the judgments of the various High Courts and yet still recording a foreward that this is one of those questions which does not admit of one clear cut answer. Therefore, the date January 30, 1976, is to be taken as the "regular assessment" for the purpose of section 214(1) of the Act. As such, for the amount deposited on December 14, 1972, and March 13, 1973, no interest on the refund amount would be payable as no refund was made out after the first regular assessment framed on January 30, 1976, and it is only in consequence of the decision of the Appellate Assistant Commissioner and the subsequent assessment order dated November 23, 1978 (annexure P3), that refund became due and the same was paid on December 20,1978, i.e., in the next month of the assessment. As held in Modi Industries' case [1995] 216 ITR 759 (SC), the interest payable under section 214 on any excess amount standing to the credit of the assessee is limited to the date of the order of the assessment and not to the date of the refund. The amount retained by the Income-tax Officer towards satisfaction of the demand raised in the assessment order must be treated as payment of income-tax by the assessee. If the liability is reduced in appeal, refund would be ordered of the amount of income-tax which was paid in excess of the reduced amount and interest under section 214 of the Act is payable only up to the date when the amount of advance tax is treated as payment of income-tax and is set off against the income-tax demand raised in the assessment order. Therefore, in terms of the assessment order dated January 30, 1976, the advance tax was adjusted. It is in consequence of the appellate decision that the Income-tax Officer (respondent No. 2) passed an assessment order dated November 23, 1978 {annexure P3), which created the refund and the refund was paid on December 21, 1978.
13. Learned counsel for the petitioner contends that even if in terms of section 214 of the Act, the petitioner-corporation is not entitled to the relief claimed, the same can be granted in terms of section 244(1A) of the Act as in the instant case the assessment orders were passed after March 31, 1975, and sub-section (1A) to section 244 was inserted by the Taxation Laws (Amendment) Act, 1975, with effect from October 1, 1975. In support of his contention learned counsel for the petitioner-corporation relies upon the judgment in the case of CIT v. Udhoji Shrikishandas [1996] 222 ITR 736, in which a Division Bench of the Madhya Pradesh High Court held that the fact that the assessee had quoted a wrong provision of law could not be a good reason to deny relief if otherwise the assessee was entitled to it. In the said case the contention urged by the applicant was that the assessee had claimed relief under section 244(1A) of the Act, the appellate authority should not have directed consideration of the claim under sections 214 and 244 of the Act and mere quoting of a wrong provision was not a good reason to deny relief if otherwise he is entitled to it.
14. There is no dispute to this proposition of law. However, the petitioner-corporation is not entitled to interest on the refunded amount as no refund was made out after the initial assessment framed on January 30, 1976. It is only in consequence of the decision of the Appellate Assistant Commissioner and the subsequent assessment order dated November 23, 1978 (annexure P3), that refund became due. In Modi Industries ltd, [1995] 216 ITR 759 (SC), it has been explained that the excess amount, if any after adjustment of the amount of income-tax payable by the assessee will have to be refunded under the provisions of Chapter XIX of the Act. Interest on delayed refund, if any, has to be paid under section 243. If in the assessment order, the Income-tax Officer determines that any sum is refundable to the assessee, that sum will have to be refunded under section 237. If the refund is not paid within due time, interest will have to be paid under section 243 on the refundable amount till the date of the order of refund. It is held that the underlying idea behind section 243 has been taken to, its logical conclusion by section 244(1A) which applies where the assessee pays tax or penalty after March 31, 1975, pursuant to an order of assessment or penalty. As already noticed above, the petitioner-corporation deposited in all advance tax of Rs. 11,89,673 on various dates, i.e., on September 8, 1972, December 14, 1972, and March 13, 1973, for the assessment year 1973-74. Besides, it filed its return dated July 25, 1973, declaring its taxable income from business at Rs. 1,84,203 after excluding income derived from letting of godowns or warehouses. These deposits and the returns were thus filed before March 31, 1975. The requirement of section 244(1A) is "where the whole or any part of the refund referred to in sub-section (1) is due to the assessee as a result of any amount having been paid by him after the March 31, 1975, in pursuance of any order of assessment or penalty." Therefore, the refund as a result of any amount having been paid by the assessee after March 31, 1975, is to be in pursuance of any order of assessment.
15. In the case in hand, as already noticed, the petitioner-corporation made payment of advance tax amounting to Rs. 1,10,995 on September 8, 1972 ; amounting to Rs. 1,10,995 on December 14, 1972, and amounting to Rs. 9,67,683 on March 13, 1973, for the assessment year 1972-73. A refund of Rs. 97,111 out of the sum of Rs. 1,10,995 deposited on December 14, 1972, and the entire sum of Rs. 9,67,683 deposited on March 13, 1973, was made on December 21, 1978. Therefore, these amounts which have been deposited before March 31, 1975, interest on the refunded amount cannot be claimed in terms of section 244(1A) of the Act.
16. In so far as the amount of Rs. 1,87,762 deposited on March 10, 1976, is concerned (i.e., after March 31, 1975) it may be noticed that the same was deposited in terms of the assessment order dated January 30, 1976, whereby a demand of Rs. 13,77,435 was raised by the Income-tax Officer. The petitioner-corporation filed an appeal against the assessment order dated January 30, 1976, which was quashed on the ground that the Income-tax Officer had not complied with the provisions of section 144B of the Act. The petitioner-corporation in its petition has itself claimed that the original assessment dated January 30, 1976, was wholly non est. Therefore, it cannot be said that the deposit of Rs. 1,87,762 on March 10, 1976 was in pursuance of an order of assessment so as to claim interest in terms of sub-section (1A) of section 244 of the Act. The Income-tax Officer on March 22, 1976, reiterated his previous computation of income by raising a demand of Rs. 13,77,435. This was again assailed by the petitioner-corporation and its appeal was accepted by the Appellate Assistant Commissioner, Ambala Range, Ambala, vide order dated May 10, 1978 (annexure P2), and the assessment order was set aside. The Income-tax Officer, Circle Officer, Chandigarh (respondent No. 2), passed an assessment order dated November 23, 1978 (annexure P3) in which the claim of the assessee was accepted except for a minor amount of Rs, 2,085. It is in consequence of the said assessment order dated November 23, 1978 (annexure P3), that a refund of Rs. 1,87,762 was made on December 21, 1978.
17. The advance tax that was paid, as held in Modi Industries Ltd. [1995] 216 ITR 759 (SC), is to be treated as payment of income-tax in respect of the income of the relevant assessment period. The assessment order was thus made on November 23, 1978, the refund was made in the very next month on December 21, 1978, Therefore, no interest is payable as in Modi Industries Ltd.'s case [1995] 216 ITR 759 (SC) in respect of the advance tax paid is to be determined by the Income-tax Officer to the extent of income-tax payable by the assessee in the assessment order. At that stage, the Income-tax Officer has to treat the amount of advance tax paid by the assessee as payment of income-tax in respect of the income of the relevant assessment period. It is held therein that by legal fiction the amount of advance tax paid or recovered from the assessee is treated as payment of income-tax in respect of the income for the period which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable. Once the amount of advance tax is treated as payment of tax and credit has been given in the assessment order, the amount loses its character of advance tax and becomes income-tax paid in respect of the income of the relevant previous year. Therefore, on this account the petitioner-corporation is not entitled to any interest on the refunded amount. The first regular assessment for the purposes of section 214(1) in respect of the petitioner-corporation was framed on January 30, 1976, and the assessee was not held entitled to any refund. It is on account of the decision of the Appellate Assistant Commissioner, as also the subsequent assessment order dated November 23, 1978, that some refund became due to the assessee. The interest claimed in terms of section 244(1A) is also not admissible as has been discussed above.
18. The petitioner, in the circumstances, is not entitled to claim interest on delayed refunds in terms of section 243(1)(a) or (b) of the Act. To claim interest in terms of section 243(1) it is to be shown that the total income of the assessee does not consist solely of income from securities and dividends and in any other case within three months from the end of the month in which the claim for refund is made under Chapter XIX. The claim of the petitioner for interest on the refund before the Commissioner (respondent No. 1) was in terms of section 214 of the Act which was declined in terms of the impugned order dated May 5, 1982 (annexure P5).
As a result of the foregoing discussion, there is no merit in this petition and the same is dismissed. However, in the circumstances there shall be no order as to costs.