Full Judgment Text
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CASE NO.:
Appeal (civil) 3088 of 2006
PETITIONER:
M/s. R.R.Holding P. Ltd
RESPONDENT:
Commissioner of Income Tax,Delhi & Anr
DATE OF JUDGMENT: 21/07/2006
BENCH:
ARIJIT PASAYAT & LOKESHWAR SINGH PANTA
JUDGMENT:
J U D G M E N T
(Arising out of SLP (C) No. 15613 of 2004)
ARIJIT PASAYAT, J.
Leave granted.
Appellant calls in question legality of the order passed by
a Division Bench of the Delhi High Court dismissing the
appeal filed under Section 260(A) of the Income Tax Act, 1961
(in short the ’Act’), holding that no reference was necessary.
The High Court held that the Income Tax Appellate
Tribunal (in short the ’Tribunal’) examined the matter in detail
and came to hold as to what was the date of assessment. This
was a question of fact which was not required to be examined
in an appeal under Section 260(A) of the Act. The High Court
also noticed that the decision of this Court in Modi Industries
Limited & Ors. v. CIT & Another [1995 (216) ITR 759 (SC)] was
clearly applicable to the facts of the case.
According to learned counsel for the appellant, High
Court failed to notice that the decision in Modi Industries’ case
(supra) has no application to the facts of the present case.
The true ambit of Section 244(1A) of the Act has not been kept
in view by the High Court. It is pointed out that in the
assessee Appellant’s own case for immediately succeeding
assessment order i.e. 1987-88 Tribunal held that Modi
Industries’ case (supra) was not applicable to almost identical
factual scenario. The department has questioned correctness
of the judgment and the High Court has admitted the appeal
in ITA 88 of 2004.
In response, Mr. Mohan Prasaran, learned Additional
Solicitor General submitted that the issue is clearly covered by
the decision of this Court in Modi Industries’ case (supra) and
the High Court was, therefore, justified in its view.
We consider it unnecessary to examine whether in the
factual background, Section 244(1A) of the Act has any
application. It may be noted that the assessee had filed its
return for the assessment year in question on 20.6.1986
declaring a loss of Rs.4151/-. It was mentioned in the return
that there was a brought forward loss of Rs.11,175/- from the
Assessment year 1985-86 and a total loss of Rs.15,326/-was
claimed to be carried forward. Subsequently, on 23.6.1987,
the assessee filed a revised return showing the same figure of
loss of Rs.4,151/- and the carried forward loss of Rs.11,175/-.
But it claimed tax refund of Rs.10,100/-, because of the tax
deduction at source on a sum of Rs.10,00,000/- advanced to
M/s. Blitz Publication Pvt. Ltd. The order in terms of Section
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143(1) on the facts passed on 29.7.1987 accepted the returned
loss. While the assessment proceedings were in progress it
came to the notice of the Department that for the relevant
assessment year a Japanese Company is paying a sum of
Rs.1,61,52,472/- plus Rs.21,71,121/-by way of commission in
respect of purchases made by the Department of Electronics,
Government of India, from M/s Sumitomo Corporation, the
aforesaid Japanese Company. The amount was paid at London
in the account of M/s Allied Petro Agencies. The information
was passed on by the Government of India to the Income Tax
Department.
In the meantime i.e. on 17.8.1987 a letter was written by
the assessee to the Commissioner of Income Tax, Delhi-III
wherein it admitted the commission income of Rs.1.61 crores
and odd and offered to pay tax thereon. The assessing officer,
however, had already completed the assessment and since
commission income had not been included in the returned
income, notice under Section 148 of the Act was issued on
31.8.1987. On that very day the assessee filed an application
with reference to the order made in terms of Section 143(1),
submitting that total income assessed on the basis of profit
and loss account, Balance Sheet and return filed was not
correct as it did not take note of income disclosed
subsequently to the Commissioner wherein it offered an
amount of Rs.1.61 crores for taxation. It was also submitted in
the said communication that taxes on the amount of Rs.1
crore and odd have been deposited on 19.8.1987 and a further
sum of Rs.17,144/- on 27.8.1987.
The question that arises for consideration is what is the
date which is to be reckoned for the purpose of grant of
interest in terms of Section 244(1A) of the Act. We need not
examine this question because undisputedly for the
subsequent assessment order the Tribunal took a different
view and an appeal filed by Revenue against the Tribunal’s
order is under consideration of the High Court.
The basic issue is whether Modi Industries’ case (supra)
has any application to the facts of the case.
Section 244(1A) of the Act reads as follows:
Interest on refund where no claim is needed.
"244. xxx xxx xxx
(1A) 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 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
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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."
The basic requirements are that: (a) there is a refund
due, (b) The whole or part of the refund referred to in Section
244(1) is due as a result of any amount having been made
after 31st March, 1975, (c) The payment must be paid
pursuance to any order of assessment or penalty, (d) Such
amount or any part thereof as paid is found in appeal or other
proceedings under the Act to be in excess of amount which
such assessee is liable to pay as tax or penalty.
The assessee has to establish that he fulfils all the above
conditions.
In view of the aforesaid position it is but appropriate that
the High Court should hear the matter afresh. Undisputedly a
question of law is involved which is required to be adjudicated
more particularly when for the subsequent year an appeal has
been admitted and the basic question to be considered has
been formulated. In the instant case, appropriate question
relevant to the assessment year in question shall be
formulated.
Above being the position the impugned order of the High
Court is set aside and the matter is remitted to it for a fresh
consideration alongwith ITA No. 188 of 2004.
The appeal is disposed of. No costs.