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K.V. Pillaiah and Sons Vs. Commissioner of Income-tax, Karnataka-i - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKarnataka High Court
Decided On
Case NumberWrit Petition No. 9954 of 1976
Judge
Reported in[1980]122ITR181(KAR); [1980]122ITR181(Karn)
ActsIncome Tax Act, 1922 - Sections 66 and 66(7)
AppellantK.V. Pillaiah and Sons
RespondentCommissioner of Income-tax, Karnataka-i
Appellant AdvocateK. Srinivasan, Adv.
Respondent AdvocateS.R. Rajasekhara Murthy, Adv.
Excerpt:
- constitution of india articles 226 & 227; [s. abdul nazeer, j] writ jurisdiction discretionary power decision making process judicial review held, if the decision is vitiated by mala fides, unreasonableness and arbitrariness, the court must exercise its discretionary power under article 226 of the constitution of india. the said power under article 226 shall be exercised with the great caution and also in furtherance of public interest and not merely on the making out of a legal point. on facts, held, it is clear from the undisputed facts that the leasing of the factory on lease, rehabilitated, operate and transfer scheme is in the interest of the farmers, workers and employees, financial institutions and the state government and also in the public interest. the state..........the commissioner may allow......' 6. it is clear that interest is to be allowed on the amount overpaid. overpayment would be from the very date of payment when the assessment is reduced as a result of the high court's order. there can be no doubt that interest would have to be paid from the time when there was overpayment. the order of the high court or other appellate authority which reduces the assessment only indicates that there is an overpayment where payment of the assessed tax has already been made. it does not mean that the overpayment is only from the date of such order of the appellate authority of the high court. the proviso also indicates that the commissioner is given a discretion in the matter of fixing up the rate of interest. he cannot curtail the period for which.....
Judgment:

Srinivasa Iyengar, J.

1. The question involved in this writ petition is about the period for which interest was payable under the proviso to s. 66(7) of the Indian I.T. Act, 1922.

2. In respect of the assessments for the assessment years 1946-47 to 1048-49, and for the assessment year 1950-51, there were references to this court. By virtue of the answers given by this court, the petitioner was entitled to a refund of the amounts of tax paid by him. He made applications to the Commissioner of Income-tax to allow the refund and after considerable correspondence an order dated March 4, 1976, was communicated to the petitioner, a copy of which has been marked as Ex. A.

3. Therein, the Commissioner stated that, so far as the assessment year 1950-51 was concerned, interest was payable only from July 30, 1970, as the Income-tax Appellate Tribunal had passes an order under s. 66(5) in conformity with the judgment of the High Court only on that date. It further stated that, so far as the other years are concerned, as the Commissioner had directed the ITO to give effect to the High Court's order and such direction was received by the ITO on September 3, 1971, interest would be paid only from that date. It transpires that the amounts due by way of refund were adjusted in respect of the arrears due for some subsequent years. Therefore, the Commissioner said that interest would be allowed only up to the dates of such adjustment. The Commissioner directed that interest to be paid of 6% per annum.

4. It is contended for the petitioner that the direction made by the Commissioner that interest was payable only from July 30, 1970, and September 3, 1971, is untenable and is unwarranted on the provisions of s. 66(7).

5. The said provision is as follows :

'Notwithstanding that a reference has been made under this section to the High Court income-tax shall be payable in accordance with the assessment made in the case :

Provided that, if the amount of an assessment is reduced as a result of such reference, the amount overpaid shall be refunded with such interest as the Commissioner may allow......'

6. It is clear that interest is to be allowed on the amount overpaid. Overpayment would be from the very date of payment when the assessment is reduced as a result of the High Court's order. There can be no doubt that interest would have to be paid from the time when there was overpayment. The order of the High Court or other appellate authority which reduces the assessment only indicates that there is an overpayment where payment of the assessed tax has already been made. It does not mean that the overpayment is only from the date of such order of the appellate authority of the High Court. The proviso also indicates that the Commissioner is given a discretion in the matter of fixing up the rate of interest. He cannot curtail the period for which interest is to be paid and postponed it to a date subsequent to the date of actual payment which as a result of the High Court's order has become an overpayment. The restriction imposed by the Commissioner is thus without authority of law. The petitioner was entitled to interest from the date when the assessed tax for the said years had been paid and up to the date when they were adjusted towards subsequent years.

7. A writ shall issue that the Commissioner shall modify his order accordingly. Parties shall bear their own costs.


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