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Trustees of H.E.H. the Nizam's Miscellaneous Trust Vs. Commissioner of Wealth-tax, Central Range, Bangalore and Anr. (09.09.1983 - APHC) - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtAndhra Pradesh High Court
Decided On
Case NumberWrit Petition Nos. 6109 to 6125 of 1979
Judge
Reported in(1985)44CTR(AP)223; [1984]150ITR423(AP)
ActsWealth Tax Act, 1957 - Sections 34A and 34A(3)
AppellantTrustees of H.E.H. the Nizam's Miscellaneous Trust
RespondentCommissioner of Wealth-tax, Central Range, Bangalore and Anr.
Appellant AdvocateK. Lakshminarayana, Adv.
Respondent AdvocateM. Suryanarayana Murthy, Adv.
Excerpt:
direct taxation - interest on refund amount - sections 34 a and 34 a (3) - whether liability to pay interest on amount of tax ordered to be refunded is absolute under section 34 a (3) after expiry of period of six months from date of order - whether interest becomes payable after six months of order of appellate tribunal or on qualification of amount to be refunded by wto pursuant to order of appellant tribunal - high court observed from provisions that claim for refund must arise 'as result of any order passed in appeal or other proceeding under this act - amount has to be refunded to assessee 'without his having to make any claim in that behalf' - liability to pay interest would run from date immediately following expiry of period of six months of aforesaid date on which refund is.....madhava reddy, c.j. 1. these writ petitions are filed by the trustees of h.e.h. the nizam's miscellaneous trust, hyderabad, seeking a writ of certiorari to quash the order of the cwt, karnataka (central) bangalore, in w.t. as. nos. 2 to 18/wt/25-cit-c dated may 31, 1979 and to direct the wto, central circle-iii, hyderabad, 2nd respondent herein to pay the petitioner interest under s. 34a of the w.t. act, 1957 (hereinafter referred to as 'the act') at the rates in force until refund is made or the amount is adjusted towards tax due, if any. 2. the two principal questions that arise for consideration are : '1. whether the liability to pay interest on the amount of tax ordered to be refunded is absolute under section 34a(3) of the act after the expiry of the period of six months from the.....
Judgment:

Madhava Reddy, C.J.

1. These writ petitions are filed by the Trustees of H.E.H. the Nizam's Miscellaneous Trust, Hyderabad, seeking a writ of certiorari to quash the order of the CWT, Karnataka (Central) Bangalore, in W.T. As. Nos. 2 to 18/WT/25-CIT-C dated May 31, 1979 and to direct the WTO, Central Circle-III, Hyderabad, 2nd respondent herein to pay the petitioner interest under s. 34A of the W.T. Act, 1957 (hereinafter referred to as 'the Act') at the rates in force until refund is made or the amount is adjusted towards tax due, if any.

2. The two principal questions that arise for consideration are :

'1. Whether the liability to pay interest on the amount of tax ordered to be refunded is absolute under section 34A(3) of the Act after the expiry of the period of six months from the date of the order and

2. Whether interest becomes payable after six months of the order of the Appellate Tribunal or on the quantification of the amount to be refunded by the WTO pursuant to the order of the Appellant Tribunal and lastly

3. Whether any enquiry was necessary consequent upon the Appellate Tribunal's order for the purpose of quantifying the amount of payment and whether that enquiry must necessarily be completed within a period of six months and whether irrespective of who was responsible for the delay, the liability to pay interest arises after a lapse of six months.

3. In order to appreciate the contentions giving rise to the above questions of law, the few facts necessary, which are practically common to all the writ petitions, may briefly be stated. The trustees of the petitioner-trust filed wealth-tax returns for the assessment years 1957-58 to 1972-73. The assessments were completed and the tax due was recovered from the Petitioner. These assessment orders were the subject-matter of appeals and ultimately the Appellate Tribunal by its order dated March 31, 1974 in W.T. As Nos. 1525 to 1527 of 1965-66 in regard to the assessment years 1957-58 to 1959-60, directed as under :

'1. The interest of a particular beneficiary in the trust is to be worked out on the basis of the proportion the said income bears to the total income of the fund and the proportionate part of the trust fund should be taken as assessable under section 21(1) with reference to that particular beneficiary. Similar assessments would have to be made with reference to the other beneficiaries.

2. In view of the decisions of the Supreme Court, the assessments under section 21(1) or s. 21(4) as the case may be, would be based on the facts in each year.

3...... the assessments under section 21(4) and under section 21(1) would have to be different and separate.

The assessments are directed to be modified accordingly. The appeals are partly allowed.'

4. Likewise, in respect of assessment years 1960-61 to 1972-73, a consolidated order was made by the Appellate Tribunal in W.T. As. Nos. 65 to 79 (Hyd) /70-71 & 120/H/70-71 and 39 to 41 (Hyd)-73-74 on January 15, 1975. The principal questions in these appeals were whether the portion of the trust fund which bears the same proportion as the aggregate amount of annuities paid to the beneficiaries of the trust under cls. 2(d), (e),(f), (g), (h),(i), (j),. (1)(i), (1)(ii) and (iii) of the trust deed bear to the total income of the fund should be excluded from the assessments, whether the amounts set apart under clause 2(m) of the trust deed for the benefit of the several beneficiaries mentioned in the Fifth Schedule should be excluded from the assessments and whether the tax liability for the assessment years in question should have been allowed by the AAC. The WTO was directed to work out the exact liabilities and allow them subject to the condition laid down in s. 2(m)(iii) being satisfied. The assessment relating to the years were modified and the appeals were allowed.

5. Pursuant to the order of the Appellate Tribunal, the assessee-trust got substantial relief and was entitled to refund of large amounts. That had to be worked out by the WTO. The order of the Appellate Tribunal was communicated to the WTO and the assessee requested the WTO to determine the amount of refund which the trust was entitled to. Instead of calculating the amount of refund due to the trust. the WTO entered into correspondence with the assessee. He called upon the assessee to furnish information as to the other assets and wealth of the beneficiaries under the plea that that information was necessary to give effect to the order of the Appellate Tribunal. In reply thereto, the assessee-trust gave the full method of working out the tax liability through its letter dated October 10, 1974. By a further letter dated November 5, 1974, the assessee informed the 2nd respondent that the trust was not aware of the particulars of the other wealth of the beneficiaries. On April 3, 1975, the 2nd respondent addressed a letter which was received by the petitioner on April 9, 1975, stating that he cannot give effect to the order of the Appellate Tribunal without the information regarding the other assets and wealth of the beneficiaries. In that letter, he stated that he had two courses open : (i) to reopen the assessments of the beneficiaries and bring to charge the corpus payments due to them under certain clauses of the trust deed, or (ii) to assess the said corpus in the hands of the trustees under s. 21(1), and opined that the second method was more convenient both for the Department as well as the trustees and, accordingly, proceeded to give effect to the Appellate Tribunal's order. The assessee objected to such a method of assessment through its letter dated April 11, 1975. Thereafter, accepting the objection raised by the petitioner in compliance with the order of the Appellate Tribunal, the WTO passed a modification order on April 28, 1975, in GIR No. 601M/1957-58 with regard to the assessment year 1957-58, and determined the excess amount of tax refundable to the petitioner at Rs. 2,42,552. By another order of even date, in respect of assessment year 1958-59, he determined the excess amount of tax refundable to the petitioner at Rs. 2,50,963 and for the assessment year 1959-60 at Rs. 3,48,261 making a total of Rs. 8,41,776. However, even after the determination of the amount refundable to the assessee, he did not choose to issue a cheque for the said amount in spite of several demands made by the assessee. Instead, he waited till August 23, 1976, and adjusted it towards tax subsequently assessed and determined as payable by the assessee. In respect of the other assessment years, the 2nd respondent instead of giving effect to the Appellate Tribunal's order and issuing a modification order at least on the lines on which he had passed the modification order in respect of the years 1957-58 to 1959-60, entered into further correspondence and while keeping the matter pending proceeded to complete the assessments of wealth for the subsequent years. He once again asked for the same information which he had sought earlier from the assessee on July 15, 1975. He passed orders of modification on December 23, 1976, for the assessment years 1960-61 to 1972-73. By virtue of these modification orders, a total sum of Rs. 36,86,718 became due and refundable to the petitioner-assessee. But even this amount was not refunded. Instead, the assessee was informed that it was adjusted towards the tax due from the petitioner-assessee for the subsequent years which assessments were completed simultaneously with the modification orders. The petitioner-assessee has, of course, challenged that this amount could not have been adjusted against the wealth-tax due and that the same has to be paid to it and not adjusted. Before the Appellate Tribunal, it also challenged the inclusion of a sum of Rs. 34,540 in the wealth and the same was ordered to be deleted on September 29, 1977, and the appeal was allowed to that extent and in respect of the rest of the claim, it was dismissed.

6. After the issuance of the modification orders, the petitioner requested the WTO to refund the amount through his letter dated December 15, 1976 and also claimed payment of interest. Even after the so-called adjustment, a sum of Rs. 78,220 was refundable. The petitioner requested for the refund of the amount and for payment of interest from the date the excess amount of tax was collected until it was refunded. No steps were taken during the period of first six months after the passing of the Appellate Tribunal's order or even subsequent to the passing of the modification orders to the assess the amount refundable. To a reminder issued by the petitioner on August 29, 1977, the only response of the WTO on September 2, 1977, was to say that the matter was receiving attention. For the first time by a letter dated September 6, 1977, the officer informed the petitioner that interest was not allowed and also explained the reasons for the delay in the issuance of the modification orders on the assessee and his failure to supply the information required of it. Lastly, he stated that the amount had been adjusted towards the tax due from the assessee. Against this order, which was in the form of a letter, the petitioner filed a revision petition before the CWT. That revision petition having been dismissed, the assessee is force to file these writ petitions.

7. In the counter-affidavit, the stand taken by the respondents is that the petitioner-assessee did not become entitled to the refund of tax by virtue of the Appellate Tribunal's order. The assessments had to be made by the WTO in accordance with the directions of the Appellate Tribunal and only on such orders being passed and the amount of tax being quantified, could the amount of tax refundable be ascertained and only one such ascertainment it became entitled to refund and not until then. Since the amount had been adjusted simultaneously with the order quantifying the amount of tax due from the petitioner-assessee, no liability to pay any interest was incurred by the Revenue. It is also the case of the Revenue that the petitioner-assessee itself had requested the Department to adjust the amount of tax refundable to it towards the arrears of tax or other advance tax due to it and therefore for any delay that had occured in so adjusting no interest was payable. It is their further stand that the delay in passing the modification orders was solely due to the failure of the assessee to furnish the information regarding the other assets and wealth of the beneficiaries which, according to the Department, was necessary to finalise the tax liability of the trust.

8. In the reply affidavit the assessee-trust categorically denied that it had earlier requested the Department to adjust the amount towards any advance tax or tax due and asserted that it had paid the advance tax by selling its securities and further that the request made earlier was never acted upon the plea that the wealth-tax assessments were yet to be completed. It also denied that there was any justification for demanding further particulars of the beneficiaries'assests and wealth after the Appellate Tribunal's order. In any event, those particulars could not be expected to be with the trustees who were merely administering the trust and not managing the other properties of the beneficiaries. Lastly, it was asserted that even without the particulars, the modification orders were in fact completed and, therefore, the assessee could not be held responsible for the inordinate delay on the part of the WTO in refunding the amount.

9. In order to determine the above questions, it is necessary to read the provisions of s. 34A of the Act. In so far as it is relevant for our present purpose, it as under :

'34A. (1) Where, as a result of any order passed in appeal or other proceeding (including a recitification proceeding) under this Act, refund of any amount becomes due to the assessee, the Wealth tax Officer shall, except as otherwise provided in this Act, refund the amount to the assessee without his having to make any claim in that behalf.

(2) Whether an order giving rise to a refund is the subject-matter of an appeal or further proceeding or where any other proceeding under this Act is pending and the Wealth-tax Officer is of the opinion that the grant of the refund is likely to adversely affect the Revenue, the Wealth-tax Officer may, with the previous approval of the Commissioner, withhold the refund till such time as the Commissioner may determine.

(3) Where a refund is due to the assessee in pursuance of an order referred to in sub-section(1) and the Wealth tax Officer does not grant the refund within a period of six months from the date of such order, 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 six months aforesaid to the date on which the refund is granted.'

10. It would be seen from the above provisions that the claim for refund must arise 'as a result of any order passed in appeal or other proceeding (including a rectification proceeding) under this Act'. Secondly, the amount has to be refunded to the assessee 'without his having to make any claim in that behalf'. Under sub-s. (3) of s. 34A, where a refund is due to the assessee and the WTO also does not grant the refund within a period of six months from the date of such order, the Central Government is placed under an obligation to pay to the assessee simple interest at 12 per cent. per annum. The liability to pay interest would run from the date immediately following the expiry of the period of six months of the aforesaid date on which the refund is ordered.

11. From the above narration of facts, it is clear that the assessment orders of the WTO in respect of the assessment years referred to above were not set aside but only modified. The assessee, which had admittedly paid the tax pursuant to the assessments, was granted some relief by the Appellate Tribunal, which directed refund of certain amounts and ordered the WTO to carry out the directions and issued modification orders. As the assessment orders were not set aside but only certain deductions were allowed it was only a matter of computation of the amount and issuing modification orders. It was not a fresh assessment order that was required to be made by the WTO. In fact the WTO did not purport to pass any fresh assessment order as such. If the contention of the Revenue is that the order of the Appellate Tribunal amounted to setting aside the assessment orders, then the Department would have been liable to refund the entire amount of tax paid by the petitioner which is much more than what has ultimately been quantified as refundable by it. On the other hand, only on the footing that the assessment order as such were not set aside but certain deductions were allowed and they were directed to determine the amount refundable to the assessee the modification orders were passed. The order of the WTO dated April 28, 1975, expressly mentions that is a 'consequential order'. The order also further goes on to record that it is being made in pursuance of the Appellate Tribunal's orders to revise the net wealth and the tax liability. In calculating the excess amount refundable, the amount of wealth assessed as per the original assessment is taken as the basis and the deductions worked out in accordance with the Appellate Tribunal's order are allowed and after working out the tax liability of the assessee as per the Appellate Tribunal's order, and deducting from out of it the tax already paid by the assessee, the excess amount refundable to the petitioner was ascertained. Even the order dated December 23, 1976, is on the same lines. In the body of the order, after referring to the operative portion of the Appellate Tribunal's order, the WTO proceeds to state : 'Respectfully giving effect to the said decision, the proportionate taxable wealth is computed as under and the balance refundable is arrived at'. From a reading of these orders there can be no manner of doubt that there was no fresh assessment but only a modification order and the amount of tax refundable was being refund thus arose 'as a result of the orders passed in appeal' by the Appellate Tribunal of March 31, 1974, and January 15, 1975, respectively as envisaged by s. 34A(1) of the Act. It is on this date that the assessee became entitled to the refund of the amount. Of course, in accordance with that order, the amount had to be quantified by the competent officer, in this case, the WTO (2nd respondent herein) . It is precisely because the Appellate Tribunal's order does not quantify the amount of relief granted and the amount of refund to which the assessee is entitled, that sub-s. (3) of s. 34A of the Act grants a period of six months mine the amount and grant the refund. If the Appellate Tribunal's order itself had quantified the amount, even this period of six months would not have been specified. Only because orders passed in appeal do not quantify the exact amount of tax payable and refund due and details have to be worked out as per the said direction, that the legislature thought it necessary to allow a period of six months to the officers concerned to determine the refundable amount of tax. If it were to be a fresh assessment, in some cases perhaps assessments would have become barred by time; but where it is a question of quantification of the amount of refund, that question does not arise. When the second respondent was merely quantifying the amount of refund, it cannot be said that the assessee became entitled to the refund as a result of the quantification of the amount. The quantification is only consequential to the order of the Appellate Tribunal. The right to refund arises as a result of the Appellate Tribunal's order and the exact amount to be refunded is determined by the WTO. It is not the WTO's order that entails him to refund but the order of the Appellate Tribunal. The WTO, by postponing the quantification of the amount refundable, cannot extend the period of limitation of six months prescribed under sub-s. (3) of s. 34A. That is the period of limitation prescribed by the statute, which by any act or omission of the authorities constituted under the Act, cannot be enlarged or curtailed.

12. Mr. Suryanarayana Murthy, the learned standing counsel for the Revenue, however, argues that a distinction has been made by courts between the debt owed and a debt due and, according to him, only where the debt becomes due but is not paid, interest becomes payable. He contends that that distinction must be made applicable to a case of refund as well. In this context he relies upon a judgment of the Supreme Court in Kesoram Industries v. CWT : [1966]59ITR767(SC) . One of the questions which their Loardships had to consider under W.T. Act in that case was whether in computing the net wealth of the assessee, the amount of the provision for payment of income-tax and super-tax in respect of the year of account was a 'debt owed' within the meaning of s. 2(m) of the W.T. Act and as such deductible in computing the net wealth of the assessee. Their Loardships observed (p. 784) :

'A debt is a present obligation to pay an ascertainable sum of money, whether the amount is payable in praesenti or in futuro; debitum in praesenti, solvendum in futuro. But a sum payable upon a contingency does not become a debt until the said contingency has happened. A liability to pay income-tax is a present liability though it becomes payable after it is quantified in accordance with ascertainable data. There is a perfected debt at any rate on the last day of the accounting year and not a contingent liability. The rate is always easily ascertainable...

All the ingredients of a 'debt' are present. It is a present liability of an ascertainable amount'.

13. In our view, this judgment, far from helping the respondents, support the contention of the petitioner that merely because the amount has to be ascertained, it does not cease to be a liability. The liability arose upon the Finance Act being passed and the tax became payable at the rate fixed thereunder. Likewise, in the present case, the liability was incurred by the Revenue by virtue of the Appellate Tribunal's order. The WTO had to merely quantify the liability in accordance with the direction of the Appellate Tribunal's order and refund the excess amount of tax recovered from the assessee. No doubt there is a distinction between a debt owed and a debt due. What s. 34A(1) envisages is that the refund should have been occasioned as a result of the order passed in appeal. It is in this context that the expression 'where a refund is due to the assessee' occurring in sub-s. (3) of s. 34A has to be understood. The refund in that context, in our view, became due as a result of the order passed by the Appellate Tribunal which was to be quantified by the WTO. As held by the Supreme Court in Kesoram Industries v. CWT : [1966]59ITR767(SC) , the mere fact that the amount has to be quantified does not take it out of the purview of the amount due.

14. Mr. Suryanarayana Murthy, the learned standing counsel for the Revenue, also relied upon a judgment of the Gujarat High Court in Baroda Board & Paper Mills v. ITO : [1976]102ITR153(Guj) . That was a case arising under the I.T. Act in which it was held that the income-tax for a particular assessment year becomes a debt due to the Crown only when the income-tax is calculated and assessed by reference to the income of the assessee for that particular year under consideration and, thereafter, the demand is made under the relevant provisions of the I.T. Act. It is only then that it becomes a debt due to the Crown and a debt due means a debt which is presently payable, which can be enforced and which is same thing as due and payable. Having regard to the facts of this case, this judgment also, in our view, does not in any way support the contention of the Revenue. In the case on hand, the tax was already assessed and paid by the assessee. The question was one of granting deduction which the Tribunal had ordered. So, the amount was to be refunded to and not collected from the assessee. The Revenue, which was liable to refund the amount, cannot postpone its liability by failing to quantify the amount refundable. The liability to refund having arisen under the Appellate Tribunal's order, the legislature itself determined the period within which such a calculation has to be made and the amount refunded. The legislature was quite aware of the fact that pursuant to the orders of the Appellate Tribunal, certain calculations have to be made and the amount refundable quantified before the refund could be made. So when the liability to refund arises on account of the Appellate Tribunal's order, the liability to pay interest on the amount refundable arises from that moment. But unless the amount refundable is quantified, it is not possible to issue the refund voucher. Lest the Revenue be saddled with the burden of paying interest on such amount during the period required for calculating this amount, to make the scheme of refund workable and at the same time ensure refund within a reasonable time, the legislature advisedly fixed a period of six months during which all calculations have to be made and the refund order issued. In any case, after the calculations are made, there is absolutely no justification for with holding the refund of the amount so ascertained. The legislature thought that a necessary calculations. To the same effect is the decision in CIT v. Ramprasad Mehra : [1975]100ITR468(Bom) . We do not, therefore, think it necessary to discuss the same in detail.

15. The other decision relied upon by the learned counsel for the Revenue, Sri Suryanarayana Murthy, in Union of India v. Raman Iron Foundry, : [1974]3SCR556 , is not directly in point and arose under the Arbitration Act and the Contract Act.

16. The only other decision that we need refer to is the decision of the Kerala High Court in New Woodlands v. CIT : [1982]138ITR795(Ker) . The learned single judge in that case was dealing with the case of liability to pay interest for failure to pay the amount of tax while the assessee was entitled to the refund. That was a case of making a fresh assessment and tax liability pursuant to a remand order. There, the assessment orders were set aside and fresh assessment orders had to be made. It was not a case of allowing certain dedications. The present cases are cases in which the appellate authority allowed deductions and directed the issuance of a modification order. Section 34-A deals with a case of refund occasioned by the orders passed in appeal or revision.

17. It is next argued for the Revenue that the Revenue was not responsible for the delay in passing the rectification order, for the assessee itself had not furnished the requisite material particulars essential for quantifying the amount of refund. This contention ignores the specific direction of Appellate Tribunal that the wealth of the assessee be proportionately assessee with reference to the share of the beneficiary. It did not further direct that the other wealth of the beneficiary should be taken into account in determining the tax liability of the trust. The particulars that were called for by the WTO from the petitioner-assessee were wholly irrelevant. That they were irrelevant was obvious from the fact that when the petitioner-assessee stated that the particulars of the other wealth of the beneficiaries were not available with it and that they were not relevant to the matteer in issue, the second respondent proceeded to pass the consequential order even without that information. In any event, any such particulars, if in the opinion of the WTO, were required to be ascertained, in the absence of those particulars being furnished by the assessee, he should have made his own enquiry and proceeded to quantify the amount of tax payable and on that basis determined the amount, if any, refundable to the petitioner-assessee within the period of six months. Whoever may be responsible for the daily in not furnishing those particulars to the WTO, the provisions of sub-s. (3) of s. 34A do not absolve the payment of interest on the amount of tax refundable to the assessee; nor does it extend the period within which tax may be refunded to the assessee without incurring the liability to pay interest. The liability to refund the tax on the expiry of the period of six months of the order which has occasioned the refund is absolute. The Act nowhere makes any provision for exempting the Revenue from the liability to pay interest on the amount refundable after that period on any ground, valid or otherwise.

18. It is also significant to note that in this case even after determining the amount, the tax was not refunded. Even though the amount to be refunded in respect of the assessment years 1957-58 to 1959-60 was order on April 28, 1975, the amount was not refunded; nor was adjusted towards any tax due from the assessee. It was only adjusted on December 23, 1976.In respect of the assessment years 1960-61 to 1972-73 and 1973-74, the consequential orders were made on December 23, 1976, and on that date itself it was adjusted.In fact, the consequential orders in respect of the assessment years 1960-61 to 1973-74 was passed on the same material that was available with the WTO when he made the modification orders in respect of the assessment years 1957-58 to 1959-60. Those orders could have been made on April 28, 1975, itself along with the orders in respect of those assessment years. For three years he kept the matter pending and proceeded to pass the order only on December 23, 1976, after completing the income-tax assessments of the petitioner. This, according to the petitioner, was deliberately done by the second respondent with a view to avoid actual refund of the amount and to enable him to adjust the same towards there tax liability determined later. The contention of the petitioner is that this adjustment was wholly unjustified, for, in fact, the petitioner had already paid this amount by way of advance tax by selling the securities and there were no arrears. Such an assertion was specifically made in para. 13 of the petitioner's affidavit, but that was not denied. Be that as it may, these arrears, even according to the respondents, were adjusted towards the tax alleged to be due from the petitioner only on December 23, 1976. As discussed above, inasmuch as the liability to refund arose on the date when the appeals were allowed by the Appellate Tribunal on March 31, 1974, and January 15, 1975, respectively, the liability to pay-interest thereon commenced on the expiry of six months from the respective date of the aforesaid orders.

19. The WTO has also stated in his counter that due to uncertainty of the position of law, the wealth-tax assessments were kept pending throughout the country and only after clarifications were issued, the WTO could complete those assessments. there were several such assessments and, therefore, in completing those assessments, he lost sight of the Appellate Tribunal's orders in these cases and could not pass the consequential order. However busily the WTO may have been engaged in other urgent work and whatever may have been his difficulties in passing the consequential orders, inasmuch as sub-s. (3) of s. 34-A prescribed thereunder, it is unnecessary for us to to consider how far the grounds stated for justifying the delay could be accepted. Even assuming that thay are true, the Revenue is not absolved of the liability to pay interest on the amount found to be refundable.

20. As per the assessment order dated December 23, 1976, relating to the assessment year 1974-75, a sum of Rs. 8,41,776 due by way of refund of wealth-tax pursuant to the Appellate Tribunal's order dated March 31, 1974, and the consequential order dated April 28, 1975, was treated as the wealth of the petitioner-assessee and was not adjusted towards income-tax or any other tax due from the petitioner. If it were adjusted towards any tax due from the petitioner, it could not have been shown as the wealth of the assessee. Likewise, from the assessment orders dated December 23, 1976, relating to the assessment years 1975-76 and 1976-77, a sum of Rs. 36,07,045 was shown as wealth-tax refundable as per the Appellate Tribunal's order dated January 15, 1975, and the consequential order made by the WTO on February 28, 1976, relating to the assessment year 1960-61 to 1973-74. If these wealth-tax refunds were adjusted towards income-tax due from there petitioner-assessee, obviously those amounts could not have been treated as wealth of the assessee for those years. It any other amount of tax was due and payable by the assessee, it was certainly open to the Revenue to adjust the refundable amount towards the said dues. But from these assessment orders, it is clear that up to December 23, 1976, this amount of wealth-tax found to be refundable to the petitioner-assessee was not adjusted and that was shown as the wealth of the assessee. Until it is adjusted towards any tax due and payable by the petitioner-assessee, or actually refunded to the petitioner, the liability of the Revenue to pay interest on that amount subsists.

21. The learned counsel for the Revenue lastly contended that the amount refundable to the petitioner-assessee was adjusted towards the tax due from it. Whether the tax ought to have been refunded in cash or they were entitled to adjust the same towards any amount of tax due (according to the petitioner, no tax was due from the petitioner-assessee) is a matter with which we are not now concerned in these writ petitioners. That is a matter to be agitated before the authorities concerned.

22. In view of the above discussion, the order of the Commissioner holding that the liability to pay interest would arise only after the quantification of the amount refundable pursuant to the Appellate Tribunal's order cannot be sustained and is accordingly quashed.

23. So far as these writ petitions are concerned, it must be further declared that on and from and date of the expiry of six months of the date of the orders of the Appellate Tribunal allowing the appeals, viz., March 31, 1974, and January 15, 1975, the assessee is entitled to the payment of interest on the amount of tax determined by the WTO as refundable to it. If on appeal it is found that the tax has been wrongly adjusted and no tax liability was subsisting on the date when the refund order was made and the amount was refundable to the petitioner-assessee, the Revenue would be liable to pay interest on the said amount from the aforesaid dates until the amount is refunded or validly adjusted.

24. These writ petitions are, accordingly, allowed with costs to the extent indicated above and there shall be a direction to pay interest on the amount of tax determined by the Wealth-tax Officer from March 31, 1974, and January 15, 1975, until the dated it is paid or validly adjusted. Advocate's fee Rs. 250 in each.


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