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Bardolia Textile Mills Vs. Income-tax Officer, Circle Ii, Ward-e, Surat - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtGujarat High Court
Decided On
Case NumberSpecial Civil Application No. 370 of 1980
Judge
Reported in[1985]151ITR389(Guj)
ActsIncome Tax Act, 1961 - Sections 2(4), 2(40), 4(2), 139, 141, 141A, 141A(1), 141A(4), 143, 143(1), 143(2), 143(3), 144, 147, 158, 207, 208, 209, 214(1), 214(1A), 214(2), 215, 244(1), 244(1A), 246 and 246(1)
AppellantBardolia Textile Mills
Respondentincome-tax Officer, Circle Ii, Ward-e, Surat
Appellant Advocate J.P. Shah, Adv.; K.C. Patel, Adv.
Respondent Advocate B.R. Shah, Adv.
Cases ReferredMarketing Federation of India Ltd. v. Union of India
Excerpt:
direct taxation - interest - section 214 (1) of income tax act, 1961 - application filed for issuing writ of mandamus to ito to pay interest under section 214 (1) - section 214 (1) provides for payment by central government to assessee of interest up to date of regular assessment - quantum of excess tax determined on basis of regular assessment - in case first assessment revised - excess tax determined with reference to revised assessment - interest payable on excess tax up to date of revised assessment - respondent ito directed to pay interest on amount of refund in accordance with section 214 (1) till date of revised assessment. - - act, 1922. section 18a was introduced in the 1922 act in 1944 as a war measure 'to combat inflation and to withdraw a part of the unprecedented amount.....poti, c.j.1. the question raised in this special civil application under article 226 of the constitution of india for a writ of mandamus directing the ito to pay interest under s. 214(1) of the i.t. act, 1961, is one on which differing views have been expressed by the high courts in india. the matter arises under the i.t. act, 1961. in a case where an assessee pays advance tax under ss. 207 to 213 in excess of the amount of tax determined on regular assessment, provision is made for payment by the central government of interest on the excess under s. 214(1) of the act. the interest is payable for the period from the 1st of april next following the financial year in which advance tax is paid and in cases where any such instalment is paid after the expiry of the financial year during which.....
Judgment:

Poti, C.J.

1. The question raised in this special civil application under article 226 of the Constitution of India for a writ of mandamus directing the ITO to pay interest under s. 214(1) of the I.T. Act, 1961, is one on which differing views have been expressed by the High Courts in India. The matter arises under the I.T. Act, 1961. In a case where an assessee pays advance tax under ss. 207 to 213 in excess of the amount of tax determined on regular assessment, provision is made for payment by the Central Government of interest on the excess under s. 214(1) of the Act. The interest is payable for the period from the 1st of April next following the financial year in which advance tax is paid and in cases where any such instalment is paid after the expiry of the financial year during which it is payable, the interest on such instalment will run from the date of payment. As to the point of commencement of the period for which interest is thus payable under s. 214(1) there is no controversy. The other terminus is the date of the regular assessment for the assessment year immediately following the above said financial year. The controversy concerns the meaning of the expression 'regular assessment' used in s. 214(1). Evidently, this is a provision obliging the Central Government to pay interest on the money paid by the assessee as advance tax and found to be in excess on assessment, just as law provides an obligation on an assessee to pay the interest on what is payable by him as determined on assessment when the advance tax paid falls short beyond the specified percentage of what is due. In normal cases, where there is only an original assessment and that becomes final, there would be no scope for controversy. But where the tax determined as payable by an assessee for an assessment year in an assessment made pursuant to the decision in an appeal or revision is less than the tax determined by the assessing authority at the time he made the first or original assessment, the question would arise whether the assessment to be reckoned is the first regular assessment or the subsequent assessment by reason of which subsequent assessment the assessee was entitled to the relief of refund. It is on this question that differing views have been expressed and evidently because the view expressed in one of the earliest of these cases, Sarangpur cotton . v. CIT : [1957]31ITR698(Bom) did not appeal to a Division Bench of this court, a reference has been made to the Full Bench. That is how the matter is now before us.

2. The petitioner is a partnership firm. The assessment years with which we are concerned in this application are 1964-65 to 1967-68 and also the assessment year 1969-70. The corresponding accounting years are Samvat years 2019 to 2022 and Samvat year 2024. Registration has been granted to the petitioner firm for these years. Advance tax was paid by the petitioner firm for these years during the course of the relevant accounting years. From the assessment orders passed in respect of these years, appeals to the AAC were taken. These appeals for the different years were disposed of by two sets of orders, Exts. B1 and B2, which cover other years also, but we are not concerned with those years. It is also not necessary to refer to these orders excepting to notice that they were passed in the year 1972, setting aside the assessments for the years in question with directions to pass fresh assessment orders in accordance with law. Fresh assessment orders for these years were passed only on September 24, 1976. These assessment orders are Ext. 'C' series in the petition. These assessment orders mention the section and sub-section under which assessment is made as s. 143(2). They refer to the original assessments having been completed earlier under s. 143(3) and these having been set aside in appeal with a direction to make fresh assessment. To the net profit returned by the assessee, certain adjustments are made and ultimately total income is determined for the respective years. It is mentioned again in the order that assessment is made under s. 143(2). This if followed by an order under s. 158 allocating the income to the partners taking due note of their respective shares. Consequent on such redetermination, the ITO made refunds of the following amounts which represent the difference between the advance tax paid and the tax payable on account of such assessments made fresh :

Rs.1964-65 24,4031965-66 3,2901966-67 2781967-68 and 1,8781969-70 1,147

3. That these amounts have been refunded is not in dispute, but in doing so, interest on these amounts was not paid to the assessee. This was said to be because the refund was due not by reason of the earlier assessments which had been set aside, but by reason of the fresh assessment made, and the Department has evidently taken the stand that reference to regular assessment in s. 214(1) of the I.T. Act, 1961, is to the original assessment. A request made by the petitioner for such payment of interest was declined by letter Ext. 'E' which mentions that : 'it is not permissible to recompute interest under section 214 of the Income-tax Act, 1961, with reference to appellate orders.' The assessee had pointed out in his letter that the Calcutta High Court had in the decision in Chloride India Ltd. v. CIT : [1977]106ITR38(Cal) held that such interest was due. Referring to this, in Ext. 'E' letter, the ITO told the petitioner that the said decision had not been accepted by the Department and the appeal filed against the decision before the Division Bench of the Calcutta High Court was pending. We may also mention here that the stand taken in Ext. 'E' letter was not that the petitioner was entitled to interest only up to the date of the first assessment by which we mean the original regular assessment (to which we may refer, for the sake of convenience, in this judgment as 'first assessment'), but that the petitioner was not entitled to interest at all on the excess amount refunded pursuant to the order of assessment passed pursuant to the decision in appeal (to which we may refer in this judgment as 'revised assessment', for the sake of convenience). The case of the Revenue is that where excess is not found to have been paid by the assessee on the determination of tax under the order of the first assessment, even though subsequently in the revised assessment it is seen that such excess was paid by the assessee by way of advance tax, interest will not be due on such excess refunded. There is no affidavit filed in reply, perhaps, considering the matter as purely one of law and, therefore, calling for no affidavit.

4. The question turns mainly on the construction of s. 214 of the I.T. Act as it stood during the relevant years. Necessarily, that section has to be understood in the context of the provisions in Part C of Chapter XVII of the I.T. Act which relates to advance payment of tax. The assessees, except those falling within certain classes, have to pay tax in advance. That is legal obligation. The scheme of the I.T. Act envisages payment of tax by such assessees during the very year in which they earn though what they have to finally pay is determined when assessment is made under the provisions of the Act. Tax paid in advance is then credited towards the dues of the relevant assessment year. If at the time of such assessment, it is found that the obligation of the assessee to pay advance tax has not been fully discharged by reason of the assessee having paid less than what is determined as due, he should not only pay the balance tax amount due, but also the interest on that amount except where the variation is not substantial, as specified. This is envisaged in s. 215 of the I.T. Act. The same scheme naturally envisages payment of interest to the assessee on the amount which has to be refunded as excess when it is found that on the determination of the tax due, advance tax is found to have been paid in excess. The payment of interest by the assessee under s. 215 is evidently on the principle that the assessee had been holding money due to the Central Government in his hands. When he pays such money later, he must pay it with interest. Where the Government holds the money of the assessee in its hands in excess of what is due, the Government is to pay interest on the money so held. If the matter were to be decided on simple logic or commonsense in the light of such a scheme for payment of interest on money due from one to the other, the answer to the case before us would be quite simple. Advance tax has been paid in excess. Though it might not have been found to be in excess, when the ITO originally passed the order of assessment, if, on the final liability of the party being determined pursuant to an order passed by the AAC, the amount determined as tax is seen to be less, it would be that amount alone which would be due from the assessee and any amount held by the Department in excess would be the amount due to the assessee. It may not be quite logical to decline to pay interest on the excess amount till the date of the revised assessment by which order alone such amount is determined as excess. Any contention that interest is payable only till the date of the first assessment which assessment did not in fact justify any refund at all may not be quite rational. There will be no logic at all to say that no interest will be payable for any period whatsoever since in the first assessment no excess was found paid by the assessee and such excess is seen paid only on the basis of the revised assessment. But we are not concerned merely with logic here. We are concerned with the provisions of a taxing statute. These have to be read and understood according to the language of the statute and if the plain language compels us to adopt an approach different from that dictated by any rule of logic, we may have to adopt it. Going through the imposing array of decisions on this question, we find that courts have expressed differing views, and numerically perhaps more authority is to be found for the view that interest would not be payable for the period up to the date of the revised assessment on the excess found refundable under such revised assessment though many of the High Courts hold that such interest will be due up to the date of the first assessment. Before we refer to these decisions, we will attempt to make an independent approach to the question. We first refer to the provisions of the I.T. Act which may have bearing on the question we are called upon to decide here.

5. Prior to 1944, there was no provision for payment of advance tax under the Indian I.T. Act, 1922. Section 18A was introduced in the 1922 Act in 1944 as a war measure 'to combat inflation and to withdraw a part of the unprecedented amount of money then in circulation, but like many other innovations in taxation legislation, it has outlived the exigency which gave it birth' (Kanga and Palkhivala, Volume 1, page 1063). Under the scheme of the I.T. Act, charge is on the income of the previous year. It is assessed and paid in the succeeding year upon the income of the previous year. Section 18A made a departure by obliging payment of tax by instalments in respect of income of the year in which it is earned. Section 18A was a very elaborate section. When the I.T. Act, 1961, substituted the earlier Act, the provision relating to payment of advance tax in s. 18A found its corresponding provisions in the new Act with, of course, many variations in s. 207 to 219, that being Part C of Chapter XVII. Section 4(2) provided for a charge for advance tax in the new Act. There was no corresponding provision in the Act of 1922. By s. 4(2), income-tax was made deductible at source or payable in advance, where it was so deductible or payable under any provisions of the I.T. Act. Section 207 specifies the categories of income on which tax is payable in advance in accordance with ss. 208 to 219. Section 208 provides for the condition of liability to pay advance tax. The computation of advance tax is dealt with in s. 209. Section 209 indicates that the basic factor to be taken into account in determining the advance tax payable by the assessee in the financial year is the total income of the latest previous year on which the assessee has been assessed by way of regular assessment. Several adjustments have to be made thereafter in order to arrive at the advance tax payable. Section 210(1) empowers the ITO to pass an order requiring payment of advance tax in accordance with ss. 207 to 209. How such tax is to be paid instalments is specified in s. 211. Section 212 enable an assessee who estimates, at any time before the last instalment of advance tax is due, that the tax payable by him would be less, to send an estimate to the ITO and to pay in accordance with such estimate. Of course, provisions are made in the Act for consequences arising from an improper estimate by the assessee. Section 213 permits postponement of instalments of advance tax in respect of income in the nature of commission receivable periodically, but not received or adjusted. The obligation of the Central Government to pay simple interest at 12 per cent. per annum on the excess received by way of advance tax is provided for in s. 214. Similar obligation on an assessee who has paid advance tax on his own estimate under certain circumstances is provided for in s. 215. Where the ITO, on making regular assessment, finds that there has been deficit payment of advance tax by underestimate or that the assessee has wrongly deferred the payment of advance tax, the Officer is empowered to direct the assessee to pay interest. The interest payable by an assessee when no estimate is made by him is provided for in s. 217 of the Act. The consequence of default in paying the advance tax is that the assessee will be deemed to be in default and that is provided in s. 218 of the Act. At the time the regular assessment is made, credit is to be given to the assessee for the payment made by him as advance tax. Where there has been a provisional assessment under s. 141A against the assessee, credit is to be given at the time of such provisional assessment. Provision therefor is made in s. 219 of the Act. Having referred to the sections in Part C, in Chapter XVII, which correspond to the provisions in s. 18A of the Indian I.T. Act, 1922, we may refer to certain other provisions which also may have a bearing on the controversy in the case. Section 237 relates to refund which subject is dealt with in Chapter XIX of the I.T. Act. If any person satisfies the ITO that the amount of tax paid by him or on his behalf or treated as paid by him or on his behalf for any assessment year exceeds the amount with which he is properly chargeable under the Act for that year he is entitled to a refund of the excess under s. 237 of the I.T. Act. Thus, the obligation to refund any amount which is found to be not due as tax in respect of the year for which it was paid arises under s. 237. Section 240 provides that where, as a result of any order passed in appeal or other proceeding under the Act, refund of any amount becomes due to the assessee, the ITO must refund the amount without the assessee having to make any claim in that behalf.

6. Section 244(1) provides for payment of interest to the assessee, where a refund is due in pursuance of an order s. 240 and the ITO does not grant the refund within a period of three months from the end of the months in which such order is passed. Interest on the amount of refund due is to be paid to the assessee for the period commencing from the date immediately following the expiry of the period of three months aforesaid till the date of refund. Section 244(1A) is quite relevant for our purpose. It was inserted in the section by the Taxation Laws (Amendment) Act, 1975, with effect from October 1, 1975. For the first time, specific provision is seen made for payment of interest on so much of the amount paid by the assessee in pursuance of any order of assessment or penalty as is found to be in excess by reason of a decision in appeal or other proceeding, provided such amount is paid after March 31, 1975. The section does not apply to any payment made in excess on or before March 31, 1975. It applies only to payments made pursuant to an order of assessment. Therefore, amounts paid by way of advance tax will not fall within the section. Naturally so, as, otherwise, the assessee will be entitled to interest till the date of the first assessment under s. 214(1) of the Act as also s. 214(1A) of the Act. While all payments made pursuant to an order of assessment are taken care of under s. 214(1A) all payments made earlier as advance tax fall within s. 214(1).

7. Now we will set out s. 214 of the Act (as it stood during the relevant period) to which we may have to make reference for the purpose of this judgment :

'214. Interest payable by Government. - (1) The Central Government shall pay simple interest at twelve 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 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.'

Section 214(1), it may be noted, deals with (1) on what amount interest is payable by the Central Government; (2) from what date such interest is payable; and (3) up to what date interest is so payable. Interest is payable only if the instalments of advance tax paid exceed the amount of the tax determined on regular assessment. If interest is payable, it is payable for the period from 1st day of April next following the financial year during which the advance tax is paid to the date of the regular assessment. The concept of the regular assessment is relevant in two contexts in the section. It is with reference to the regular assessment that the question whether any excess has been paid by way of advance tax has to be determined. It is up to the date of that regular assessment that interest has to be paid on the refund. The question to be posed is not 'up to what date interest is payable, the date of the first assessment or the date of the revised assessment', but 'on what amount is interest payable, on the amount that could be found to be excess on the basis of tax determined under the first assessment, or the revised assessment ?'

8. We called upon the Revenue to state its case categorically to ascertain whether the Revenue concedes that if at the time of first assessment the tax determined does not justify any refund, but consequent upon a revised assessment pursuant to the order in appeal or revision or otherwise, refund, is found due to the assessee, the interest is payable at least up to the date of the first assessment on such excess found on revised assessment or whether the case is that in such a case no interest is payable even up to the date of the first assessment. The latter would be the extreme case, but evidently that is the stand taken by the Revenue. The alternative stand of the Revenue is that at any rate interest will not be due on such excess found on revised assessment for the period after the date of the first assessment. Referring to s. 214(1), we notice that reference is made therein to regular assessments in two contexts as already noticed. The first is in the context of determining the excess. The excess is the advance tax paid which exceeds the amount determined on regular assessment. That refers to quantum. The second reference is to the date up to which the interest is to be paid. We will first up the case of the Revenue that in both contexts the reference to 'regular assessment' is to the first assessment and not the revised assessment. The result would be that where in the first assessment tax determined is not less than the advance tax paid there would be no excess on which interest would be due under s. 214(1), irrespective of any refund on account of the revised assessment. While refund will be due on account of the provision in s. 240 of the I.T. Act, no interest will be due on that refund for any period under s. 214(1). That is because in such a case, there would be no excess, and if there be no excess the question as to the date up to which the interest is payable would not arise at all. This would lead to very anomalous results. If an assessee pays advance tax of Rs. 50,000 and he is assessed by the ITO determining the tax payable as Rs. 60,000, but as a result of direction in appeal it is revised by the ITO to a tax of Rs. 30.000, the ITO is under an obligation to refund Rs. 20,000 on the determination of income pursuant to the revised assessment, but is under no obligation to pay interest on that amount under s. 214(1) for any period. If, on the other hand, the same ITO rightly determines the tax at the original assessment at Rs. 30,000, as it ought to be, the assessee would be entitled to refund of Rs. 20,000 and also interest on the amount of Rs. 20,000 up to the date of such regular assessment. Where the officer acts wrongly, the party would not be entitled to the interest, though such wrong is corrected later by the appellate authority. It is difficult to envisage that the Legislature contemplated that such a result should follow. Unless it be that we are compelled by the plain language of the section to so construe it, we would not be justified in doing it. This amply illustrates the fallacy of the approach of the Revenue that no interest would be payable even up to the date of the first assessment, a view which has not gained acceptance in many courts. We may, therefore, consider the alternative plea that interest would be payable only up to the date of the first assessment, but it will be so payable on the amount of excess determined on the basis of the revised assessment, a plea which has appealed to many courts.

9. The above contention of the Revenue in the alternative envisages two different meanings to be given to the term 'regular assessment' occurring in s. 214(1) of the Act. This contention assumes that in s. 214(1), the first reference to regular assessment is to the revised assessment, and the reference to regular assessment immediately following is to the first assessment. Read and understood in that manner, interest will be due up to the date of the first assessment, and the interest will be due on an amount found excess on the basis of the determination of tax under the revised assessment. It will be difficult to understand the sub-section in this manner for more than one reason. It is not as if the term 'regular assessment' appears in two different sections. It appears in one and the same sub-section. In the sequence in which it appears, it would be quite unreasonable to construe the term in two different senses. The term 'regular assessment' is defined in the statute. Section 2(4) which embodies the definition provides that 'regular assessment' means 'an assessment made under section 143 or section 144' and it cannot be disputed that an assessment made pursuant to a decision of an appellate authority is an assessment under section 143. The position is well settled (Kooka Sidhwa and Co. v. CIT : [1964]54ITR54(Cal) , Gopi Lal v. CIT and Dwarka Nath v. ITO [1965] 57 ITR 340. It is no doubt true that the definition is 'unless the context otherwise requires'. Normally, unless it is shown that the context calls for a different meaning to be given to the term used in the same section, one would be justified in assuming that the term used in the same section, one would be justified in assuming that the term has been used so as to mean the same, particularly when the sequence is such as in this case. There would be more reason to assume that the term 'regular assessment' is used in the same sense, that of referring to the revised assessment. It would be appropriate at least to start on such premises and only if the result disclosed by such an approach is unreasonable or unjustifiable, the need to look for another meaning would arise. If 'regular assessment' in s. 214(1) is understood as revised assessment, where there is one, the obligation on the State will be to pay interest on the amount paid as advance tax found to be in excess of what is due from the assessee on the basis of the revised or final assessment. Why should such a result be considered unreasonable Why should any attempt be made to reach another result We do not think that this goes against the scheme of the Act. On the other hand, it promotes the scheme. Broadly speaking there is obligation on the assessee to pay interest on money which should have been paid to the State, but which was not paid as required by law and there must be corresponding obligation on the State to pay interest on the money taken in excess by the State and found to be such excess later. The provision for payment of interest was envisaged simultaneously with the scheme of introduction of advance tax. No doubt that underwent several changes and refinements, but it remained essentially a part of the scheme relating to payment of advance tax. There will be more logic in saying that, if interest is to be paid on any amount retained by the Government in excess found ultimately to be due to the assessee, such interest is to be paid till the date on which it is determined as excess, consequent upon which an obligation to pay such excess arises in law, than to say that such obligation is only to pay up to an earlier date, the date when the ITO erroneously determined higher tax as payable by the assessee. If in a case, where the ITO makes a correct determination, the assessee gets the benefit of refund with interest immediately, where he makes a mistake on assessment which is revised later, interest must naturally be payable up to the date of such revision. Our attempt is only to show that no circumstances disclosed in the facts justify an approach suggested by the Revenue in regard to the meaning to be assigned to the term 'regular assessment' in s. 214(1) of the Act.

10. There is yet another approach that could be made to the controversy. What happens to an assessment by the ITO when such assessment is subjected to an appeal and pursuant to the appellate decision, the matter is reopened obliging the ITO to pass a fresh order When he makes a fresh order of assessment, he determines afresh the tax payable by the assessee. It is not as if two assessment orders survive against the assessee then. The first order, when it did operate was legal and recovery and enforcement could legally have been made pursuant to that order. But after the passing of the second order, the obligation of the assessee arises from that order and where it is a fresh assessment determining tax payable for the year consequent upon the appellate decision setting aside the order of the ITO, the order of the ITO would no longer survive. It is true that it lived earlier. But by the passing of the fresh order it is the fresh order that would operate. By the decision in appeal, the earlier order ceases to be valid and it is replaced by the fresh order. At that point of time, any reference to an assessment order could only be to the order of assessment passed afresh. It could not be to an order which was once passed and which had become dead, having been set aside. That is the case here, as Ext. 'C' series will show. The earlier orders were passed under s. 143. The subsequent orders, Ext. 'C' series, are also passed under s. 143(3) of the I.T. Act as the orders themselves bear out. So when the question of refund is raised pursuant to the order passed by the ITO on directions by the appellate authority, the question of excess over the advance tax paid has to be determined on the basis of the order in force, and not an order which was once alive. It is not that, at that point of time, there are two orders, one an original assessment order referred to in this judgment as the 'first order' and the other a fresh order referred to herein as the 'revised order'. There is only one operative order thereafter. In this case, it is Ext. 'C' series and, if so, when called upon to decide the question of refund, necessarily, it is the revised orders that should be taken into account to determine the amount of refund. Once those orders are referred to for the purpose of determining the quantum of refund, necessarily the obligation to pay interest on such quantum will be determined with reference to those orders, as those are the only orders that could be referred to as assessment orders at that time. Reference in s. 214(1) can only be to the revised order, where the original order is set aside and a fresh order is passed and, if, so, interest would be payable up to the date of such revised order.

11. We may appropriately refer now to another contention urged on behalf of the Department. It is said that if s. 214(1) is understood as entitling the assessee to interest not only up to the date of the first assessment, but up to the date of the revised assessment, but up to the date of the revised assessment, there will be an anomaly in that there will be double payment of interest to the assessee after October 31, 1975. Evidently, the reference is to s. 244(1A) inserted in the Act by the Taxation Laws (Amendment) Act, 1975, with effect from October 1, 1975. It is said that this sub-section enables an assessee to interest on the amount found to be in excess by reason of a decision in appeal or other proceeding under the Act from the date on which the amount was paid to the date on which the refund is granted, that this will, therefore, take care of the interest for the entire period during which the excess was in the hands of the Department and, therefore, if s. 214(1) was also to operate to enable interest to be claimed under that section, the assessee will get the benefit of refund under two sections resulting in duplication of refund. The answer is to be found in s. 214(1A) itself. That excludes amount paid as advance tax. In terms, that sub-section refers only to amount paid by the assessee after March 31, 1975, in pursuance of any order of assessment or penalty. The reference could only be to amounts paid after such order or assessment or penalty is made. Advance tax paid is not amount paid in pursuance of any order of assessment or penalty. That will have to be taken care of independent of s. 244(1A). Therefore, the situation is not only not anomalous, but in a way indicates that the interest payable under s. 214(1) is not up to the date of the first assessment, but up to the date of the revised assessment. Otherwise, in respect of advance tax, even if there be excess, no interest will be due for the period from the date of the first assessment whereas such interest will be due on amount paid pursuant to an assessment. That would really be anomalous. We will have to refer to this again when we consider a decision of some importance, that of the Bombay High Court in Sarangpur Cotton . v. CIT : [1957]31ITR698(Bom) .

12. Before we refer to the decided cases on the subject, it may be profitable to advert here to the proviso to s. 214(1) as well as to sub-s. (1A) of s. 214, for we fell that the Revenue is making an incorrect approach to the understanding of those sections, which approach is seen made also in some decisions to which we will advert. Section 141A was inserted by the Finance Act of 1968 with effect from April 1, 1968. The original s. 141A inserted by the Finance Act, 1963, with effect from April 1, 1963, was omitted by the Finance Act of 1964 with effect from April 1, 1964, and it was inserted again in the Act by the Finance Act of 1968. The section, as it stood on April 1, 1968, underwent a change by substitution by s. 42 of the Taxation Laws (Amendment) Act, 1975, with effect from April 1, 1976. Section 141A provided for provisional assessment for refund. Where a return has been furnished under s. 139 of the Act and the assessee claims that the tax paid or deemed to have been paid exceeds the tax payable on the basis of the return and the accounts and documents accompanying it, the ITO is obliged to make a provisional assessment in a summary manner within six months, if he is of the opinion that the regular assessment is not likely to be made within six months from the date of furnishing of the return, and the assessee claims that the tax paid on the basis of the return is in excess. The provisional assessment is of the sum refundable to the assessee. Sub-s. (4) of s. 141A deals with how the refund made under sub-s. (1) of s. 141A is to be dealt with on the regular assessment being made on the assessee. Where the amount refunded under s. 141A is equal to the amount determined as excess on regular assessment, the amount refunded is to be deemed to have been refunded towards the regular assessment. When refund exceeds the amount refundable on regular assessment, the excess amount refunded is to be deemed tax payable by the assessee. The proviso to s. 214(1) was inserted evidently by reason of the insertion of s. 141A. Had it not been for this amendment, s. 214(1), as it stood, would have enabled the assessee to claim interest on the advance tax to the date of regular assessment notwithstanding the fact that such amount or part of it might have been refunded pursuant to a provisional assessment under s. 141A(1). That would mean that the assessee would be entitled to interest even for a period after the amount due to him had been paid back to him. Therefore, logically there was need to insert the proviso to s. 214(1) to limit the date up to which interest would be due under s. 214(1), in a case where refund is made under s. 141A(1), to the date of the provisional assessment. That is the purport of the proviso. Now we come to sub-s. (1A) which was also inserted by the same Finance Act. That was evidently a sequel to the insertion of the proviso in s. 214(1). In a case, where a provisional assessment had been made under s. 141A(1), it is possible that when a regular assessment is made thereafter it is found that the amount as determined due under s. 141A(1) was really not refundable as the tax determined is higher than that envisaged at the provisional assessment. By its very nature, the determination of tax refundable under s. 141A is provisional subject to adjustment at the regular assessment. When the proviso to s. 214(1) was inserted, naturally there had to be a provision as to what should be the consequence of the regular assessment. To illustrate by reference to a specific case, if a person has paid advance tax of Rs. 50,000 and he moves the ITO, even before the assessment that actually he is liable to pay only Rs. 40,000 as tax for the year in question, and the ITO is of the opinion that the regular assessment cannot be finalised within six months of filing the return, he is obliged under s. 141A(1) to determine the tax refundable to the assessee and for that purpose a summary procedure is prescribed. If after such summary procedure, he accepts the assessee's case and assesses the amount refundable as Rs. 10,000, the assessee will naturally get that amount which means that only Rs. 40,000 remained with the Department, though Rs. 50,000 was originally paid as advance tax. It would be necessary to provide that interest payable under s. 214(1) up to the date of the regular assessment would not be payable in respect of the sum of Rs. 10,000 after the date of the provisional assessment. That by itself may not be sufficient to take care of the situation. There should also be a provision as to what should happen if at the regular assessment made thereafter the tax due is determined as Rs. 50,000. The assessee who had originally paid Rs. 50,000 as advance tax has walked away with Rs. 10,000 on account of the order under s. 141A(1). Section 141A(4)(b) provides that if the amount refunded exceeds the amount refundable on regular assessment, the excess amount refunded is to be deemed tax payable by the assessee. Therefore, after regular assessment is made, the amount of Rs. 10,000 which had been refunded to the assessee, but which is due, will be treated as tax payable by the assessee. Then again there would be the question of interest on the sum of Rs. 10,000 refunded from the date of refund to the date of the regular assessment. The obligation under s. 214(1) being to pay interest on excess advance tax, when such excess is refunded on a date earlier to the regular assessment, viz. virtue of an order under s. 141A(1), it would be natural to make such refund with interest thereon up to the date of the provisional assessment. The proviso indicates that no interest shall be paid for the period after the date of the provisional assessment which evidently means that interest will be paid up to the date of provisional assessment. In case such refund is made with interest up to the date of the provisional assessment, what should happen when, in the regular assessment, it is found that the amount ought not to have been refunded, because that much also would be due as tax. In that case, it could be said that on completion of the regular assessment, the amount on which interest was paid pursuant to the proviso to s. 214(1) had been reduced. In other words, if Rs. 50,000 is due as tax, but out of Rs. 50,000 paid as advance tax, Rs. 10,000 has been refunded with interest up to the date of the provisional assessment, besides finding that Rs. 10,000 more is due and recoverable which will follow from s. 141A(4)(b), provision has to be made for recovery of interest on Rs. 10,000 which had been paid over pursuant to the assessment of refund under s. 141A(1). If interest had been paid on Rs. 10,000 under the proviso s. 214(1) and that amount has been reduced to nil by the regular assessment, the interest really payable to the assessee has to be reduced to nil and, therefore, excess interest paid would be treated as tax payable by the assessee and the provisions of the I.T. Act shall apply as such to that amount. This evidently is the purport of s. 214(1A) and is evidently provided as part of a scheme necessitated by refund under s. 141A(1). While s. 141A(1) envisages refund on account of an assessment of the amount refundable, the proviso to s. 214(1) limits the liability of the Department to pay interest to the date of the provisional assessment. But, if the Department meets that liability, it must be made good in the event the refund is found to be in excess. Naturally, therefore, the interest paid on the refund has to be recovered and that is recovered as tax invoking s. 214(1A). If we understand the scheme in this manner with due reference to the legislative history of the provision concerned, there is no anomaly or ambiguity in the section. It is no doubt true that the proviso to s. 214(1) does not in terms refer positively to payment of interest on any amount refunded. Though the proviso is worded in the negative, it is evident that it contemplates payment of interest up to the date of the provisional assessment for which there is no separate provision and read with s. 214(1A), it is apparent that the situation where such interest has been paid, but on final determination it is found such interest was really not payable as no such refund was due, is dealt with by the provision that such interest is recoverable as tax. We have taken pains to elaborate this only because it has been urged by the Revenue and successfully before the High Court of Kerala that the term 'regular assessment' in sub-s. (1A) of s. 214 must refer to an assessment subsequent to the first assessment and, therefore, it should refer to the revised assessment. The term 'completion of the regular assessment' in sub-s. (1A) of s. 214 is to be understood in the context of the proviso which was inserted by the same Act which contemplated a provisional assessment in order to determine the tax refundable. Had such a provision not been inserted, there would have been no need for sub-s. (1A). Perhaps the purpose of sub-s. (1A) would have been better served by enacting it as a further proviso to s. 214(1).

13. It will be pertinent here to notice how the Revenue has understood the scheme of the proviso to s. 214(1) as well as s. 214(1A). The construction put on these proviso by the Revenue accords with our approach and we particularly notice that the Revenue has read in the proviso to s. 214(1), the obligation to pay interest on the refund made under s. 214(1A), though in express terms this obligation is not provided therein and it has to be implied and read into the proviso. The view of the Revenue is reflected in paragraph 91 of Circular No. 6-P dated July 6, 1968 of the Central Board of Direct Taxes which reads (See Indian Tax Laws (1969), Appendix II, p. lxxxvi) :

'Any refund of tax on the provisional assessment will be deemed to have been granted in respect of the regular assessment when such assessment is completed. Where, on completion of the regular assessment, it is found that the refund already granted on provisional assessment is in excess of the refund, if any, actually due, the excess amount, together with interest, if any, paid thereon, is deemed to be tax payable by the taxpayer, and will be recoverable accordingly.'

14. Now we will refer to the decisions bearing on the subject. We need not be taken to have considered these decisions after we have formed our conclusions in the matter. We have been persuaded to adopt the view we have expressed herein after a due consideration of the decisions to which we will presently advert. We, with great respect, agree with the view expressed by Sabyasachi Mukharji J. in two decisions of the Calcutta High Court Chloride India Ltd. v. CIT : [1977]106ITR38(Cal) and General Fibre Dealers Ltd. v. ITO : [1979]116ITR40(Cal) . The contrary view expressed by High Courts of Allahabad, Delhi, Andhra Pradesh, Punjab and Haryana, Kerala and Bombay in the decisions to which we will refer has been influenced considerably by an early Division Bench decision of the Bombay High Court in Sarangpur Cotton . v. Commissioner of Income-tax [1975] 31 ITR 698. Chagla C.J., delivering the judgment for the Division Bench, considered the question of the date up to which interest was payable by the Government to the assessee under s. 18A(5) of the Indian I.T. Act, 1922. The view taken by the Bench that it was only up to the date of the first assessment has persuaded many courts to take a similar view with regard to s. 214(1) of the Income-tax Act. Therefore, the decision of the Bombay High Court in Sarangpur Cotton . v. CIT : [1957]31ITR698(Bom) , needs a close examination.

15. To appreciate the decision reached in the Bombay case, it would be advisable to outline the legislative history of the provision with which we are concerned here. We have already adverted to the fact that the provision for payment of advance tax was introduced in the Indian I.T. Act, 1922, for the first time in 1944. It was by incorporating s. 18A(5) into the Act. That section had many sub-sections dealing with many of the matters which are now dealt with in ss. 207 to 219 of the I.T. Act, 1961. The section corresponding to s. 214 of the Act is s. 18A(5). The sub-section corresponding to s. 216 of the present Act is s. 18A(6). We will extract s. 18A(5) and s. 214 here :

Section 18A(5) Section 214'(5) [The Central Government shall pay '214. Interest payable bysimple interest - Government - (1) The Central(i) at two per cent. per Government shall pay simpleannum on any amount payable in interest at [twelve] per centaccordance with the provisions of per annum on the amount bythis section before the 1st day of which the aggregate sum ofApril, 1955, and paid accordingly; any instalments of advance(ii) at four per cent. per annum tax paid during any financialon any amount payable in accordance year in which they are payablewith provisions of this section after under sections 207 to 213the 1st day of April, 1955, and paid exceeds the amount of the taxaccordingly;] from the date of payment determined on regular[to the date of the provisional assessment, from the 1st dayassessment made under section 23B, or of April next following theif no such assessment has been made]to said financial year to thethe date of the assessment (herein date of the regularafter called the 'regular assessment') assessment for the assessmentmade under section 23 of the income, year immediately followingprofits and gains of the previous year the said financial year, andfor an assessment for the year for an where any such instalment isassessment for the year in which the paid after the expiry of theamount was payable : financial year during whichit is payable by reason ofthe provision of section213, interest as aforesaidshall also be payable on thatinstalment from the date ofits payment to the date ofregular assessment :Provided that on any portion of such [Provided that in respectamount which is refunded under the of any amount refunded onforegoing provisions of this section a provisional assessmentinterest shall be payable only up to under section 141A, nothe date on which the refund was interest shall be paidmade : for any period after the dateof such provisionalassessment.]Section 18A(5) Section 214[Provided further that for [(1A) where on completionany period beginning with the 1st of the regular assessment theday of April, 1952, interest shall amount on which interest wasbe payable only on the amount by paid under sub-section (1)which the aggregate sum of any has been reduced, the interestfinancial year in which they are shall be reduced accordinglypayable under this section exceeds and the excess, if any, paidthe amount of the tax determined shall be deemed to be taxon regular assessment calculated payable by the assessee andas hereunder - the provisions of this Actshall apply accordingly.](i) in respect of such instalments (2) On any portion of suchpaid in any financial year before amount which is refundedthe said date, from the said date under this Chapter, interestto the date of the regular assessment; shall be payable only up tothe date on which the refundwas made.'(ii) in respect of such instalmentspaid after the said date, from thebeginning of the financial year nextfollowing to the date of the regularassessment.']

16. It may also be necessary to advert once again to s. 4(2) of the India I.T. Act, 1961, to indicate that under the present Act the charging section provides for payment in advance of the tax payable and the provisions thereof in part C of Chapter XVII. From the year 1944, when advance tax was introduced for the first time, up to April 1, 1952, the Central Government had an obligation to pay simple interest at 2 per cent. per annum on advance tax paid under the Act from the date of payment to the date of the assessment made under s. 23. This was a scheme different from the present scheme under which the State has no obligation to pay interest on the advance tax, merely because it is paid as advance tax. It is different from the scheme introduced with effect from April 1, 1952, by the insertion of proviso to sub-s. (5) of s. 18A. For the first time, the obligation to pay interest on the advance tax was limited to so much of the advance tax as was found to be in excess of the tax determined on regular assessment. In other words, the scheme adopted in the 1961 Act in s. 214(1) came into force from April, 1952, under the old Act, while prior to that date, the obligation was to pay interest on the advance tax paid irrespective of whether such advance tax was adjustable against the tax found due on regular assessment. But there is an essential difference between the scheme in the proviso to s. 18A(5) and the scheme in s. 214(1) of the present Act. This distinction arises by reason of two circumstances. One of them is that there is no definition of 'regular assessment' in the 1922 Act. That term is defined in the present Act. Secondly, there is no provision corresponding to s. 4(2) in the 1922 Act. This is relevant because the character of the payment would depend on the nature of the legal liability to pay. Whether the payment is as tax or as advance by way of deposit would, to a great extent, determine the character of the amount paid and naturally this character will have its own impact on the scheme. We preface our reference to the judgment of the Bombay High Court with these remarks only to underline the fact that the scheme of the statute which the Division Bench was considering in the Bombay case and about which Chagla C.J. spoke in the said decision is different from the scheme which we have to consider here. The Legislature has made an altogether different approach to the scheme by dropping the obligation of the Central Government to pay interest on whatever amount is paid as advance, and by giving a taxation base for the advance tax liability.

17. Now we will advert to the facts of the decision in Sarangpur Cotton . v. CIT : [1957]31ITR698(Bom) . The assessee company in that case paid a sum of Rs. 12,95,508 as advance tax under s. 18A of the Indian I.T. Act, 1922. The total tax determined by the ITO in that case for the assessment year 1947-48, at the assessment made on March 30, 1948, was much in excess of the advance tax paid. As the section stood then, the assessee was entitled to interest at 2 per cent. on the advance tax paid by him and this amount worked out to Rs. 33,434 and that too was deducted from the tax payable by the assessee and demand was made for the balance. A portion of such demand was met by the assessee. The AAC set aside the assessment in appeal and directed a fresh assessment to be made. Fresh assessment was made in respect of that year under s. 23(3) on January 25, 1954. The total income was reduced but even so there was no question of any refund due. The question that arose then was whether the assessee was entitled to claim the 2 per cent. interest under s. 18A(5) of the Indian I.T. Act, 1922, up to March 30, 1948, only, that being the date of the first assessment, or up to January 25, 1954, that being the date of the revised assessment. According to the assessee, the Central Government had to pay interest up to the date of assessment made under s. 23 and that meant in that case that the assessee was entitled to claim interest on the advance tax paid by him up to January 25, 1954, and not the date of the earlier order. The question was not one of any interest payable on a refund to the assessee. The question had to be decided entirely on the construction of s. 18A(5) as it stood then, regard being had to the scheme of that provision, which, as we have indicated, was entirely different from the scheme which came into force with effect from April 1, 1952, and the further scheme which came into force under the present I.T. Act. Evidently, it was a case, where the State had an obligation to pay interest on an amount which was received in the nature of a deposit. The obligation to pay such interest would naturally cease when a legal base for retaining the money, on account of a tax liability in the assessee having arisen, is provided in the Act, though it would be open to the statute even then to provide for payment of interest as has been done in s. 214(1). The contention taken before the Bombay High Court was that the reference to the date of assessment must be understood as reference to the valid and effective assessment and that would be only to the order of January 25, 1954, the revised order. Prima facie it appeared to the court that the date of assessment must mean the date of a valid one effective assessment, but the court felt, on a closer examination of the matter, that, when the ITO made the order on March 30, 1948, interest ceased to run and, therefore, when the Legislature used the expression 'date of assessment', it was considering the factual date of assessment and not the legality or validity of the assessment. The court examined the question also from another point of view. The taxing Department would have the use of the assessee's money from the date the amount was paid till the taxing authorities chose to refund the money in a case where tax was paid pursuant to an order of assessment. The court asked the question, could it be suggested that the position would be different with regard to advance payment of tax, and the answer was that the liability to pay the tax arose as soon as the assessment order was made and the court concluded (p. 703 of 31 ITR) :

'The scheme of the section seems to be that interest is payable for the period during which there is no liability to pay upon the assessee.'

18. It is therefore, evident that the court rested its decision primarily on the fact, in the scheme of things, the Legislature would have contemplated using the expression 'date of assessment' in s. 18A(5) as meaning the factual date of the assessment irrespective of whether the assessment would be sustained later and further that the scheme of the section appears to be that interest was payable only for the period during which there was no liability to pay upon the assessee. This reasoning would not be applicable when the scheme is one under which there is a liability to pay advance tax upon the assessee by reason of the charging section. The reasoning would not be available when the section is in different terms. The provision in the Act of 1961 refers to 'regular assessment' in two contexts and the construction is called for the section as it now stands. Such a situation did not arise in the Bombay case. Therefore, however high the authority of the decision may be, it may not be applicable to a case arising under the section as it now stands, a section which has a different scheme. The section will have to be understood and the meaning of the terms used therein applied in the context of the present Act. The circumstances that should be of relevant in considering the decision of the Bombay High Court as not applicable to the case here may be said to be : (a) s. 18A(5) as it stood prior to the amendment in 1952, had a different scheme as to advance tax and the character of the obligation of the assessee to pay the the State to account for it stood entirely on a footing different from that envisaged in the scheme under the Act of 1922. The liability to pay arose as soon as the assessment order was made. There was an obligation under s. 18A(5) to pay interest to the assessee on whatever amount was paid as advance tax giving it more or less the character of a deposit whereas under the new Act an obligation by way of charge is provided by s. 4(2); (b) the term 'regular assessment' used in s. 214(1) is defined in the Act which makes it clear that it takes in an assessment which is under s. 143(3) or 144 giving no room for the argument that if it is a subsequent assessment, even assuming it is made under s. 143(1), it would not be a regular assessment. It may be remembered that the term 'assessment' was understood by the Division Bench of the Bombay High Court regard being had to what the Legislature could have contemplated in the context in which it was used; (c) on the basis of the scheme of s. 18A(5) in the repealed Act, the court took the view that the Legislature did not contemplate that the terminus should be altered because the assessee chose to appeal and in the appeal the order was set aside and a fresh assessment directed. Whether that would be the case here we will have to determine not by analogy, but on the basis of the scheme and the setting of the provisions with which we are concerned here. It appears to us that whereas the scheme of s. 18A(5), as it stood prior to 1952, was one whereunder the money was treated as belonging to the assessee, returned by the Government like a deposit for which the Government was liable to pay interest, the scheme under the new Act is different and the obligation to pay interest in limited on the part of the Government and must be determined on the terms of s. 214 and in the context of the scheme envisaged in that and other relevant sections of the Act. The scheme appears to be that interest is payable for the period during which there is no liability in the assessee to pay the excess tax recovered as advance tax. We cannot do better than quote a pithy statement, distinguishing the Bombay decision, by Sabyasachi Mukharji J. in Chloride India Ltd. v. CIT : [1977]106ITR38(Cal) . Mukharji j., referring to that decision, said (p. 43) :

'The Division Bench was concerned primarily with the question of the 'date of assessment' and not really on the question as to what was the 'tax determined on regular assessment'. The excess of advance tax paid cannot be determined nor the claim for payment of interest arise unless the tax determined on regular assessment is first ascertained. The Division Bench of the Bombay High Court had no occasion to consider this aspect of the matter.'

19. We are in respectful agreement with the above said observation.

20. While we are considering the Bombay decision we should notice one more aspect arising from the reasoning therein. Chagla C. J. said in that case (p. 703 of 31 ITR) :

'Let us look at this order from another point of view. When the order of assessment was made, it was competent to the taxing authorities to recover the tax, and the liability to refund would only arise when the assessment order was set aside. But the taxing Department would have the use of the assessee's money from the date when the amount was paid till the taxing authorities chose to refund the money. Could it be suggested that the position would be different with regard to advance payment of tax The liability to pay the tax arose as soon as the assessment order was made; and that liability would cover not only the advance tax already paid, but also any additional amount that might have to be paid by the assessee. In this very case the assessee paid an additional amount of Rs. 6 lakhs. Although it put forward a claim for interest on this amount also, that claim was ultimately abandoned. Therefore, if we were to give the construction to s. 18A as suggested by Mr. Palkhivala, then the advance tax would stand on a different footing from the payment of Rs. 6 lakhs, which was paid by the assessee under the order of assessment. The scheme of the section seems to be that interest is payable for the period during which there is no liability to pay upon the assessee. But once the order of assessment is made, the liability to pay arises, and even though the order may be subsequently set aside, there is no obligation upon the Department to pay interest in respect of the amounts which they recovered as tax under the original assessment order.'

21. No doubt there is logic in this approach, though logic alone will not be determinative of the controversy arising from a taxing statute. The approach of the learned judges in that case is evidently that if money paid to satisfy the demand pursuant to an assessment does not earn interest from the date of payment on refund, why should advance tax credited as amount towards tax due earn such interest from that date. Now let us assume that s. 214(1) does not envisage the assessee earning interest on excess payment of advance tax after the first assessment, even though due to later developments he gets a refund of such excess. What happens to the amount paid by an assessee subsequent to March 31, 1975, pursuant to an order of assessment Section 244(1A) entitles him to interest on such amount for the period from the date of the payment up to the date when, on account of the amount being found in excess in appeal or other proceedings, he gets a refund. He will not, in that event, get interest for excess payment made earlier as advance tax from the date of first assessment though he will be entitled to get interest on an amount paid pursuant to as assessment. This situation could not have been envisaged by Chagla C.J. We are only indicating the danger of interpreting the section on the basis of the logic in the passage above quoted.

22. Before we refer to the decisions of the Calcutta High Court, it would be appropriate to refer to a decision of the Allahabad High Court in Sir Shadilal Sugar and General Mills Ltd. v. Union of India : [1972]85ITR363(All) , which purported to follow the principle stated in the decision in Sarangpur Cotton Mfg. Co. Ltd. v. CIT : [1957]31ITR698(Bom) . The significant fact of relevance here is the essential distinction between the case before the Bombay High Court and the case before the Allahabad High Court to which we have adverted. The assessment year in question in the Allahabad case was 1960-61, and s. 18A(5) as it stood then was materially different from that as it stood prior to April 1, 1952. As we had indicated, whereas the obligation prior to April 1, 1952, was to pay interest on whatever money was paid by the assessee as advance tax irrespective of whether such amount was found due on final assessment or not, subsequent to the amendment, it was only on the excess determined on regular assessment that interest was payable to the assessee. In the case before the Allahabad High Court, the revised order made by the ITO to give effect to the appellate order enabled the assessee to claim a refund taking into account the amount of advance tax deposited by the petitioner during the financial year 1960-61. The petitioner moved for payment of interest on the excess payment by him and wanted his petition to be treated as one for rectification. The relief was denied to him and he moved the court in a petition under article 226 of the Constitution. To come to a conclusion on the claim of the petitioner that the reference in s. 18A(5) to the date of the assessment made under s. 23 was to the first or original assessment order made by the ITO, the court relied entirely upon the scheme of the provision as it stood. It would be profitable here to quote the words of Pathak J., who spoke for the Bench (p. 366) :

'By the scheme introduced under section 18A the assessee is required to pay an amount by way of tax in advance, that is, before an assessment order is made and a demand is issued for payment of the tax determined against him. Section 18A(5), as enacted originally, obliged the Central Government to pay to an assessee interest on the amount of advance tax paid by him. This was in recognition of the fact that the assessee had been deprived of money belonging to him and which he was entitled to retain and utilise so long as an assessment order was not made. From this it will be clear that when section 18A(5) speaks of the date of the assessment made under section 23 and refers to it as the 'regular assessment', it is the first or, as one might say, the original assessment order made by the Income-tax Officer for that year which is intended.'

23. Reference is made by the learned judges to the absence of obligation to pay the tax prior to the assessment and the assessee nevertheless paying tax as advance only because of the scheme specially providing for recovery of tax in advance. Therefore, according to the court, in accordance with such scheme when one the liability to pay had arisen, there was no question of any subsequent date to be reckoned. Here again we may point out that apart from the fact that the decision in Sarangpur Cotton Mfg. Co. Ltd. v. CIT [1957] 38 ITR 698 , relied upon by the court in that decision may not be on all fours with the case before it, regard being had to a different scheme in force after April 1, 1952, we may notice that the learned judges were dealing with a case under s. 18(5), no doubt as amended, but wherein also the scheme as considered by the learned judges was not the scheme as it is now in s. 214(1).

24. The case Sabyasachi Mukharji J. had to consider in Chloride India Ltd. v. CIT : [1977]106ITR38(Cal) , to which we have earlier adverted, was one where the question concerned the obligation under s. 214(1) of the I.T. Act. The claim for interest under s. 214 had been rejected by the Department in that case though on the computation made by the ITO pursuant to the order of the AAC it was found that the assessee had paid excess advance tax and that was found refundable. The assessee's request to the Commissioner for payment of interest did not succeed as the Commissioner took the view relying upon the Allahabad case, Sir Shadilal Sugar and General Mills Ltd. v. Union of India : [1972]85ITR363(All) , that the date of regular assessment mentioned in s. 214 must be taken to be that first assessment as was held in relation to s. 18A(5) in the Allahabad case. Mukharji J. explained the decision in Sarangpur Cotton Mfg. Co. v. CIT : [1957]31ITR698(Bom) , as not applicable to a case arising under s. 214 of the Act and also explained the decision of the Allahabad High Court in Sir Shadilal Sugar and General Mills Ltd. v. Union of India : [1972]85ITR363(All) . It was noticed that in the Allahabad case also the court was not concerned with the question of the tax determined on regular assessment and what was considered was only the date of the regular assessment for the purpose of s. 18A(5). The court further noticed that evidently aware of the said interpretation, Parliament has deliberately chosen to define 'regular assessment' in the new Act as meaning assessment under s. 143 and s. 144 and not confine it to initial assessment. Considering the context of s. 214(1), the court expressed the view that the expression 'regular assessment', having regard to the definition in s. 2(40), refers to an order passed by the ITO finally to give effect to the direction, if any, of the appellate authority in a case where there is an appeal against his order. It is pertinent to notice that the court pointed out an anomaly if the situation be otherwise (p. 41 of 106 ITR) :

'If by regular assessment was meant the first assessment only, then the effect would be that in case where after the first assessment there was an appeal and in the appeal the assessment has been modified or reduced and the Income-tax Officer has passed an order giving effect to such modification or reduction, still the Income-tax Officer would be obliged to make the demand for advance tax not on the basis of the amount reduced by the direction of the appellate authority but on the basis of the first assessment order made by the Income-tax Officer. The assessee under s. 208 would also be obliged to pay advance tax on that basis.'

25. This was considered to be an anomalous situation which would not be permitted unless the section compels one to make that construction. The court also noticed that when an assessment is modified pursuant to the order of the appellate authority or direction, the subsequent order will be the regular assessment and must supersede and replace the earlier assessment order.

26. The question arose again before the Allahabad High Court in Lala Laxmipat Singhania v. CIT : [1977]110ITR289(All) , but this time the question concerned the scope of s. 214 of the I.T. Act, 1961, the assessment year under consideration being 1970-71. That case also arose out of an application for rectification made by the petitioner claiming interest under s. 214 found to have been paid by the petitioner as advance tax in excess of that finally determined as the tax payable for the assessment year in question. This final order was to give effect to the appellate order. Having failed before the departmental authorities, the matter was taken to the High Court by the assessee. The court expressed the view that there was no definition of the expression 'regular assessment' in the repealed Act, that sub-s. (5) of s. 18A of the old Act was in pari materia with s. 214 of the new Act and, therefore, the decisions rendered under the old Act could be usefully referred to. After referring to the decisions in Sarangpur Cotton Mfg. Co. Ltd. v. CIT : [1957]31ITR698(Bom) and Sir Shadilal Sugar and General Mills Ltd. v. Union of India : [1972]85ITR363(All) , to which we have adverted earlier, the court went on to observe (p. 295) :

'As section 214 of the Act is in pari materia with sub-section (5) of section 18A of the Old Act, the rulings of the Bombay High Court in Sarangpur Cotton Mfg. Co.'s case : [1957]31ITR698(Bom) and of this court in Sir Shadilal Sugar Mills' case : [1972]85ITR363(All) are equally applicable to the present case.'

27. We have only to point out that the provision which the court was called upon to consider in that case was different from the provision in the repealed Act prior to 1952 and also as amended in 1952. We have adverted to these earlier and so we do not reiterate our view again. We do not find any further reasoning in the judgment of the Allahabad High Court in Lala Laxmipat Singhania v. CIT : [1977]110ITR289(All) calling for an answer. The Allahabad High Court noticed the subsequent decision of the Calcutta High Court in Chloride India Ltd. v. CIT : [1977]106ITR38(Cal) to which we have referred. But commenting on that decision the learned judges of the Allahabad High Court observed that they are unable to see any material distinction between the expression 'regular assessment' occurring in s. 214 of the Act and the expression 'the date of assessment hereinafter referred to as regular assessment', occurring in s. 18A(5) of the old Act. In fact, the Calcutta High Court had pointed out the anomaly of construing the term 'regular assessment' in ss. 209 and 210 in a way different from that in s. 214. The learned judges of the Allahabad High Court expressed their agreement with the Calcutta High Court that anomaly will 'result in certain situations'. But the answer, according to the learned judges, was to be found in the words of the definition in s. 2(40) 'unless the context otherwise requires'. We have only to state that the distinction pointed out by Sabyasachi Mukharji J. between the expressions 'regular assessment' and 'the date of assessment hereinafter referred to as regular assessment' is real. We, therefore, do not see our way to agree with the decision of the Allahabad High Court in the two cases adverted to.

28. The later decision of the Allahabad High Court came up for notice by Sabyasachi Mukharji J. again in a subsequent case of the Calcutta High Court. That was in General Fibre Dealers Ltd. v. ITO : [1979]116ITR40(Cal) . While reiterating the view expressed by the learned judge earlier referring to the decision in Lala Laxmipat Singhania v. CIT : [1977]110ITR289(All) , Mukharji J. said (p. 45) :

'With respect to the learned judge, it may be observed that, normally, an expression used in a particular Chapter should, unless there are other cogent reasons to the contrary, be given the same meaning. The expression used in a catena of sections in a particular Chapter should receive, unless there are good reasons to the contrary, the same interpretation. I should have thought that the proper approach would be to consider whether there is anything in the context of s. 214 which requires giving a different meaning to the expression 'regular assessment' used in that section to the meaning given to the expression as used in ss. 209 and 210 in the same Chapter. It is true that there was nothing in the context of s. 214 which required the expression 'regular assessment' not being understood as the first or the original assessment. But I should have thought that there was nothing also in the context of s. 214 which required that the expression 'regular assessment' be confined to the first or the original assessment. As I have indicated before, the expression 'regular assessment' is of wider amplitude and need not be confined to the first or the original assessment. The legislature has not chosen to use the expression 'first' or 'the original assessment' and, therefore, the expression 'regular assessment' should not be given a meaning different from the meaning which may be attributable to that expression in ss. 209 and 210 and as I have pointed out, in my previous decision, if the expression 'regular assessment' is given the meaning first or the initial assessment in ss. 209 and 210, certain anomalies would result which have also been noticed by the learned judges of the Division Bench of the Allahabad High Court.'

29. Now, we advert to the decision of the Kerala High Court in Devaki Amma v. ITO : [1980]122ITR272(Ker) , the Delhi High Court decision in National Agricultural Co-operative Marketing Federation of India Ltd. v. Union of India : [1981]130ITR928(Delhi) , the decision of the Andhra Pradesh High Court in Trustees of H. E. H. Nizam's Religious Endowment Trust v. ITO : [1981]131ITR239(AP) , the decision by the Punjab and Haryana High Court in CIT v. Ambala Electric Supply Co. Ltd. , decisions of the Madras High Court in Triplicane Urban Co-operative Society Ltd. v. CIT : [1980]126ITR125(Mad) and Rayon Traders Private Ltd. v. ITO : [1980]126ITR135(Mad) and a recent decision of a Full Bench of the Bombay High Court in CIT v. Carona Sahu Co. Ltd. : [1984]146ITR452(Bom) .

30. Let us first deal with the Kerala decision in Devaki Amma v. ITO : [1980]122ITR272(Ker) . On the decision of the AAC in that case, refund of Rs. 29,492 paid by way of advance tax was found due to the assessee. The ITO did not allow interest on the amount refunded and the Commissioner rejected the petition for revision. This was challenged by the assessee by a writ of mandamus to direct the income-tax authorities to pay interest. The High Court dismissed the petition holding that the right to claim interest should be traceable either to an agreement between the parties or to a statutory provision. There was no agreement and barring s. 244(1A) which had no application, the court found that there was no provision to pay interest. Section 214(1) was held to be not a provision which enabled the assessee to claim interest. It is trite law that, in the absence of an agreement, if the statute does not provide for such interest, it would not be due on the tax paid. But the question is whether s. 214(1) enables such interest to be claimed. The assessee's counsel contended in that case that in view of the definition of 'regular assessment' in s. 2(40), when recomputation of the income and tax was made by the ITO to give effect to the reliefs granted by the AAC, that was under s. 143 of the Act, and interest would be due till the date of such revised assessment. We have already considered this question and have found that such a plea is tenable. The view taken by the Kerala High Court was (p. 275) :

'While we notice the force of the contention that a 'revised regular assessment' in effect and substance is as much a regular assessment made under s. 143 or s. 144 of the Act, as the case may be, we do not find ourselves persuaded to accept the reasoning of Sri Radhakrishna Menon that, because 'revised regular assessment' also is to be deemed to be 'regular assessment' made under s. 143 or s. 144 of the Act, as the case may be, the expression 'regular assessment' appearing in s. 214 of the Act should be so interpreted as to refer only to 'revised regular assessment' where the 'original regular assessment' was set aside or modified as a result of the decision of a superior authority.'

31. We have dealt with this contention earlier in this judgment and it is sufficient to indicate our disagreement with this view, with great respect to the learned judges. Where the original order of assessment has been set aside and a fresh assessment order is passed, such revised assessment order is the only order in force as in this case and reference can be only to that order. When the original assessment order stands modified in appeal, and as a consequence, a revised assessment order is passed, the revised order is also an order under s. 143, as held by courts, and the reference in s. 214(1) could be either to the first order or the revised order. The context in which the term appears, understood in the background of the scheme of the Act, must determine whether the reference therein is to the first assessment or revised assessment. There is no other approach possible and any pedantic approach which does not keep in view the simple rule we have stated here will fail. The learned judges of the Kerala High Court expressed the view that (p. 276) :

'When s. 214(1) of the Act speaks of 'regular assessment', without anything more, in our opinion, it is difficult to construe that the legislature had in mind not only the plain meaning of 'original regular assessment' as understood in the normal or popular sense, but also a restricted meaning in a qualified sense that it could also be 'revised regular assessment' where, on a recomputation in pursuance of the direction of a superior authority, reduction of tax has been ordered.'

32. It is difficult to understand the term 'regular assessment', 'in the normal or popular sense' - if there be one - for the simple reason that 'regular assessment' is a term defined which definition should govern. The above approach made to the term 'regular assessment' is, according to us, with great respect to the learned judges, not warranted.

33. Reference has been made to sub-s. (1A) and it has been understood by the Division Bench as referring to the 'revised regular assessment'. In fact, the learned counsel for the Revenue also did not contend for the position in that case that 'on completion of the regular assessment' used in sub-s. (1A) had any meaning other than 'original regular assessment'. Nevertheless, the court took the view that the term 'regular assessment' in sub-s. (1A) must be understood as different from the first assessment. We have already referred to the scope of s. 214(1), proviso and s. 214(1A) and we respectfully disagree with the approach to these sections by the Kerala High Court. The counsel for the assessee seems to have drawn the attention of the court to paragraph 91 of Circular No. 6-P dated July 6, 1968, issued by the Central Board of Direct Taxes to which we had adverted earlier. The circular indicates how the Department understood the proviso to s. 214(1). Evidently, it has been understood in the manner explained earlier in this judgment. The obligation to refund under s. 141A(1) is accompanied by the obligation to pay interest on the amount refunded till the date of provisional assessment under s. 214(1). The circular further deems the excess amount paid together with interest, if any, paid as tax payable by the taxpayer. This is proper because, so far as the excess amount refunded is concerned, it is treated as tax under s. 141A(4)(b) while the interest on such excess amount paid is treated as tax under s. 214(1A). We think it is only appropriate that this circular is noticed to give a reasonable and logical interpretation to the sections. Another approach made in the judgment of the Division Bench is that while sub-s. (1A) of s. 214 provides that excess shall be deemed to be tax payable by the assessee 'there is no corresponding provision to pay interest to the assessee on the amount where the position is the reverse'. The corresponding provision, as we see, is in s. 214 itself. The provision for payment of interest to the assessee is in s. 214(1) itself and the reference to the other sections in the Act may not be called for.

34. Reference is next made by the learned judges to the scheme of the Act. It is assumed that it was never the intention of the Legislature to cast on the Central Government a liability under s. 214(1) of the Act to pay interest to the assessee on the advance tax 'on 'revised regular assessment''. Referring to the scheme, it is said that on first assessment, the advance tax ceases to have its identity as such. It is said that it is reasonable to construe that the Legislature presumed that the ITO ordinarily passed a valid order under s. 143 or s. 144 of the Act. It is also said that s. 214(1) employs the words 'tax determined on regular assessment' and not 'tax in respect of or under regular assessment'. We have already adverted to the scheme of the Act and have indicated how it will be logical to assume that 'regular assessment' means assessment which is alive, the assessment which causes refund, the assessment which really determines the rights of parties. It is not the date of the regular assessment which is significant, but the quantum to be determined on the regular assessment. Once that approach is made to the basis of the scheme, there would be no difficulty in appreciating the provision as pointed out by Sabyasachi Mukharji J. in the Calcutta cases.

35. Evidently, in expressing the view that the amount of advance tax is towards tax due on regular assessment and naturally on interest would be due thereafter, the courts is adopting the reasoning of Chagla C. J. made in Sarangpur Cotton . v. CIT : [1957]31ITR698(Bom) , but in a different context and with reference to a different provision. We have indicated that the scheme of the new Act and the subsequent insertion of the provision in s. 214(1A) should go a long way in appreciating the scope of s. 214(1). The learned judges of the Kerala High Court mention that the legislative history pertaining to the advance tax also strengthens their conclusion that the intention of the legislature, as the law stood during the material time, was to make the Central Government liable to pay assessees like the petitioner interest on the amount of advance tax ordered to be refunded on original regular assessment. The view taken by the court is seen to be that if refund is due only by reason of the revised assessment, no interest on the refund would be due for any period. That is indicated by the dismissal of the writ petition where the case was that no interest at all was paid even for the period up to the date of the first assessment. With great respect we dissent from the decision of the Kerala High Court.

36. The facts in National Agricultural Co-operative Marketing Federation of India Ltd. v. Union of India : [1981]130ITR928(Delhi) , decided by the Delhi High Court are more or less similar to the facts here. It was the decision of the AAC consequent on which the ITO passed a revised assessment order that enabled the petitioner in that case to a refund of Rs. 8,82,586, that being the excess amount paid as advance tax. The assessee claimed interest on it partly under s. 214 and partly under s. 244. It was the assessee's case that till the revised assessment order of the ITO passed on September 2, 1977, interest was due under s. 214 while subsequent interest would be due under s. 244 to the extent permitted by that section. Unable to get relief from the Department, the assessee moved the High Court in a writ petition and the High Court, while discountenancing the claim for interest under s. 214 for the whole amount, gave relief to the petitioner holding that s. 244(1A) enabled the petitioner to get interest from the date on which such excess was paid to the date on which refund is granted. In coming to this conclusion, it examined the question whether s. 214 would apply and further examined the question that if s. 214 would not apply, whether s. 244(1A) read with s. 214(2), could give relief to the petitioner. It is evident that the view taken by the Delhi High Court does not accord with the view taken by us here. After referring to the scheme of the earlier Act of 1922 and the decision of the Bombay High Court concerning that Act in Sarangpur Cotton Mfg. Co. Ltd. v. CIT : [1957]31ITR698(Bom) and other subsequent cases, reference is made to s. 214(1) and other sections relevant under the new Act. The court then refers to the various decisions in which s. 214 had been considered including the decisions of the Calcutta High Court to which we had adverted and the decision of the Kerala High Court in Devaki Amma v. ITO : [1980]122ITR272(Ker) . Then the court concurs with the meaning given by the Bombay High Court, the Allahabad High Court and the Kerala High Court to the expression 'regular assessment' and expresses its own reasons to which alone we need refer. The court seems to have been persuaded by the scheme of the Act to hold that even when s. 244 was enacted to provide for payment of interest on payment of tax made in excess, it did not provide for interest on the excess collected from the date on which the original amount was paid or the original assessment was completed and payment of interest starts only after a reasonable period had elapsed after the order in appeal or revision was passed as a consequence of which order the refund becomes due. It, therefore, takes the view that it should not favour a construction which would enable the assessee to get interest on the advance tax paid by him for a period beyond the date of the original regular assessment. That would, according to the court, result in a discrimination between an assessee who has paid advance tax and an assessee who has not. To this, the answer is simple as we have stated elsewhere in this judgment. The situation is taken care of now under s. 244(1A). If we consider that interest is not payable in respect of advance tax from the date of the first assessment, whereas interest would be payable on the tax paid pursuant to an order of assessment that would be anomalous. Of course, we do not, with great respect, agree with the Delhi High Court that s. 244(1A) must be interpreted on the principle of equity and 'equality' as entitling payment of interest even on advance tax, since advance tax would become regular tax on the assessment by virtue of s. 219 of the I.T. Act. The learned judges are conscious of the fact that this would be putting a strain on the language of s. 244(1A). We have discussed in this judgment earlier that s. 244(1A) covers an entirely different field in that it only refers to the payment of interest on tax made pursuant to an assessment order and tax paid as advance tax. Sections 214 and 244(1A) are, as it is complementary to each other and those sections are to be understood as such.

37. We are unable to agree with the Delhi High Court that the term 'regular assessment' would mean only the first or initial assessment in all the provisions in Chapter XVIIC. It would be illogical to assume that ss. 209 and 210 refer to the first assessment. In view of the very elaborate approach which we have made to s. 214, we do not think that we should reiterate our reasoning once again here.

38. We have to notice the case before the Andhra Pradesh High Court in Trustees of H. E. H. Nizam's Religious Endowment Trust v. ITO : [1981]131ITR239(AP) . In that case also refund was made of excess advance tax paid by the assessee pursuant to a revised order passed by the ITO, so revised consequent to the AAC's order. Two questions arose for consideration by the court. The first of them was whether s. 244 read with s. 240, applied to the claim of the petitioners for refund or s. 214 applied. The second was, what the term 'regular assessment' occurring in s. 214 meant. The court noticed that under s. 240 the ITO has to refund the amount to the assessee and when there is such an obligation on the ITO, s. 244 applies. Consequently, the ITO has to give refund of not only the advance tax but also the other amounts collected within three months from the date of the order without the assessee asking for it. The court, therefore, held (P. 247) :

'We are, therefore, satisfied that the right of the assessees to get interest on the amounts of advance tax they paid which became refundable to them comes squarely within the ambit of s. 244(1) read with s. 240.'

39. We may notice here that s. 244(1A) had no application in that case as the payment was made much earlier than March 31, 1975. The court seems to have taken the view that there is a specific provision for payment of interest on refund under s. 244, that s. 214 is only a general provision relating to payment of interest on advance tax, that it does not deal with the specific case of refund arising out of appellate orders, that, therefore, such a specific contingency is covered only by s. 244 read with s. 240 and, consequently, the petitioner would be entitled to the payment of interest only from the date envisaged in s. 244 and not from an earlier date. That is how the relief under s. 214 was denied. We are unable to agree with the learned judges. Section 244(1) operates in a field different from that in which s. 214(1) operates. Section 240 obliges refund under certain circumstances. Section 244(1) deals with the obligation to pay interest for the period after the obligation to refund has arisen. That in no way operates against s. 214(1), which deals with a different situation, that of payment of interest on tax paid in advance to the extent the amount so paid exceeds that found payable by the assessee. We have elaborately, at the the beginning of this judgment, dealt with the legislative history of the provisions and the change in the character of advance tax. It may not be correct to say that s. 214(1) is a general provision and s. 244 is a specific provision. Both are independent provisions covering two different situations.

40. The other approach made to the case by the Andhra Pradesh High Court concerned the meaning given by the court to the term 'regular assessment' in s. 214. The view taken was that an order under s. 143 or s. 144 could only be an order passed originally by the ITO and not an order pursuant to an appellate or revisional decision. Even the Department has no such case before us. Naturally so. When, to give effect to an appellate decision, an ITO is called upon to pass a revised assessment order, he can act only under the provision of s. 143. He acts under s. 143. Otherwise, he will have no power to pass an order at all. The orders, which are before us on the basis of which refunds were made, refer to the section under which the orders are passed as s. 143 and as we noticed, that is not a matter in controversy. May be that regular assessment many include assessment of escaped income, for 'regular assessment' having been defined as one made under s. 143 or s. 144, if another provision of law enables such income and tax thereon to be determined as for instance under s. 147, that would not be an order under s. 143 or s. 144 and will not be taken within the scope of the term 'regular assessment'. Reference to cases where the assessment orders do not fall within s. 143 or s. 144 would, therefore, be of no assistance. We respectfully dissent from the view expressed by the Andhra Pradesh High Court.

41. The Punjab and Haryana High Court has taken the same view as that expressed by the Allahabad, Andhra Pradesh, Kerala and Delhi High Court in CIT v. Ambala Electric Supply Co. Ltd. . The courts refers to an earlier decision of that court in CIT v. Rohtak Delhi Transport P. Ltd. which had also taken a similar view. The court notices that perhaps its earlier decision in CIT v. Rohtak Delhi Transport P. Ltd. may be said to be not of such authority as it was decided ex parte in the absence of the assessee and the matter had not been dealt with in depth nor had any reference been made to various judgments for and against the proposition. It notices that its earlier decision would need reconsideration. Therefore, to obviate challenge to that judgment, the learned judges purport to apply their mind independently to all aspects of the case. Having said so, they express their agreement with the view taken by the Allahabad, Kerala and Delhi High Courts. Of course, we see no independent reasoning in that judgment evidently because the learned judges did not propose to rewrite the reasons indicated in the decisions of other courts with which they agreed. Therefore, beyond citing this decision, we do not think any discussion is called for.

42. We must now embark on a close examination of a recent decision of the Full Bench of the Bombay High Court in CIT v. Carona Sahu Co. Ltd. : [1984]146ITR452(Bom) . Though we are proposing to differ from the view taken by the Bombay High Court and indicating the reasons thereafter, we would say that in certain aspects we are in agreement with the view expressed by the Bombay decision. But before we refer to that decision, it would be only appropriate to refer to two decisions of the Madras High Court which, to the extent they go, support the view we are taking here. We are adverting to the decisions in Triplicane Urban Co-operative Society Ltd. v. CIT : [1980]126ITR125(Mad) and Rayon Traders P. Ltd. v. ITO : [1980]126ITR135(Mad) . In the former case, the question dealt with, so far as is relevant for our purpose, was whether the order passed by the ITO to give effect to the decision of the AAC could be termed one of 'regular assessment' as defined under s. 2(40) of the Act. It was the case of the Department that the order would not be one made under s. 143. Of course, we have to distinguish that case from the case here since, in that case, the AAC had disposed of the appeal giving relief to the assessee unlike the case here where the assessment order was set aside and the matter was remitted back to the ITO who had necessarily to pass a fresh assessment order. The question that had to be considered in that case was whether the order of recomputation made pursuant to the order of the AAC could be said to be an order under s. 143 so as to bring the case within s. 214. The question whether even if it be an order of regular assessment, whether it would be the first assessment that would be taken within the scope of s. 214(1) was not discussed in that case. The only controversy being whether the order of the ITO passed pursuant to the decision in the appeal could be said to be one under s. 143, the court had only to consider the nature of such order. Referring to the decisions in Kooka Sidhwa and Co. v. CIT : [1964]54ITR54(Cal) of the Calcutta High Court and Gopi Lal v. CIT of the Punjab High Court, the court took the view that the order must be taken as one passed under s. 143. In the latter case of the Madras High Court in Rayon Traders P. Ltd. v. ITO : [1980]126ITR135(Mad) , the ITO passed a consequential order on the appeal being allowed by the AAC and consequent on that, refund was due. The question of the entitlement of the assessee to interest on such refund under s. 214 arose for decision. There again the question whether a reassessment order under the circumstances would be one of 'regular assessment' arose. Reference was made by the court to its earlier decision in Natarajan Chettiar v. ITO : [1961]42ITR29(Mad) . That case was an authority for the position that regular assessment meant only assessment made under s. 23(3) of the 1922 Act and not reassessment falling within s. 34. Reliance was placed on the decision in Triplicane Urban Co-operative Society Ltd. v. CIT : [1980]126ITR125(Mad) , which has been adverted to. The question omitted to be considered in Triplicane Urban Co-operative Society Ltd. v. CIT : [1980]126ITR125(Mad) was considered in the latter case, namely, whether even though the second order also may be an order of regular assessment which of the two regular assessments was meant in s. 214(1). The court noticed that in such a case, there are two regular assessment orders. The source of the power to pass both of them was s. 143. In a case, where there was only one assessment, there being no appeal or revision, the answer was simple. The view taken by the court was that s. 214(2) makes the assessee eligible for interest up to the date of refund, that s. 214(1) while providing for the particular rate of interest for a particular period does not provide for interest up to date of refund and that by virtue of s. 214(2), the assessee would be entitled to interest up to the date of refund. We do not agree with this approach to s. 214(2). Section 214(1) provides for payment of interest and specifies also the date up to which interest is payable. Section 214(2) cannot be taken to mean that despite s. 214(1) interest will be payable up to the date of refund. We have not referred to s. 214(2) earlier and we are not proposing to refer here only because we find that there has been a very lucid exposition of the scheme of the proviso to s. 214(1), s. 214(1A) and s. 214(2) in the Full Bench decision of the Bombay High Court in CIT v. Carona Sahu Co. Ltd. : [1984]146ITR452(Bom) , with which exposition we fully agree and, therefore, we do not think it necessary to elaborate our reasons here. Suffice it to say that the question of entitlement of interest in respect of refund of advance tax must be determined with reference to s. 214(1) and not s. 214(2) which has no bearing on the question. To that extent, we do not agree with the Madras decision. However, we agree with the ultimate decision, but, for independent reasons, the court also noticed the decision in Chloride India Ltd. v. CIT : [1977]106ITR38(Cal) of the Calcutta High Court and expressed its agreement with the view expressed by the Calcutta High Court.

43. The recent decision of the Bombay Full Bench in CIT v. Carona Sahu Co. Ltd. : [1984]146ITR452(Bom) , calls for close study, both because it considers almost all the relevant reported decisions on the question and also because the court has dealt with a contention on behalf of the Revenue in regard to the interpretation of s. 214(1A) and (2) which in that form has not been dealt with in any earlier reported case. That was not a case where the AAC set aside the assessment orders and directed fresh assessment as in this case, but one where the AAC reduced the tax liability and the ITO consequently passed the order to give effect to the appellate order. Not that this should make any material difference. Consequent upon such fresh order, the ITO granted a refund of Rs. 56,198 for 1970-71 and, similarly, for the year 1971-72 also granted refund. Against the failure to grant interest under s. 214 on the amount refunded for the period up to the date of each revised order of assessment by the ITO, the assessee filed an appeal before the AAC. The AAC held that interest was allowable under s. 214 only with reference to the amount of tax determined on the first assessment under s. 143 and not will reference to the tax determined on subsequent revision of assessment in consequence of reduction granted in appeal. He also held that the interest was allowable only up to the date of the first or original assessment order and not up to the date of the order passed by the ITO consequent upon the appellate order. The Tribunal, before which appeals for both the years were filed by the assessee, held that interest under s. 214 can be allowed with reference to the tax determined on subsequent revision of assessment consequent upon reduction granted in appeal, but the assessee was entitled to such interest only up to the date of the order of the first regular assessment. At the instance of the Revenue, reference was made of the question whether the assessee was entitled to interest under s. 214 with reference to the tax determined as a result of the appellate order. At the instance of the assessee, the Tribunal referred the question whether interest is allowable beyond the date of the regular assessment and up to the date of the ITO's revised order. The second question could not be answered for the reason that there was no separate application in that behalf made by the assessee and, therefore, in accordance with the decision in CIT v. Damodaran : [1980]121ITR572(SC) , the High Court was precluded from answering the question. The case which originally came up before a Division Bench was referred to a Full Bench.

44. Though the question there was only whether interest was payable on the basis of the revised assessment order and not up to what date such interest was due, the entire controversy that is now before us in this case was necessarily before the Full Bench also as the answer to the question referred called for consideration of the question which is not before us. Now, we will proceed to summarise the approach of the learned judges of the Full Bench in that case as follows : (a) After referring to s. 214 and the definition of 'regular assessment' in s. 2(40), the court took up for consideration the assessee's contention that an order of the ITO giving effect to the directions contained in an appellate order is an order passed under s. 143 of the I.T. Act. After referring to the decisions in Kooka Sidhwa & Co. v. CIT : [1964]54ITR54(Cal) , Gopi Lal v. CIT , CIT v. Warner Hindustan Ltd. : [1979]117ITR15(AP) and Triplicane Urban Co-operative Society Ltd. v. CIT : [1980]126ITR125(Mad) , the court took the view that for the purpose of appealability, an order giving effect to the directions of the appellate authority under the Act must be treated as an order passed under the provisions of s. 143, but the decisions do not hold that such an order is an order passed under s. 143 for all purposes. The court found that it cannot subscribe to so wide a proposition; (b) Assuming that the revised order was also an order of regular assessment, the court considered the question whether regular assessment must be taken as the first assessment or the last operative order of regular assessment. In dealing with this question, the one and only reference made was to the scheme of s. 215 of the Act. If found that having regard to the interpretation of s. 215 and the similar objectives of ss. 214 and 215, a strong case was made out for reading 'regular assessment' in s. 214 as the first order of regular assessment and not as the last operative order of regular assessment; (c) While the above two were the reasoning presented in support of the Revenue's case, the court proceeded to consider certain other approaches made on behalf of the assessee to support the claim for interest. The main argument of the assessee's counsel in that case was that s. 214(2) enabled interest to be claimed up to the date of refund and, therefore, even assuming that the term 'regular assessment' in s. 214(1) referred to the first assessment, by operation of s. 214(2) interest till the date of refund will be due. This was dealt with in the light of the scheme of s. 214(1A) and s. 214(2) and the court found no reason to uphold that argument; (d) Yet another argument was presented by the assessee's counsel that, by reason of s. 214(1A), the assessee was entitled to refund. The argument was summarily dismissed by the court; (e) Reference was then made to the scheme in ss. 209 and 210 of the Act and it was urged that since in these sections the reference to 'regular assessment' can only be to the revised assessment, the same reasoning must be given to the term in s. 214(1) also. This too was considered unsustainable; (f) The Revenue's representative contended that s. 240 being a provision concerning refund, s. 214 could not and was not intended to operate in respect of the interest due upon amounts ordered to be refunded consequent upon an appeal. The court held that s. 244 was not determinative of the construction to be placed upon s. 214; (g) The court then proceeded to consider the case law and dealt with reported decisions. After referring to the decisions, in paragraph 64 of its judgment, it found that the end result was that the words 'regular assessment' in s. 214(1) mean the first order of regular assessment passed by the ITO and not the last operative order of regular assessment at any given point of time passed as a result of the appellate or revisional proceedings. The question was answered in favour of the Revenue.

45. Now, we shall deal with each one of these contentions. We express our agreement with the approach in regard to matters covered by points (c) to (e) and generally to the approach to the consideration of point (f). The contention of the Revenue considered at point (f) was that s. 214 would not operate in regard to refund pursuant to an appellate order because s. 244 provides for the same. We have dealt with, in this judgment, the scope of s. 244 and we have held that it covers a field entirely different from that envisaged by s. 214(1). Whereas s. 214(1) dealt with interest payable on excess advance tax paid, s. 244 deals with refund due as a result of an order referred to in s. 240. Section 244(1A) provides for interest even for a prior period but only in respect of amounts paid pursuant to an order of assessment. As we have indicated earlier, s. 214(1) and s. 244 operate in different fields and naturally they find their place in different Chapters. We agree with the Full Bench of the Bombay High Court that s. 244 is not determinative of the construction attempted to be placed on s. 214 by the Revenue.

46. With great respect, we fully endorse the reasoning of the Full Bench on the understanding of the proviso to s. 214(1), s. 214(1A) and s. 214(2). We do not repeat our reasoning here as we have set it down earlier. Looking at the legislative history and the background of these provisions, it is evident that the only meaning that could be ascribed to these provisions, it is evident that the only meaning that could be ascribed to these provisions is what has been given in the Bombay decision. It does not stand to reason that even if s. 214(1) does not cover the case, s. 214(2) would cover the case. If s. 214(1) does not cover the case, there is no scope for any claim for interest under s. 214(2). We also agree that the term 'regular assessment' in s. 214(1A) does not refer to regular assessment which becomes final. Once the scheme of the provision is understood, it would be easy to hold that such a construction is not possible.

47. The Bombay High Court has found that merely because ss. 209 and 210 refer to the revised assessment where there is one, the same meaning need not be given to the term 'regular assessment' in all sections which follow : Though a different approach has appealed to the Calcutta High Court in the decision in Chloride India Ltd. v. CIT : [1977]106ITR38(Cal) , we do not subscribe to that view. The definition itself indicates that the meaning to be given to the term 'regular assessment' so long as there is only the first assessment is to that assessment and once it has been substituted or displaced by a revised assessment under s. 143, the latter would operate. Which of them will operate in a given situation will have to be determined with reference to the context of the section. In s. 214(1A) 'completion of regular assessment' could only refer to the first assessment after the provisional assessment. It should be in the context of reference to provisional assessment under s. 141A in the proviso to s.214(1) that the term 'completion of regular assessment' has to be understood. The scheme of section 214 and 215 are different as we will presently show and naturally, therefore, the meaning of 'regular assessment' in s. 215 will depend upon the context of that section. We, therefore, agree with the view indicated in the judgment of the Bombay High Court that the context in which the term 'regular assessment' is used in ss. 209 and 210 may require a meaning different from that to be given to that term elsewhere to be adopted. But that is not to pay that the meaning of the term is s. 214(1) should necessarily be different. That question has to be examined in the background and context of that provision. The principle that the same meaning need be given to the term throughout the provisions in Part C of Chapter XVII is one with which we have no difference of opinion.

48. It is, therefore, evident that it is only in regard to points narrated as (a) and (b) that we have difference of opinion with the Bombay High Court. We respectfully dissent from the Bombay view on these points. As to the first, the answer so far as it concerns the case before us is simple. Even the Revenue has no dispute that the revised orders passed in this case were under s. 143. There can be no controversy in a case where, by reason of the appellate orders, the original assessment is set aside and the ITO is called upon to assess afresh. In the case before the Bombay High Court, the position was slightly different in that the ITO passing the revised order was recomputing the income and the tax to give effect to the appellate decision. Even so, according to us, this should make no difference. The decisions which have been adverted to by the learned judges themselves answer the question. Section 246 of the I.T. Act enumerates appellate orders. Only orders which all under one or other of the categories mentioned is s. 246 would be appealable under this section and no orders similar to such orders would be appealable. An order of assessment under sub-s. (3) of s. or an order under s. 144 where the assessee objects to the amount of income assessed, or to the amount of tax determined or to the amount of loss computed or to the status under which he is assessed has been made appealable under s. 246(1)(c). There is no independent provision in s. 246 providing for appeal against a revised order of assessment passed to give effect to an appellate order. Nevertheless such orders have been held to be appealable as orders under s. 143. The Bombay High Court does not make any different approach nor does it dissent from the decided cases on that question. If they are appealable, they are appealable only as orders of assessment falling within s. 246(1)(c). With great respect to the learned judges, we disagree with the view expressed in the judgment - referring to cases holding such orders to be appealable - that 'they do not hold that such an order is an order passed under s. 143 for all purposes, nor can we subscribe to so wide a proposition'. Either they are orders under s. 143 or they are not. If they are not, they are not appealable. If they are, they are appealable. Therefore, it appears to us that the premise by which the court has come to the conclusion that the revised order of assessment is not one of regular assessment is not right.

49. The Bombay High Court has gone on to consider whether, assuming the revised order is also an order of regular assessment, that is meant to be taken in by s. 214(1). But the one and only argument, to find against the contention of the assessee on that point is seen to be an inference drawn from the scheme of s. 215. We must notice that s. 215 is not similar to s. 214. Section 214 deals with refund due to the assessee. Such refund will be due normally when excess is found. That could be found at the first assessment and that could be found further at the revised assessment for a revised assessment is passed on proceedings resorted to by them to reduce the tax liability and not to enhance it. In the case of interest payable by the assessee under s. 215, such interest would be payable on the first assessment. The section deals with payment to the Central Government of interest by the assessee. Since revised orders of assessment would not normally create further liability on the assessee but only reduce it, the liability to pay the tax would depend upon the first assessment and that would only stand reduced by the revised assessment. In the case of interest payable to the assessee under s. 214, the revised assessment would create an obligation on the Central Government to pay interest even though there may not be obligation to pay interest on account of the first assessment. We are pointing out this to indicate that to assume that there should be a scheme in s. 214 similar to that in s. 215 may not be logical particularly in a taxing statute. The requirement of paying interest to the assessee is met with in s. 214 and the requirement of paying interest to the Central Government is met with in s. 215. This should be sufficient to explain why the term 'regular assessment' in s. 215(1) and (2) should refer to the first assessment, for it is that assessment which creates the liability on the assessee and once that liability arises, he has to pay. In the event the assessee succeeds in his appeal and the amount on which interest was payable under s. 215 is thereby reduced, he must get relief. Such relief is expressly provided for in sub-s. (3). In the very nature of things, the scheme of ss. 214 and 215 cannot be identical and to import such a concept may not be warranted. At any rate, the meaning of s. 214, in its setting, is not ambiguous. It is clear as we have attempted to show at the beginning of this judgment. The learned judges themselves have said, while referring to the scheme of ss. 209 and 210, that the Act may conceive of different meanings to the term 'regular assessment' in different contexts. The meaning to be ascribed to the term 'regular assessment' is s. 215(1) and (2) is clear from the provision in s. 215(3).

50. Let us look at the question in another way. Assuming that the approach in the Bombay decision on the question of inference to be drawn from the schemes of ss. 214 and 215 is correct, let us see the result. Section 215 would enable the Central Government to obtain from the assessee interest on the deficit on the first assessment being made. The liability of the assessee may stand reduced by proceedings by way of appeal or revision. He would then be entitled to refund of the excess of tax he had paid on the basis of the first assessment. That is provided for in sub-s. (3) of s. 215. That is fair enough. But in the case of payment of interest by the Central Government on the excess advance tax paid by the assessee, he would get refund only on the basis of the first assessment order of the ITO if the Bombay view is adopted as the correct view. He gets relief in appeal. On the basis of such relief, he is found entitled to refund of excess not found by the ITO. If we adopt the approach of the Bombay decision, it would mean that the assessee would not get interest for the period after the first assessment. In other words, while the Central Government would get interest only for real deficit and not deficit under the first order by reason of s. 215(3), the Central Government will not pay interest for the real excess, but only for the excess under the first assessment and that too up to the date of the first assessment only. If the scheme of s. 214 is similar to that in s. 215, this result should not follow. Hence, assumption of a similar scheme in the two sections and emphasis on it to understand s. 214 may not be warranted.

51. The observation of the learned judges in the context of considering s. 215(3) that 'it would thus appear that where the legislature intended to provide for a contingency arising out of an order in appeal or revision, a specific provision was made' would seem to suggest that the absence of such a provision in s. 214 is significant. There is no scope for such a provision in s. 214 when s. 214(1) itself provides for the same result. Section 214 has to provide for many situations, such as situation arising from provisional assessment under s. 141A, refund pursuant to such provisional assessment, a subsequent regular assessment, amount of tax due being found more than that determined under s. 141A on such regular assessment and providing for recovery of such tax. To provide for this, a scheme entirely different from that contemplated in s. 215 will have to be envisaged.

52. Now we will come to the reference by the Full Bench to the decided cases of the High Courts. We are not referring to the views expressed by the Bombay judges of the Full Bench in regard to those cases because we have dealt with them earlier in this judgment. Suffice it to say, we respectfully dissent from the approach made to these judgments for reasons stated by us.

53. To sum up : Section 214(1) provides for payment by the Central Government to an assessee of interest up to the date of regular assessment. It provides for payment of interest on the excess advance tax paid. The quantum of excess tax will be determined on the basis of the regular assessment. When the first assessment is final, that is the regular assessment for the purpose of s. 214(1). Where the first assessment happens to be revised, the excess will be determined with reference to such revised assessment. Interest is payable on such excess up to the date of such revised assessment. This is the scheme of s. 214(1) of the I.T. Act, 1961.

54. In the light of our finding, we allow this petition under art. 226 of the Constitution of India and direct the issue of a writ to the respondent-ITO asking him to pay interest on the amount of refund in accordance with s. 214(1) till the date of the revised assessments which are annexure 'C' series in the case. Parties will suffer costs.

55. Petition allowed.


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