Commissioner of Income Tax vs Agrawal Metal Works (P.) Ltd.

Ashok Bhan, J.—This order shall dispose of Income Tax References Nos. 66 and 67 of 1984, as common questions of law and fact are involved in both these cases.

At the instance of the Revenue, the Income Tax Appellate Tribunal, Delhi Bench "C", New Delhi, has referred the following question of law to this court for its opinion, for the assessment years 1977-78 and 1979-80 by drawing up a common statement of the case because the question involved in both the assessment years is the same :

"Whether, on the facts and in the circumstances of the case, the Tribunal was right in allowing interest u/s 214, though some of the payments had not been made strictly in accordance with the provisions of Sections 207 to 213 of the Income Tax Act in so far as the payment was made before the filing of the estimate by the assessee ?"

We also deal with the said two assessment years by passing a common order but refer to the facts of each year separately.

Assessment year 1977-78 ending March 31, 1977 :

While making the assessment, the Income Tax Officer did not allow interest u/s 214 of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). The assessee moved an application u/s 154 of the Act claiming that interest should be allowed u/s 214 of the Act on the gross refundable amount of Rs. 9,162. The Inspecting Assistant Commissioner of Income Tax found that the demand u/s 210 of the Act came to Rs. 6,44,480 whereas the assessee had filed an estimate on May 12, 1976, estimating the company''s liability at Rs. 22,000. Another estimate was filed on December 12, 1976, estimating the company''s liability at Rs. 3,30,000. The Inspecting Assistant Commissioner gave the details of dates on which the amount of Rs. 3,30,000 had been paid and held that out of Rs. 3,30,000, Rs. 2,34,134 had not been paid as advance tax. These payments were made prior to the end of the previous year, i.e., during the financial year. The Inspecting Assistant Commissioner, therefore, held that if these payments were excluded for the purpose of calculation of interest, no interest u/s 214 was admissible. The claim of the assessee was rejected. An appeal filed by the assessee before the Commissioner of Income Tax (Appeals) was also dismissed.

The assessee filed a second appeal before the Tribunal, which was accepted. It was held by the Tribunal that the assessee had received credit for the advance tax paid and, therefore, the amounts paid within the financial year should be eligible for payment of interest u/s 214 of the Act. Thereafter, at the instance of the Revenue, the question reproduced in the earlier part of the judgment, has been referred to this court for the opinion.

Assessment year 1979-80 ending March 31, 1979 :

The assessee moved an application u/s 214 of the Act, claiming interest on the gross refundable amount of Rs. 22,635. The Inspecting Assistant Commissioner of Income Tax found that the assessee had filed two estimates of his income. The first was filed on June 1, 1978, and the second on November 4, 1978. According to the second estimate, the advance tax liability was shown at Rs. 6,30,000. This was followed by the third estimate on November 21, 1979, and the fourth estimate on December 8, 1978, showing the tax liability at Rs. 9,45,000 and Rs. 10,71,000, respectively. The Inspecting Assistant Commissioner gave the details of the dates of payment and held that to the extent of Rs. 1,42,800, the payments were not in accordance with the provisions of Sections 207 to 213 of the Act and if these amounts were excluded, no interest u/s 214 of the Act could be admissible to the assessee. The order of the Inspecting Assistant Commissioner was upheld by the Commissioner of Income Tax (Appeals) in appeal.

The assessee filed a second appeal before the Tribunal, which was accepted. It was held by the Tribunal that the assessee had made the payments before the close of the financial year and had received credit for the advance tax paid and, therefore, the amounts paid within the financial year should be eligible for payment of interest u/s 214 of the Act.

Counsel for the parties are agreed that the question referred stands concluded against the Revenue and in favour of the assessee, by two judgments of this court in Commissioner of Income Tax Vs. Oswal Woollen Mills Ltd., and COMMISSIONER OF Income Tax Vs. ROADMASTER INDUSTRIES OF INDIA (P.) LTD., .

As the question referred to us, relevant to the assessment years 1977-78 and 1979-80, stands concluded by the aforesaid two judgments of this court in Commissioner of Income Tax Vs. Oswal Woollen Mills Ltd., and COMMISSIONER OF Income Tax Vs. ROADMASTER INDUSTRIES OF INDIA (P.) LTD., , the same is answered in the affirmative, i.e., against the Revenue and in favour of the assessee.