Commissioner of Income Tax vs National Agrl. Co-operative Marketing Federation of India

R.C. Lahoti, J.—Heard finally. This is a reference u/s 256(1) of the income tax Act, 1961 (''the Act'') at the instance of the revenue seeking opinion of the High Court on the following question of law arising out of the proceedings for the assessment year 1977-78 :

Whether, on the facts and in the circumstances of the case, when no refund was payable to the assessee on the initial regular assessment u/s 143(3) of the income tax Act, 1961 and the refund resulting from the Tribunal''s order would come out of the advance tax paid by the assessee, the Tribunal was right in directing that interest u/s 214 should be allowed on such refund ?

On behalf of the assessee, the learned counsel Mr. Sawhney has submitted that the question does not arise from the order of the Tribunal and, therefore, need not be answered. He submits that the Tribunal has not expressed any opinion on the quantum of the amount of advance tax on which interest would be liable to be calculated u/s 214 of the Act and, therefore, the question cannot be said to be one arising from the order of the Tribunal. On the contrary, the learned senior standing counsel for the revenue, Mr. Khanna, has submitted that the language used by the Tribunal in its appellate order is not properly worded and as the Assessing Officer calculating the amount of interest is likely to be misguided and act in a manner not contemplated by law treating the order of the Tribunal as having achieved a finality, the question of law does arise from the order of the Tribunal and that is why the Tribunal has thought it fit to make the reference.

Para 13 of the appellate order of the Tribunal around which centres the controversy, is reproduced hereunder :

The last ground in the assessee''s appeal pertains to the interest u/s 214 which should have been allowed on the refund to which the appellant will become eligible after the disposal of the final appeal. The Delhi High Court has decided in the assessee''s own case in National Agricultural Co-operative Marketing Federation of India Ltd. Vs. Union of India and others, that u/s 214, regular assessment means the first or initial regular assessment and not the subsequent modification thereof and, therefore, interest would be admissible only up to the date of such assessment. The IAC shall, therefore, allow interest u/s 214 in the light of the said decision of the Delhi High Court.

The correctness of the view of the law taken by Delhi High Court in the case of National Agricultural Co-operative Marketing Federation of India Ltd. Vs. Union of India and others, is not disputed by either party before us. Now we also have the law exhaustively laid down by the Supreme Court in the case of Modi Industries Limited, Modinagar and Others Vs. Commissioner of Income Tax, Delhi and Another, , which is the final word and end of the controversy clustering around section 214.

It is true that the Tribunal has not expressed any opinion, much less recorded any finding on the question of quantum. It has simply directed the Assessing Officer to follow the law laid down by the Delhi High Court in the above-said decision and to allow interest u/s 214 in the light of the said decision. Needless to say that while carrying out the order of the Tribunal in the light of the decision of the Delhi High Court, the Assessing Officer cannot afford to overlook the law laid down by the Supreme Court in Modi Industries Ltd.''s case (supra), which is the law of the land and binding on the Assessing Officer. Inasmuch as the Tribunal has not expressed any opinion on the quantum of advance tax on which interest is to be calculated and the law laid down by the Supreme Court in the case of Modi Industries Ltd. (supra) has left no scope for any doubt, in our opinion, the question as framed, does not arise from the order of the Tribunal and, hence, need not be answered. The reference be treated as disposed of. No order as to costs.