Commissioner of Income Tax vs Orissa Cement Ltd.

The petitioner seeks reference of the following questions :

"1. Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in holding that interest u/s 214 was allowed by the Commissioner of Income Tax (Appeals), vide his Order No. 527 of 1985-86, dated July 9, 1986, and having not filed appeal against the said order, the Department is not entitled to appeal against the clarificatory Order No. 215 of 1987-88 dated November 6, 1987?

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in holding that the assessed-company is entitled to interest u/s 214 of the Income Tax Act, 1961?"

It appears that the assessed had paid advance tax. The assessment having been completed at a figure where the tax paid came to be more than the tax assessed, the assessed filed an appeal against this assessment order. The appeal filed by the assessed was allowed and the Income Tax Officer was directed to give effect to the said appellate order.

The Income Tax Officer gave effect to the order in the appeal and because the tax payable was less than the tax which had been paid the Income Tax Officer held that the assessed was entitled to interest u/s 244(1A) of the Income Tax Act. The Income Tax Officer specifically held that no other interest was allowed to the assessed.

The assessed filed an appeal before the Commissioner of Income Tax (Appeals) and contended that it was entitled to interest u/s 214 of the Act because the amount of advance tax which had been paid was more than the total tax payable by it.

The Commissioner of Income Tax, vide his order dated July 9, 1986, allowed this contention and held that the assessed had become entitled to the payment of interest and the Commissioner of Income Tax (Appeals) then directed the Income Tax Officer to verify the figure of advance tax paid and the income assessed and then to allow the necessary interest to the assessed.

The Income Tax Officer by order dated January 12, 1987, however, came to the conclusion that no interest u/s 214 of the Act was payable. On appeal being filed, the Commissioner of Income Tax (Appeals) accepted the contention of the assessed and, following the decision of this court in the case of National Agricultural Co-operative Marketing Federation of India Ltd. Vs. Union of India and others, , came to the conclusion that the interest u/s 214 of the Act was allowable.

The Revenue then filed an appeal to the Tribunal which came to the conclusion that this contention cannot be now raised by the Department because the decision as to whether interest u/s 214 was payable or not had been taken by the Commissioner of Income Tax (Appeals) by his order dated July 9, 1986, and the said decision having been accepted, the Revenue had missed the bus.

A reference application u/s 256(1) having been dismissed, the present application u/s 256(2) has been filed.

We find that the conclusion of the Tribunal calls for no interference. The first order of the Commissioner of Income Tax (Appeals) dated July 9, 1986, clearly held that the assessed was entitled to interest u/s 214 of the Act. All that the Income Tax Officer was required to do was to compute the amount which was payable. The conclusion of the Tribunal that the question could not be reagitated as the Department had accepted the order dated July 9, 1986, is correct. No question of law, in our opinion, arises and this application is dismissed.