M/S. R.R.Holding
P. Ltd Vs. Commissioner of Income Tax,Delhi & Anr [2006] Insc 441 (21 July 2006)
Arijit
Pasayat & Lokeshwar Singh Panta
(Arising
out of SLP (C) No. 15613 of 2004) ARIJIT PASAYAT, J.
Leave
granted.
Appellant
calls in question legality of the order passed by a Division Bench of the Delhi
High Court dismissing the appeal filed under Section 260(A) of the Income Tax
Act, 1961 (in short the 'Act'), holding that no reference was necessary.
The
High Court held that the Income Tax Appellate Tribunal (in short the
'Tribunal') examined the matter in detail and came to hold as to what was the
date of assessment. This was a question of fact which was not required to be
examined in an appeal under Section 260(A) of the Act. The High Court also noticed
that the decision of this Court in Modi Industries Limited & Ors. v. CIT
& Another [1995 (216) ITR 759 (SC)] was clearly applicable to the facts of
the case.
According
to learned counsel for the appellant, High Court failed to notice that the
decision in Modi Industries' case (supra) has no application to the facts of
the present case.
The
true ambit of Section 244(1A) of the Act has not been kept in view by the High
Court. It is pointed out that in the assessee Appellant's own case for
immediately succeeding assessment order i.e. 1987-88 Tribunal held that Modi
Industries' case (supra) was not applicable to almost identical factual
scenario. The department has questioned correctness of the judgment and the
High Court has admitted the appeal in ITA 88 of 2004.
In
response, Mr. Mohan Prasaran, learned Additional Solicitor General submitted
that the issue is clearly covered by the decision of this Court in Modi
Industries' case (supra) and the High Court was, therefore, justified in its
view.
We
consider it unnecessary to examine whether in the factual background, Section
244(1A) of the Act has any application. It may be noted that the assessee had
filed its return for the assessment year in question on 20.6.1986 declaring a
loss of Rs.4151/-. It was mentioned in the return that there was a brought
forward loss of Rs.11,175/- from the Assessment year 1985-86 and a total loss
of Rs.15,326/-was claimed to be carried forward. Subsequently, on 23.6.1987,
the assessee filed a revised return showing the same figure of loss of Rs.4,151/-
and the carried forward loss of Rs.11,175/-.
But it
claimed tax refund of Rs.10,100/-, because of the tax deduction at source on a
sum of Rs.10,00,000/- advanced to M/s. Blitz Publication Pvt. Ltd. The order in
terms of Section 143(1) on the facts passed on 29.7.1987 accepted the returned
loss. While the assessment proceedings were in progress it came to the notice
of the Department that for the relevant assessment year a Japanese Company is
paying a sum of Rs.1,61,52,472/- plus Rs.21,71,121/-by way of commission in
respect of purchases made by the Department of Electronics, Government of
India, from M/s Sumitomo Corporation, the aforesaid Japanese Company. The
amount was paid at London in the account of M/s Allied Petro
Agencies. The information was passed on by the Government of India to the
Income Tax Department.
In the
meantime i.e. on 17.8.1987 a letter was written by the assessee to the
Commissioner of Income Tax, Delhi-III wherein it admitted the commission income
of Rs.1.61 crores and odd and offered to pay tax thereon. The assessing
officer, however, had already completed the assessment and since commission
income had not been included in the returned income, notice under Section 148
of the Act was issued on 31.8.1987. On that very day the assessee filed an
application with reference to the order made in terms of Section 143(1),
submitting that total income assessed on the basis of profit and loss account,
Balance Sheet and return filed was not correct as it did not take note of
income disclosed subsequently to the Commissioner wherein it offered an amount
of Rs.1.61 crores for taxation. It was also submitted in the said communication
that taxes on the amount of Rs.1 crore and odd have been deposited on 19.8.1987
and a further sum of Rs.17,144/- on 27.8.1987.
The
question that arises for consideration is what is the date which is to be
reckoned for the purpose of grant of interest in terms of Section 244(1A) of
the Act. We need not examine this question because undisputedly for the
subsequent assessment order the Tribunal took a different view and an appeal
filed by Revenue against the Tribunal's order is under consideration of the
High Court.
The
basic issue is whether Modi Industries' case (supra) has any application to the
facts of the case.
Section
244(1A) of the Act reads as follows:
Interest
on refund where no claim is needed.
-
"xxx xxx xxx
1.A.
Where the whole
or any part of the refund referred to in sub-section (1) is due to the assessee,
as a result of any amount having been paid by him after the 31st day of March,
1975, in pursuance of any order of assessment or penalty and such amount or any
part thereof having been found in appeal or other proceeding under this Act to
be in excess of the amount which such assessee is liable to pay as tax or
penalty, as the case may be, under this Act, the Central Government shall pay to
such assessee simple interest at the rate specified in sub-section (1) on the
amount so found to be in excess from the date on which such amount was paid to
the date on which the refund is granted :
Provided
that where the amount so found to be in excess was paid in instalments, such
interest shall be payable on the amount of each such instalment or any part of
such instalment, which was in excess, from the date on which such instalment
was paid to the date on which the refund is granted:
Provided
further that no interest under this sub-section shall be payable for a period
of one month from the date of the passing of the order in appeal or other
proceeding:
Provided
also that where any interest is payable to an assessee under this sub-section,
no interest under sub-section (1) shall be payable to him in respect of the
amount so found to be in excess." The basic requirements are that:
-
there is a
refund due,
-
The whole or
part of the refund referred to in Section 244(1) is due as a result of any
amount having been made after 31st March, 1975,
-
The payment must
be paid pursuance to any order of assessment or penalty,
-
Such amount or
any part thereof as paid is found in appeal or other proceedings under the Act
to be in excess of amount which such assessee is liable to pay as tax or
penalty.
The assessee
has to establish that he fulfils all the above conditions.
In
view of the aforesaid position it is but appropriate that the High Court should
hear the matter afresh. Undisputedly a question of law is involved which is
required to be adjudicated more particularly when for the subsequent year an
appeal has been admitted and the basic question to be considered has been
formulated. In the instant case, appropriate question relevant to the
assessment year in question shall be formulated.
Above
being the position the impugned order of the High Court is set aside and the
matter is remitted to it for a fresh consideration alongwith ITA No. 188 of
2004.
The
appeal is disposed of. No costs.
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