Law:

Section:

Section 214 of the Income-tax Act, 1961 - Advance tax - Interest payable by Government - Assessment year 1973-74 - Petitioner/assessee paid advance tax - Subsequently, AAC revised assessment and a part of advance tax was refunded as per provisional assessment order - Assessee filed application for grant of interest under section 214 - ITO rejected application holding that section 214 does not provide for grant of interest in respect of excess advance tax paid as modified from time to time as a result of appeal, rectification, revision etc. - Whether, having regard to proviso to section 214, assessee was entitled to interest till order of provisional assessment was passed - Held, yes FACTS The petitioner paid advance tax of Rs. 58,69,155 and Rs. 22,05,885 were refunded as per the provisional assessment order. As per the direction of the AAC and the revised assessment, the petitioner was required to pay tax of Rs. 55,01,236. The petitioner filed an application for grant of interest under section 214. The application was rejected on the ground that under section 2(40) regular assessment would not include the order passed by the appellate authority and section 214 does not provide for grant of interest in respect of excess advance tax paid as modified from time to time as a result of appeal, rectification, revision, etc. On writ : HELD When the first assessment is final, that is the regular assessment for the purpose of section 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 section 214(1). The proviso to section 214 indicates that no interest shall be paid for the period after the date of provisional assessment. Hence, the petitioner could be entitled to interest till the order of provisional assessment was passed. In the result, the petition was allowed. The impugned order passed by the ITO, was quashed and set aside. - Decision was in favour of petitioner/assessee. CASES REFERRED TO Bardolia Textile Mills v. ITO [1985] 151 ITR 389 (Guj.) (FB) and Sarangpur Cotton Manufacturing Co.…

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