Law: Income Tax Act, 1961

Section: 244,244(1A)

Income-tax-Refund---Interest---Deduction of tax at source---Interest payable on amount of tax deducted at source---Indian Income Tax Act, 1961, S.244(1A). The Supreme Court of India held in Modi Industries Ltd. v. CIT (1995) 216 ITR 759, that the amount of advance tax paid by the assessee loses its character by virtue of section 199 of the Income Tax Act, 1961 as soon as the first assessment order is made and the advance tax is set off against the demand raised in the assessment order. If the assessment order is set aside, the adjusted amount of tax or the amount of tax refunded or refundable does not regain its character of advance tax once again. Held accordingly, that with the passing of the order of assessment, dated February 22, 1983, without regard to the fact that the assessment order was set aside by the Assistant Commissioner of Income-tax, the amount of tax deducted at source lost its character and the same was deemed to have been paid in pursuance of the order of assessment. Hence, section 244(lA) would be clearly attracted. Modi Industries Ltd. v. CIT (1995) 216 ITR 759 (SC) applied. CIT v. Leader Engineering Works (1989) 178 ITR 529 (P&H) ref. THIS JUDGMENT DELIVERED BY R.C. LAHOTI, J.---This is a petition by an assessee seeking direction to respondent No.5 to release payment of interest to the petitioner under section 244(1 A) of the Income Tax Act, 1961. The facts relevant may briefly be noticed. An amount of Rs.7,235 was deducted as TDS from the assessee. The assessee filed a return and a order of assessment was made on February 22, 1983. There was an appeal wherein by order, dated December 13, 1985, the Assistant Commissioner of Income-tax set aside the order of assessment. Thereafter, a fresh order of assessment was made on March 6, 1988. On March 31, 1988, the petitioner moved an application to the Income-tax Officer for awarding interest on the amount of Rs.7,235 which fell due and payable to the petitioner, consequent upon the order of assessment. The prayer was rejected. The petitioner preferred an appeal which was held to be not maintainable. Thereafter, the petitioner moved an application under section 264 of the Act to the…

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