Case Note & Summary
The petitioner, M/s Ultramarine & Pigments Ltd., filed a writ petition challenging the order dated 30th January 1992 passed by the Commissioner of Income Tax under Section 264 of the Income Tax Act, 1961, rejecting the revision petition. The dispute pertained to the assessment year 1982-83. The petitioner filed a return on 31.7.1982 declaring income of Rs.56,53,380/-. The assessing officer passed an assessment order on 31.1.1985 determining income at Rs.71,91,717/- and granted a refund of Rs.10,25,207/- inclusive of interest. Section 214 of the Act was amended on 1st April 1985, empowering the assessing officer to increase or reduce interest payable by the Government while giving effect to orders of higher authorities. The petitioner appealed against the disallowances, and the CIT (Appeals) allowed the appeal on 21.1.1986. On 10.3.1986, the assessing officer gave effect to the appellate order, entitling the petitioner to a refund of Rs.15,45,081/-. However, the assessing officer did not recompute the interest under Section 214 in light of the amendment. The petitioner filed a revision before the Commissioner under Section 264, which was rejected on 30.1.1992. The High Court allowed the writ petition, holding that the amendment to Section 214 effective from 1.4.1985 applies to pending proceedings and the assessing officer must recompute interest while giving effect to the appellate order. The court set aside the Commissioner's order and directed the assessing officer to recompute the interest payable to the petitioner.
Headnote
A) Income Tax - Refund Interest - Section 214 Income Tax Act, 1961 - Amendment - The petitioner challenged the order of the Commissioner rejecting revision against the assessing officer's failure to recompute interest on refund after appellate order. The court held that the amendment to Section 214 effective from 1.4.1985 applies to pending proceedings and the assessing officer must recompute interest while giving effect to the appellate order. (Paras 1-4)
Issue of Consideration
Whether the Commissioner of Income Tax erred in rejecting the revision petition under Section 264 of the Income Tax Act, 1961, by not directing the assessing officer to recompute interest under Section 214 in light of the amendment effective from 1.4.1985.
Final Decision
The writ petition is allowed. The order dated 30th January 1992 passed by the Commissioner of Income Tax is set aside. The assessing officer is directed to recompute the interest payable to the petitioner under Section 214 of the Income Tax Act, 1961, while giving effect to the order of the CIT (Appeals) dated 21.1.1986.
Law Points
- Interest under Section 214 of Income Tax Act
- 1961 is payable on refunds
- amendment to Section 214 effective from 1.4.1985 applies to pending proceedings
- assessing officer has power to recompute interest while giving effect to appellate order.
