Commissioner of Income Tax vs Ashok Leyland Ltd.

A.K. Rajan, J.—The question that has been referred for our consideration is :

Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in law in holding that the assessee is

entitled to interest u/s 18 of the Surtax Act read with Section 244(1A) of the Income Tax Act, 1961, on the over payment of the self-assessment

tax paid by the assessee ?

For the assessment year 1976-77, the surtax liability was determined at Rs. 56,00,940. After giving credit to the pre-assessment tax paid by the

assessee, the assessment resulted in a refund of Rs. 3,40,366. The Assessing Officer did not allow the assessee interest u/s 18 of the Surtax Act

read with Section 244(1A) of the Income Tax Act, 1961. Hence, an appeal has been filed by the assessee.

In the case reported in Modi Industries Limited, Modinagar and Others Vs. Commissioner of Income Tax, Delhi and Another, , the Supreme

Court has held that Section 214 provides for payment of interest to an assessee on the excess amount of advance tax paid. After adjustment of

advance tax at the time of regular assessment, if some balance remains to the credit of the assessee, that balance is treated as excess amount of

advance tax which has to be refunded with interest u/s 214.

Therefore, this question is answered against the Revenue and in favour of the assessee.