R.M.S. Khandeparkar, J.
1. Since a common question of law and facts arises in all the petitions, they were heard together and are being disposed of by this common judgment.
2. The order rejecting the claim for interest on interest is sought to be challenged while contending that the petitioners are entitled to be paid with the interest at the rate of 15 per cent. per annum on the total amount of refund, including the interest accrued thereon from the day such refund amount became due and payable till the date of actual payment, in terms of Sections 214(1), 214(1A), and 244(1A) read with Section 240 and Section 244(1) of the Income-tax Act, 1961 (hereinafter referred to as 'the said Act'), and in the alternative, assuming that no such interest on interest is payable under any of the provisions of the said Act, then the same shall be ordered to be paid in exercise of writ jurisdiction since the amount of interest payable under Section 214(1) read with Sections 214(1A) and 244(1A) of the said Act was illegally and wrongfully withheld by the respondents for a long period as stated in the petition.
3. The facts not in dispute in Writ Petition No. 5841 of 2001 are that for the assessment year 1978-79 the petitioners paid advance tax of Rs. 1,11,81,844. By the assessment order dated March 27, 1981, the petitioners' income for the said period was assessed at Rs. 1,54,17,090 and the tax liability was determined at Rs. 89,03,368. The excess advance tax of Rs. 22,78,476 was refunded. In appeal, by order dated August 23, 1985, the income of the petitioners was reduced to Rs. 93,93,108 and the tax liability was determined at Rs. 54,24,561. Accordingly, further refund of Rs. 34,78,807 was granted on April 30, 1986. As against the petitioners' claim of interest to the tune of Rs. 42,58,766, it was allowed only to the extent of Rs. 1,73,940 on November 28, 1986, and the claim for the balance amount was rejected. The revision filed by the petitioners was rejected on February 28, 1990. However, the apex court by its order dated April 30, 1997, directed the Commissioner of Income-tax, Pune, to consider the revision petition in the light of the Supreme Court's decision in Modi Industries Ltd. v. CIT : [1995]216ITR759(SC) . By order dated September 29, 1997, the Commissioner of Income-tax-(I), Pune, directed the payment of interest according to the decision in Modi Industries' case : [1995]216ITR759(SC) and accordingly the Joint Commissioner of Income-tax, SR-II, Pune, by his order dated March 27, 1998, while giving effect to the order of the Commissioner of Income-tax, dated September 29, 1997, granted interest amount to the tune of Rs. 40,84,906 in addition to Rs. 1,73,940, which was also paid on November 28, 1986, thereby totalling the interest amount to Rs. 42,58,846. The said interest was calculated in terms of the provisions of law contained in Section 214 read with Section 244(1A) of the said Act, as under :
'(i) Interest under Section 214(1) at the rate of 12 per cent. per annum on Rs. 22,78,400 for the period April 1, 1978, to February 28, 1981, to the tune of Rs. 7,97,440 ;
(ii) Interest under Section 214(1) at the rate of 12 per cent. per annum on Rs. 34,78,800 for the period from April 1, 1978, to March 27, 1981, to the tune of Rs. 12,17,580 ; and
(iii) Interest under Section 244(1A) on the sum of Rs. 34,78,800 :
(a) from April 1, 1981, to September 30, 1984, at the rate of 12 per cent. per annum to the tune of Rs. 14,61,096, and
(b) from October 1, 1984, to March 31, 1986, at the rate of 15 per cent. per annum to the tune of Rs. 7,82,730.'
4. The said interest amount was paid on March 27, 1998. After receipt of the said interest amount, the petitioners preferred an application contending that due to delay in payment of the amount of interest, the petitioners were entitled to claim further interest on the said amount of interest. The claim of the petitioners was rejected by the impugned order dated September 25, 2000.
5. The case of the petitioners is that :
(a) a sum of Rs. 7,97,440 was received by the petitioners on April 2, 1998, when the Department ought to have paid the same to the petitioners on March 27, 1981. Thus, there was a delay of 17 years in the matter of payment of the said interest amount to the petitioners, and therefore, the petitioners are entitled for the interest at the rate of 12 per cent. per annum for the period from April 1, 1981, to September 30, 1984, totalling to Rs. 3,34,924 and at the rate of 15 per cent., per annum from October 1, 1984, to April 30, 1998, totalling to Rs. 16,24,794 ;
(b) a sum of Rs. 1,73,940 was paid to the petitioners on November 28, 1986, when the Department ought to have paid the same on April 30, 1986. Thus, there was a delay of six months in the payment of interest amount and therefore the petitioners are entitled for interest on the said amount of at the rate of 15 per cent. per annum from April 1, 1986 to October 30, 1986 amounting to Rs. 15,220 ;
(c) a sum of Rs. 32,87,466, i.e., the amount calculated after deducting the sum of Rs. 7,97,440 out of the total sum of Rs. 40,84,906 was paid to the petitioners on April 2, 1998, when the Department ought to have paid the said amount to the petitioners on April 30, 1986, and thus there was a delay of 12 years in payment of the said interest amount and therefore the petitioners are entitled for interest on the said amount at the rate of 15 per cent. per annum, from April 1, 1986, to April 30, 1998, amounting to Rs. 59,58,532.
6. In Writ Petition No. 5841 of 2001, therefore, the claim of the petitioners on account of delay in payment of amount of interest by the respondents is to the tune of Rs. 1,18,49,618 as on June 30, 2001, while reserving the right to claim further interest. This claim relates to the assessment year 1978-79.
7. In Writ Petition No. 5854 of 2001, which relates to the assessment year 1982-83, other facts being similar to the first petition, the claim of the petitioners on account of delay in payment of amount of interest by the respondents is to the tune of Rs. 17,44,381 as on June 30, 2001, with the reservation of right to claim further interest.
8. In Writ Petition No. 5855 of 2001, which relates to the assessment year 1977-78, the claim of the petitioners on account of delay in payment of amount of interest by the respondents is to the rune of Rs. 87,13,628 as on June 30, 2001, with the reservation of right to claim further interest.
9. In Writ Petition No. 5860 of 2001, which relates to the assessment year 1981-82, the claim of the petitioners on account of delay in payment of amount of interest by the respondents is to the tune of Rs. 91,14,165 as on June 30, 2001, with the reservation of right to claim further interest.
10. The contention of the petitioners is two fold. Firstly, it is sought to be contended that the provisions of law contained in Section 240 read with Section 244(1) of the said Act clearly provide for interest on interest when the Revenue fails to refund the amount due to an assessee within the period of three months from the date of the amount becoming due and payable to the asses-see. According to the learned advocate for the petitioners, the expression 'refund of any amount' in Section 240 discloses that it not only refers to the tax component but also includes other amounts like interest, penalty, etc., and the same expression has been used in Section 244(1). The latter section specifically refers to the liability of the Revenue in terms of the order referred to in Section 240 and therefore the interest to be calculated under Section 244(1) would be on the aggregate amount of refund including the tax component refundable to the assessee as well as the interest accrued thereon in terms of Section 214 and/or 244(1A). Reliance is placed on the decisions in the matter of CIT v. Narendra Doshi : [2002]254ITR606(SC) ; D. J. Works v. Deputy CIT : [1992]195ITR227(Guj) ; CIT v. Goodyear India Ltd, : [2001]249ITR527(Delhi) ; Chimanlal S. Patel v. CIT : [1994]210ITR419(Guj) ; CIT v. Ambat Echukutty Menon : [1988]173ITR581(Ker) ; Suresh B. Jain v. P. K. P. Nair : [1992]194ITR148(Bom) ; Jwala Prasad Sikaria v. CIT ; Poddar Projects Ltd. v. Asst. CIT : [1999]240ITR572(Cal) ; CIT v. Needle Industries Pvt. Ltd. : [1998]233ITR370(Mad) . It was also sought to be contended that the apex court in the case of CIT v. Narendra Doshi : [2002]254ITR606(SC) and the Gujarat High Court in D. J. Works v. Deputy CIT : [1992]195ITR227(Guj) as also in CIT v. Chimanlal J. Dalai and Co. : [1965]57ITR285(Bom) have clearly laid down the law on the point in issue and while arguing about the doctrine of merger and the binding nature of the decision of the apex court, reliance is sought to be placed on the decision in the matter of V. M. Salgaocar and Bros. Pvt. Ltd, v. CIT : [2000]243ITR383(SC) . Referring to the decision of the apex court in Modi Industries Ltd, v. CIT : [1995]216ITR759(SC) , it was sought to be contended that it is in the nature of declaration of law and therefore it relates back to the date of enforcement of the enactment itself. Reliance is placed on the decision in the matter of Mysore Cements Ltd. v. Deputy Commr. of Commercial Taxes and Kil Kotagiri Tea and Coffee Estates Co. Ltd, v. ITAT : [1988]174ITR579(Ker) . Secondly, it is the contention of the petitioners that the said amount, which lawfully belonged to the petitioners, was wrongfully withheld by the respondents without any authority of law for the period mentioned above and therefore, even otherwise the petitioners should be granted interest on the entire amount payable to them and direction in that regard should be issued to the respondents in writ jurisdiction.
11. Learned counsel appearing for the respondents, on the other hand, submitted that the Commissioner has decided the matter in terms of the direction issued by the apex court and the direction was to decide the claim in relation to the interest payable to the petitioners in the light of the law laid down in Modi Industries' case : [1995]216ITR759(SC) . None of the provisions of law contained in the said Act provide for payment of interest on interest and certainly not Section 244(1). The apex court in Narendra Doshi's case : [2002]254ITR606(SC) had not laid down any law on the point in issue and none of the decisions relied upon by the learned advocate for the petitioners speak of any provision of law in the Said Act creating liability upon the Revenue to pay interest on interest. In the matter of interpretation of a taxing statute and the provisions of law contained therein, there can be no scope for consideration of equity or intendment and what is expected is strict interpretation. He has further submitted that when the statute does not permit grant of interest, it would be inappropriate to grant interest in exercise of writ jurisdiction. It is his further contention that under Section 237 the refund spoken of relates to tax and penalty component, i.e., what is paid by the assessee and not what may become due and payable to the assessee by the Revenue and therefore the expression 'refund Of any amount' in Section 240 would not relate to interest on the amount payable as refund by the Department to the assessee under Section 240. Reliance is placed on the decisions in the matters of Union of India v. Kirloskar Pneumatic Co. Ltd. : 1996(84)ELT401(SC) ; Union of India v. Orient Enterprises : 1998(99)ELT193(SC) ; Kurumber Betta Estate v. ITO : [2002]257ITR328(Ker) ; Bardolia Textile Mills v. ITO : [1985]151ITR389(Guj) [FB].
12. Upon hearing the learned advocates for the parties and perusal of the records, the following points arise for consideration :
(i) Whether the provisions of law comprised under Section 240 read with Section 244(1) of the said Act entitle the assessee to claim interest on interest in case of failure on the part of the Revenue Department to pay to the assessee the refund amount within the period of three months from the date of the refund becoming due and payable to the assessee ?
(ii) As a prelude to the above question, it would be necessary to know what does the expression 'refund of any amount' in Section 240 of the said Act mean ?
(iii) What is the decision of the apex court in Narendra Doshi's case : [2002]254ITR606(SC) and whether it is a complete answer to the above questions ?
(iv) Whether the respondents had wrongfully withheld the interest amount payable to the petitioners for the period as stated by the petitioners and, that therefore, the petitioners are entitled for interest on interest as claimed by the petitioners even in the absence of any specific provision in that regard in the said Act ?
13. Chapter XIX of the said Act deals with the subject of refund. Section 237 thereof provides that if any person satisfies the Assessing Officer that the amount of tax paid by him or on his behalf or treated as paid by him or on his behalf for any assessment year exceeds the amount with which he is properly chargeable under the said Act for that year, then he shall be entitled to a refund of the excess. A plain reading of Section 237 would reveal that what is payable to the assessee as refund is the amount paid by him 'in excess' to the one 'chargeable' under the said Act. What could be chargeable under the said Act is either tax or interest for the period of delay in payment of tax or penalty amount, if any. In other words, if any amount paid by the assessee is found to be in excess of the amount chargeable as tax, or interest, or penalty, or having been found to have paid any such amount when there was no such amount chargeable as such or payable by the assessee, then such excess amount is to be repaid to the assessee as refund.
14. Section 240 provides that where as a result of any order passed in appeal or other proceeding under the said Act, refund of any amount becomes due to the assessee, the Assessing Officer shall, except as otherwise provided in the said Act, refund the amount to the assessee without his having to make any claim in that behalf provided that where, by the order as aforesaid when the assessment is set aside or cancelled and an order of fresh assessment is directed to be made, then the refund, if any, shall become due only on the making of such fresh assessment or when the assessment is cancelled, that the refund shall become due only of the amount, if any, of the tax paid in excess of the tax chargeable on the total income returned by the assessee.
15. While Section 237 relates to right of the assessee to get back any amount paid in excess of the one chargeable under the said Act, the provision of law contained in Section 240 relates to obligation of the Department to repay to the assessee any amount becoming due and payable pursuant to the order in appeal or other proceedings, without there being claim made in that regard by the assessee. While Section 237 uses the phrase 'refund of excess', Section 240 refers to 'refund of any amount'. Section 237 relates to '. . . amount of tax paid . . . exceeds the amount . . . properly chargeable under this Act. . .' whereas, Section 240 relates to '.. . refund of any amount becomes due ...' Considering the difference in the phraseology in the two sections under reference, at first sight it may appear that while Section 237 refers strictly to the amount paid in excess by the assessee to be refundable, whereas Section 240 relates to any amount becoming due and payable to the assessee pursuant to an order in appeal or other proceedings and that, therefore, the obligation of the Department to refund under Section 240 is not restricted to the amount which was paid in excess by the assessee but would also include the amount of interest becoming due and payable on such excess amount which was paid by the assessee. However, before arriving at any conclusion on the point in issue, it is necessary to take note of some other provisions of law in the said Act including the proviso to Section 240.
16. Clause (a) of the proviso to Section 240 of the said Act speaks of postponement of right to refund till the finalisation of fresh assessment in a case where the assessment is set aside or cancelled in appeal or other proceedings. Clause (b) relates to situation on annulment of assessment. The proviso reads thus :
'Provided that, where, by the order aforesaid--
(a) an assessment is set aside or cancelled and an order of fresh assessment is directed to be made, the refund, if any, shall become due only on the making of such fresh assessment;
(b) the assessment is annulled, the refund shall become due only of the amount, if any, of the tax paid in excess of the tax chargeable on the total income returned by the assessee.'
17. Both the clauses of the proviso uses the expression 'the refund' in relation to the amount payable by the Revenue either on setting aside, cancellation or on annulment of assessment. However, Clause (b) of the proviso makes it very clear that what would be payable as refund on annulment of the assessment would be the amount of tax paid in excess of the tax chargeable on the total income returned by the assessee. In other words, any amount refundable is specified to be one which was earlier paid by the assessee and it does not relate to amount which may be payable by the Department by way of interest on such amount paid by the assessee. When the proviso specifically refers to the amount paid by the assessee in excess to be the amount refundable as refund to the assessee in case of annulment of assessment, is it possible to construe the words 'any amount' in Section 240 to mean the amount of interest accrued on such amount in excess paid by the assessee in cases other than those of annulment of assessment Does the provision of law contemplate one rule for refund in case of annulment of assessment and another rule in case of modification or partial interference in assessment either in appeal or other proceedings while calculating the amount of refund If not, is it permissible to interpret the provision of law under Section 240, which may lead to absurdity and chaotic results Undoubtedly, the order of annulment of assessment differs from that of mere setting aside of the assessment and both can have different consequences. However, in relation to right to interest, can it be sought to be bestowed upon the assessee without there being clear provision of law in that regard, and by merely interpreting the provision of Section 240 ?
18. It is relevant to note that the expression 'the refund' pertaining to excess payment used either in Section 237 or in Section 240 relates to the tax or the amount of tax. Does it mean that it has to be restricted to the tax component alone, and would not include even the amount of interest or penalty, if any, paid by the assessee The word 'tax' has been defined in Section 2(43) of the said Act to mean income-tax chargeable under the provisions of the said Act. The term 'income-tax' has not been defined under the said Act. However, on a perusal of the various sections of the said Act and the scheme of taxation, it is apparent that any amount payable or becoming due as tax under the said Act in relation to any income of a person or persons during a financial year or any part thereof would be income-tax. Once it is clear that any amount payable as tax would be tax under the said Act, it would obviously include any amount payable to the Government over and above the amount of tax on account of either delay in paying the amount of tax or for similar such reason, and therefore it would also include even interest or penalty amount payable by the assessee either on account of delay in payment of actual amount of tax or default in payment of tax. This is evident from the provision of law contained in Section 229 of the said Act which provides that any sum imposed by way of interest, fine, penalty, or any other sum payable under the provisions of the said Act, shall be recoverable in the manner provided in Chapter XVII of the said Act which deals with the subject of collection and recovery of tax and includes collection of penalty and interest and the actual amount of tax. What is pertinent to note is that both the sections--Section 237 and Section 240--lay stress on the aspect of payment of excess amount by the assessee to be the pre-condition for occasion 'to refund'.
19. The term 'refund' has not been defined under the said Act. The dictionary meaning thereof, as appearing in the New Lexicon Webster's Dictionary is that 'to pay back (money spent) : to reimburse (some one) : to make repayment', whereas in terms of the Shorter Oxford English Dictionary, it means, 'to give, restore, to make return or restitution of (sum received or taken), to hand back, retake, restore, to reimburse,' Considering the dictionary meaning of the word 'refund', it would therefore be an act of repayment or reimbursement. Certainly in cases of reimbursement, it may or may not include the element of compensation for deprivation of the use of the amount for the period for which it is retained by one who is required to repay or reimburse the other. However, the question of resorting to the dictionary meaning of the word cannot arise when the context in which the word used makes the meaning of the word abundantly clear. In Deputy Chief Controller of Imports and Exports v. K. T. Kosalram, : 1971CriLJ1081 , it was held by the apex court that it is not always safe to construe a statute by dividing it by a process of etymological dissection and after separating words from their context to give each word some particular definition given by lexicographers and then to reconstruct the instrument upon the basis of those definitions. It is well settled that the meaning of words and expressions used in an Act must take their colour from the context in which they appear (vide : Ram Narain v. State of Uttar Pradesh, : [1956]1SCR664 ). The meaning of a word must take colour from the context in which it is used (vide Mangoo Singh v. Election Tribunal, : [1958]1SCR418 ).
20. On a careful reading of Section 240, it discloses that the word 'refund' and the expression 'any amount' have been used in the context of obligation of the Revenue 'to repay' the excess amount which was paid by the assessee. In other words, it relates to the payment of an amount made by an assessee over and above the amount becoming chargeable or due and payable under the said Act and that is the amount which is repayable as the refund to the asessee. It is, therefore, difficult to accept the contention of the learned advocate for the petitioners that those words or expressions would include even the amount payable by the Department over and above the amount 'paid' by the assessee either as the tax or an interest or penalty. A word in a statute though not defined therein may have different dictionary meanings, yet the meaning which suits to the word in the context in which it has been used in the statute, has to be accepted. Considering the context in which the word 'refund' or the expression 'any amount' has been used in Section 240, it is to be held that it would not include 'an amount of interest' payable by the Department to the assessee.
21. Referring to Section 244(1) of the said Act, it was sought to be argued on behalf of the petitioners that both the sections are to be read together and that such reading is inescapable in view of the contents of the said sub-section of Section 244(1) itself, and it would reveal that the amount spoken of as refundable under Section 240 would necessarily include the interest on the amount repayable to the assessee. There cannot be any dispute about the proposition that Section 244(1) cannot be read independently of Section 240, but at the same time it cannot be accepted that Section 240 cannot be read independently of Section 244(1). The liability to pay interest in terms of Section 244(1) can arise only upon failure on the part of the Department to comply with its obligation under Section 240. Therefore, in case of payment of refund amount in accordance with the provision of Section 240 within three months from the date of the amount becoming due, there would be no occasion to pay interest under Section 244(1) of the said Act.
22. According to the learned advocate for the petitioners, however, in this view of the matter, it would lead to the conclusion that the assessee would not get the payment of the interest payable on such amount without being demanded or claimed. The provision of law contained in Section 244(1), however, proves the contention to be devoid of substance. Section 244(1) reads thus :
'244. (1) Where a refund is due to the assessee in pursuance of an order referred to in Section 240 and the Assessing Officer does not grant the refund within a period of three months from the end of the month in which such order is passed, the Central Government shall pay to the assessee simple interest at fifteen per cent. per annum on the amount of refund due from the date immediately following the expiry of the period of three months aforesaid to the date on which the refund is granted.'
23. The above quoted provision on the face of it discloses that if the Department fails to refund the amount due in terms of Section 240 within three months from the end of the month in which the order referred to in Section 240 is passed, then the Department would be liable to pay the interest at the rate of 15 per cent. per annum on the refund amount till the refund is granted. This liability of payment of interest in case of failure to pay the amount within three months in terms of Section 240, itself reveals that the obligation there under would arise without there being any need for demand of compliance of such obligation. Upon the failure to pay the amount within three months, undoubtedly such obligation to pay interest will have to be complied with along with the compliance of the provisions of Section 240. However, Sub-section (1) of Section 244 nowhere speaks of interest on interest. On the contrary, it refers to the simple interest on the amount of refund due in pursuance of the order referred to in Section 240. Once it is clear that Section 240 does not relate to any interest amount but speaks of the repayment of the excess amount paid by the assessee and Section 244(1) refers to the order spoken of under Section 240 for refund of such excess amount, and provides for interest on such excess amount refundable to the assessee, it clearly means that the interest payable under Section 244(1) is on such excess amount refundable to the assessee under Section 240, and both the amounts to be paid simultaneously, without there being any need for demand of such refund or payment of interest thereon in terms of Section 244(1) of said Act.
24. The provisions of law comprised under Section 244(1), ex facie disclose that if the Department fails to repay the excess amount within three months from the date it becomes due and payable to the assessee, then the assessee should be paid interest on such amount at the rate of 15 per cent. per annum. In other words, on the failure to refund the amount within the specified time, and without there being any demand, the Department is bound to pay along with such refund, the interest thereon as specified in Section 244(1). Even the subtitle of the section reads 'Interest on refund where no claim is needed'. It is thus clear that the obligation to pay interest in terms of Section 244(1) is also without any need for claim of interest, while performing its obligation under Section 240 of the said Act.
25. It is also necessary to take note of Section 244(1A). It reads thus :
'244. (1A) 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.'
26. It is pertinent to note that prior to the introduction of Section 244(1A), the assessee was not entitled to get any interest from the date of payment of tax up to the date of the order as a result of which excess realisation of tax became refundable and the interest under Section 243 or Section 244 was payable only when the refund was not paid within the stipulated period up to the date of refund, but if the assessment order was set aside in appeal, no interest was payable from the date of payment of tax pursuant to the assessment order to the date of the appellate order. The situation prior to the introduction of Section 244(1A) was summarised by the apex court in Modi Industries : [1995]216ITR759(SC) :
'Prior to the introduction of Sub-section (1A) in Section 244, if any refund was payable pursuant to the order of regular assessment, that had to be paid in accordance with the provisions of Section 243 of Chapter XIX of the Act. If the payment was delayed beyond the period mentioned in Section 243 of the Act, interest had to be paid from the date of expiry of the aforesaid period to the date of the refund order. If as a result of any of the appellate or other proceedings mentioned in Section 240 the refund amount was enhanced, then the enhanced amount had to be paid within the period prescribed by Section 244 failing which interest had to be paid from the first day after the expiry of the stipulated period till the date of the order of refund. This position was drastically altered by Sub-section (1A) of Section 244, which was inserted by the Taxation Laws (Amendment) Act, 1975, with effect from October 1, 1975,'
27. The effect of introduction of Section 244(1A) has been described by the apex court in the following words (page 806) :
'Sub-section (1A) of Section 244 does not affect the operation of Section 214 in any manner whatsoever. The period during which interest has to be paid under Section 214 is the first day of the relevant assessment year to the date of the assessment order. The period covered by Section 244(1A) is the period commencing from the date of payment of tax or penalty. ....
Interest under Sub-section (1A) of Section 244 is payable when the tax or penalty paid by an assessee pursuant to an order of assessment has been reduced in appeal or any other proceeding. In such a case, an excess amount of tax or penalty paid by the assessee will have to be refunded and the Central Government has to pay interest on the excess amount from the date on which such amount was paid to the date on which the refund was granted. Of course, there can be no question of paying interest both under Section 214(1A) and Section 244(1A) simultaneously. The rate of interest being the same under both the provisions, there would be no difference in the actual amount of interest payable, whichever provision is applied.'
28. Dealing with the matter relating to the scope of Section 214, while rejecting the argument based on the principle of equity that the assessee should get interest amount on advance tax paid when the amount paid in advance is refunded pursuant to the appellate order, it was held by the apex court that (page 790) :
'There is no right to get interest on refund except as provided by the statute. The interest on excess amount of advance tax under Section 214 is not paid from the date of payment of the tax. Nor is it paid till the date of refund. It is paid only up to the date of the regular assessment.'
29. A query is raised as to whether prior to the expiry of the period of three months, the assessee would not be entitled for any interest on such refund amount under Section 240 Certainly the answer is in the negative, as the Legislature has taken due care to ensure such interest in terms of the provisions of law incorporated in Section 244(1A). In fact, the provisions of law relating to the liability to pay interest after the expiry of three months are found in Sub-section (1) as well as in Sub-section (1A) of Section 244, but it does not mean that the Department is liable to pay interest twice on interest on interest and law in that regard is very clear from the third proviso to subsection (1A) thereof. The said proviso clearly states that where any interest is payable to the assessee under Sub-section (1A), then no interest should be paid under Sub-section (1) thereof. Hence, irrespective of the fact, that Section 240 merely refers to the amount of refund, i.e., the amount paid by the assessee in excess of the chargeable amount, to be paid without there being demand made by the assessee, at the same time, the provisions of law comprised under Section 244(1) and Section 244(1A) make it clear that such refund should be along with the interest at the rate of 15 per cent. per annum, on such refund, and that such interest has to accompany the refund amount. In other words, such interest would also be payable without there being any need or demand for the same.
30. It is also necessary to note Sub-section (3) of Section 244 as well as Section 244A(1) and (4). The Sub-section (3) of Section 244 reads thus :
'(3) The provisions of this section shall not apply in respect of any assessment for the assessment year commencing on the 1st day of April, 1989, or any subsequent assessment years.'
31. Section 244A(1) and (4) read thus :
'(1) Where refund of any amount becomes due to the assessee under this Act, he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated in the following manner, namely : --
(a) where the refund is out of any tax collected at source under Section 206C or paid by way of advance tax or treated as paid under Section 199, during the financial year immediately preceding the assessment year, such interest shall be calculated at the rate of two-third per cent. for every month or part of a month comprised in the period from the 1st day of April of the assessment year to the date on which the refund is granted :
Provided that no interest shall be payable if the amount of refund is less than ten per cent. of the tax as determined under Sub-section (1) of Section 143 or on regular assessment ;
(b) in any other case, such interest shall be calculated at the rate of two-third per cent. for every month or part of a month comprised in the period or periods from the date or, as the case may be, dates of payment of the tax or penalty to the date on which the refund is granted.
Explanation.--For the purposes of this clause, 'date of payment of tax or penalty' means the date on and from which the amount of tax or penalty specified in the notice of demand issued under Section 156 is paid in excess of such demand. . . .
(4) The provisions of this section shall apply in respect of assessments for the assessment year commencing on the 1st day of April, 1989, and subsequent assessment years.'
32. A plain reading of the above provisions would disclose that the obligation to pay interest in terms of Section 244(1) or 244(1A) is not applicable to cases relating to assessments for the assessment year commencing from 1st April, 1989, onwards. In respect of such assessments from the commencement of assessment year commencing from April 1, 1989, interest will have to be calculated in terms of Section 244A(1). The said provision under Sub-section (1) of Section 244A provides for payment of simple interest in the manner specified thereunder, however, it does not disclose provision for interest on interest.
33. A plain reading of the provisions of law contained in Sections 240 and 244, therefore, nowhere discloses liability of the Department to pay interest on interest. We are not persuaded to read the terms and expressions referred to above in the context different from the one we have read as stated above. In interpreting a taxing statute, equitable considerations are entirely out of place as has been held in CST v. Modi Sugar Mills Ltd., : [1961]2SCR189 , Simultaneously logic or reasons cannot be of much avail, as has been held in H. H. Prince Azam Jha Bahadur v. Expenditure-tax Officer : [1972]83ITR92(SC) , and that the strict interpretation rule essentially applies to charging sections, and not to machinery or procedural provisions, as was ruled in Gursahai Saigal v. CIT : [1963]1ITR48(SC) .
34. Before arriving at any final conclusion on the point in issue, it would be necessary to take note of the decisions relied upon, more particularly the one in Narendra Doshi's case : [2002]254ITR606(SC) . Undoubtedly, when the Supreme Court decides a question of law, its decision is binding on all. Every such decision is an authority for what its actually decides. It was ruled by the apex court in B. Shama Rao v. Union Territory of Pondicherry, : [1967]2SCR650 that 'it is trite to say that a decision is binding not because of its conclusion but in regard to its ratio and the principle laid down therein'.
35. It is well-settled that the ratio of a decision is to be ascertained on the basis of the question which is dealt with and decided by the court. The apex court in Union of India v. Dhanwanti Devi : (1996)6SCC44 , while dealing with this aspect, has held that it is not everything said by a judge while delivering judgment that would constitute a precedent but the only thing in the judge's decision binding a party is the principle upon which the case is decided, and for that purpose, it is necessary to analyse the decision and isolate from it the ratio decidendi. It was held that every decision contains three basic postulates. Firstly, the findings of the material facts, direct and inferential, an inferential finding of fact being the inference which the judge draws from the direct, or perceptible facts. Secondly, the statements of the principles of law applicable to the legal problems disclosed from the facts. And thirdly, the judgment based on the combined effect of both the above postulates. It was further held that a decision is only an authority for what it actually decides and, therefore, what is of the essence in a decision, is it ratio and not every observation found therein, nor what logically follows from the various observations made in the judgment. It was ruled that (page 52) :
'Every judgment must be read as applicable to the particular facts proved, or assumed to be proved, since the generality of the expressions which may be found there is not intended to be exposition of the whole law, but governed and qualified by the particular facts of the case in which such expressions are to be found. It would, therefore, be not profitable to extract a sentence here and there from the judgment and to build upon it because the essence of the decision is its ratio and not every observation found therein. The enunciation of the reason or principle on which a question before a court has been decided is alone binding as a precedent. The concrete decision alone is binding between the parties to it, but it is the abstract ratio decidendi, ascertained on a consideration of the judgment in relation to the subject-matter of the decision, which alone has the force of law and which, when it is clear what it was, is binding. It is only the principle laid down in the judgment that is binding law under article 141 of the Constitution.'
36. With the above ruling it was held that in order to understand and appreciate the binding force of a decision it is always necessary to ascertain the facts in the case in which the decision is given and what is the point which has been decided and no judgment can be read as if it were a statute nor a word or a clause or a sentence in the judgment be regarded as a full exposition of law.
37. In a recent decision of the apex court in the matter of Islamic Academy of Education v. State of Karnataka : AIR2003SC3724 , it has been held that the ratio decidendi of a judgment is to be found out only on reading the entire judgment. It was also held that an answer to a question formulated in a judgment for the purpose of its consideration has necessarily to be read in the context of what is set out in the judgment, and not in isolation, and in case of any doubt as regards any observations, reasons and principles, the other part of the judgment has to be looked in to, and that by reading a line here and there from the judgment, one cannot find out the entire ratio decidendi of the judgment. In Rajeswar Prasad Misra v. State of West Bengal, AIR 1965 SC 1887, it was held that the observations of the Supreme Court should not be read as statutory enactments and that it is well known that the ratio of a decision is the reasons assigned therein. In Prabha Shankar Dubey v. State of Madhya Pradesh [2003] AIR SCW 6592, it was held that 'a line or a word in a judgment cannot be read in isolation or as if interpreting a statutory provision, to impute a different meaning to the observations.'
38. In Narendra Doshi's case : [2002]254ITR606(SC) , the matter came up before the apex court in an appeal against the order of the High Court of Madhya Pradesh. Therein the High Court of Madhya Pradesh had answered the following question in the affirmative and in favour of the assessee, while relying upon the judgments wherein it was laid down that interest was payable on the excess amount paid towards income-tax (page 607) :
'Whether, on the facts and in the circumstances of the case, the Income-tax Appellate Tribunal was justified in law in upholding the order of the Deputy Commissioner of Income-tax (Appeals), Indore, directing to allow interest on interest, when the law points for grant of simple interest only ?'
39. While rejecting the appeal, the apex court took note of three factors and one principle of law, and they were :
Factors :
(i) Tribunal whose decision was challenged before the High Court, had relied upon two decisions of the Gujarat High Court in D. J. Works' case : [1992]195ITR227(Guj) and in Chimanlal's case : [1994]210ITR419(Guj) ;
(ii) The decisions of the Gujarat High Court were to the effect that the Revenue was liable to pay interest on the amount of interest which was unjustifiably withheld by it ; and
(iii) The Revenue Department had not challenged the said decisions of the Gujarat High Court
Principle of law :
40. Once parties to the proceedings before the High Court do not challenge its decision on the point of law, they are bound by such decision in all subsequent matters to which such decision on the point of law could be applicable.
41. Considering the above factors and the principle of law, the apex court ruled that (page 607 of 254 ITR) :
'The Revenue has not challenged the correctness of the two decisions of the Gujarat High Court. They must, therefore, be bound by the principle laid down therein. Following that principle, the question has, as we find, been rightly answered in the affirmative and in favour of the asses-see.'
42. Apparently, the reason for refusal to interfere in the order of the High Court of Madhya Pradesh related to failure on the part of the Revenue to dispute the correctness of the judgment of the Gujarat High Court in the said decisions and consequently the same had attained finality and had resulted in being binding upon the Revenue. Considering those judgments of the Gujarat High Court which were binding upon the Tribunal as well as the Revenue Department, the Tribunal would not have been justified in setting aside the order of the Deputy Commissioner (Appeals) which was in consonance with the said two binding decisions, and therefore there was no illegality committed by the High Court of Madhya Pradesh in answering in the affirmative, the question which was referred to it.
43. It is to be noted that the matter before the apex court was relating to the correctness of the answer of the High Court of Madhya Pradesh in the facts and circumstances of that case and not relating to the correctness of the decisions of the Gujarat High Court on the point of liability of the Revenue for payment of interest on interest either in case of unjustifiable delay in payment of interest to the assessee or otherwise. In fact, the apex court has not expressed any opinion on the said point. The decision of the apex court is restricted to the point of correctness of the answer of the High Court of Madhya Pradesh to the question which it was called upon to answer. The said question related to the correctness of the decision of the Tribunal in the facts and circumstances of the case, and not relating to the correctness of the decision of the Gujarat High Court in D. J, Works' case : [1992]195ITR227(Guj) .
44. The said Narendra Doshi's case : [2002]254ITR606(SC) neither deals with the issues regarding the liability of the Revenue under the provisions of the said Act to pay interest on interest nor regarding the correctness of the view taken by the Gujarat High Court in D. J. Works' case : [1992]195ITR227(Guj) , nor does it confirm the ruling either in D. J. Works' case : [1992]195ITR227(Guj) or in Chimanlal's case : [1994]210ITR419(Guj) . Even those two decisions of the High Court of Gujarat do not lay down any general proposition of law to the effect that the Revenue Department is liable to pay interest on interest under the provisions of the said Act for the delay in payment of interest. In fact, the High Court of Gujarat in the facts of those two cases had held that the Department was liable to pay the interest on interest which was unjustifiably withheld by the Department and this fact was also noted by the apex court in Narendra Doshi's case : [2002]254ITR606(SC) , while observing that 'these decisions hold that the Revenue is liable to pay interest on the amount of interest which it should have paid to the assessee but has unjustifiably failed to do so.'
45. In D. J. Works' case : [1992]195ITR227(Guj) , it was the contention of the assessee that the Revenue had illegally withheld the interest amount payable to the assessee and therefore the Revenue should be directed to pay interest on the amount wrongfully withheld ; on the other hand, it was the defence of the Revenue that there was no provision in the said Act for payment of interest on interest. Taking note of the provision of law contained in Section 214(1) of the said Act, it was observed by the Gujarat High Court that (page 231): 'It would thus appear that the Legislature itself has considered it fair and reasonable to award interest on the amount paid in excess, which has been retained by the Government. We do not see any reason why the same principle should not be extended to the payment of interest which has been wrongfully withheld by the Assessing Officer or the Government.' Further while ruling that once the interest amount becomes due, it takes the same colour as that of the excess amount of tax which is refundable on regular assessment, it was held that (page 231) :
'Therefore, in our opinion, though there is no specific provision for payment of interest on the interest amount for which no order is passed at the time of passing the order of refund of the excess amount and which has been wrongfully retained, interest would be payable at the same rate at which the excess amount carries interest.'
46. It was further clarified in the judgment that (page 232) : 'On general principles, we are of the opinion that the Government is liable to pay interest, at the rate applicable to the excess amount refunded to the assessee, on the interest amount which had become due under Section 214(1) of the Act.' The decision clearly refers to the absence of provision of law for payment of interest on interest in the said Act. But the direction for payment of interest was given on innovation of the proposition of law that once the interest amount becomes due it takes the colour of the excess amount of tax refundable to the assessee, and that therefore even in the absence of provision of law, the Revenue would be liable to pay interest on interest wrongfully withheld. With great respect, we are unable to persuade ourselves to agree with the proposition of law innovated and the opinion expressed. As already observed above, neither the provision of law in the said Act, nor the scheme thereof leaves any room for allowing the amount payable by the Department to the assessee to take the colour of amount of tax.
47. The statutory authorities have to act in accordance with the power bestowed upon them under the statute. Those authorities can levy and collect the interest on delay in payment of tax provided the statute provides for such obligation of the assessee under the statute and not otherwise. Similarly, the authorities can pay interest on interest if the statute provides for the same and not otherwise. The apex court in India Carbon Ltd. v. State of Assam : AIR1997SC3054 , has held that interest can be levied and charged on delayed payment of tax only if the statute that levies and charges the tax makes a substantive provision in that behalf. Similarly the Full Bench of this court in CIT v. Carona Sahu Co. Ltd. : [1984]146ITR452(Bom) had clearly ruled that though interest is compensatory in character yet there is no right to receive interest other than by a right created by a statute and therefore the right to receive interest depends upon the construction of the statute. It is needless to say that the construction of the statute implies interpretation thereof and not interpolation therein. The provisions of the said Act apparently reveal liability to pay interest on delayed payment of refund amount but do not provide for payment of any interest on interest, even though there is delay in payment of such interest to the assessee. On the contrary, the provision of law contained in Section 244(1) allows three months grace period, without any obligation to pay interest, though even for such period the assessee will have to be duly compensated by payment of interest in terms of Section 244(1A) which came to be introduced from October, 1975. However, the fact remains that even while introducing the said provision, the Legislature thought it fit not to provide for any interest on interest even in case of delay in payment of interest on refund amount. To read the liability to pay interest on interest in the provisions of law contained in Section 244(1) read with Section 240 of the said Act would virtually amount to legislate upon the said Act, and that is not the function of the court.
48. In Chimanlal's case : [1994]210ITR419(Guj) , no law as such was laid down and the court had merely followed its earlier decision in D. J. Works' case : [1992]195ITR227(Guj) for the grant of interest on interest in the facts of that case.
49. The decision of the Delhi High Court in Goodyear's case : [2001]249ITR527(Delhi) was on the assumption that the term 'any amount' in Section 240 would include all amounts payable to the assessee, including interest, and therefore, the assessee was held to be entitled for interest on interest. For the reasons stated above and with respect, it is difficult to agree with the said proposition. In any case, the facts of the matter also disclose that the interest which was included in the amount due as refund was the one payable in terms of Section 214. This is clear from the observation in the judgment that (page 532) : 'Merely because this was inclusive of an amount which ,was payable under Section 214 of the Act, that would not make the position any different' and the arguments canvassed on behalf of the Revenue were to the effect that (page 530) : 'In a sense it was submitted that such a refund of the amount paid by the assessee or on its behalf under Section 240 as well as Section 244 are relatable to such amount only and not to any interest payable under Section 214 of the Act'.
50. The decision in V. M. Salgaocar's case : [2000]243ITR383(SC) is sought to be relied upon in respect of the point relating to the doctrine of merger of the lower court's order when a speaking order is passed by the apex court while dismissing the appeal and the binding nature of such order. Certainly nobody can ignore the order of the apex court. The law declared by the apex court is binding on all. However, referring to the following observations from the said decision, it was sought to be argued that the decision of the Gujarat High Court in D. J. Works' case : [1992]195ITR227(Guj) has merged with the decision of the apex court in Narendra Doshi's case : [2002]254ITR606(SC) and therefore the same is binding upon this court (page 392) :
'Different considerations apply when a special leave petition under article 136 of the Constitution is simply dismissed by saying 'dismissed', and an appeal provided under article 133 is dismissed also with the words 'the appeal is dismissed'. In the former case it has been laid down by this court that when a special leave petition is dismissed this court does not comment on the correctness or otherwise of the order from which leave to appeal is sought. But what the court means is that it does not consider it to be a fit case for exercise of its jurisdiction under article 136 of the Constitution. That certainly could not be so when an appeal is dismissed though by a non-speaking order. Here the doctrine of merger applies. In that case, the Supreme Court upholds the decision of the High Court or of the Tribunal from which the appeal is provided under Clause (3) of article 133. This doctrine of merger does not apply in the case of dismissal of a special leave petition under article 136. When an appeal is dismissed the order of the High Court is merged with that of the Supreme Court.'
51. Undoubtedly, a decision of the apex court in an appeal against the order of a High Court would result in superseding the decision of the High Court and would attract the doctrine of merger. However, it is well-settled that the doctrine is not of universal or unlimited application and therefore while applying the said doctrine and weighing the effect thereof, the nature of jurisdiction exercised by the superior forum and the content or subject matter of the challenge laid or which could have been laid should be meticulously considered. In that respect, it would be necessary to take note of the decision of the apex court in Kunhayammed v. State of Kerala : [2000]245ITR360(SC) , wherein it was held that (page 382) :
'Where an appeal or revision is provided against an order passed by a court, tribunal or any other authority before a superior forum and such superior forum modifies, reverses or affirms the decision put in issue before it, the decision by the subordinate forum merges in the decision by the superior forum and it is the latter which subsists, remains operative and is capable of enforcement in the eye of law.
The doctrine of merger is not a doctrine of universal or unlimited application. It will depend on the nature of jurisdiction exercised by the superior forum and the content or subject-matter of challenge laid or capable of being laid shall be determinative of the applicability of merger.'
52. In fact, the law relating to the theory of merger has been well-settled by various decisions of the apex court. In State of U. P. v. Mohd. Nooh AIR 1958 SC 86, it was held that (page 95) :
'. . . while it is true that a decree of a court of first instance may be said to merge in the decree passed on appeal therefrom or even in the order passed in revision, it does so only for certain purposes, namely, for the purposes of computing the period of limitation for execution of the decree.'
53. In State of Madras v. Madurai Mills Co. Ltd. : [1967]1SCR732 , it was ruled by the apex court that (headnote of AIR 1967 SC) :
'The doctrine of merger is not a doctrine of rigid and universal application and it cannot be said that wherever there are two orders, one by the inferior authority and the other by a superior authority, passed in an appeal or revision, there is a fusion or merger of two orders irrespective of the subject-matter of the appellate or revisional order and the scope of the appeal or revision contemplated by the particular statute. The application of the doctrine depends on the nature of the appellate or revisional order in each case and the scope of the statutory provisions conferring the appellate or revisional jurisdiction.'
54. In yet another decision, i.e., in S. Shanmugavel Nadar v. State of Tamil Nadu : [2003]263ITR658(SC) , wherein the constitutional validity of the Madras City Tenants Protection (Amendment) Act, 1994, was sought to be challenged, and relying upon the earlier decision of the Madras High Court in the matter of M. Varadaraja Pillai v. Salem Municipal Council [1972] 85 M LW 760, decided on January 25, 1972, and against which the appeal was dismissed by the apex court on September 10, 1986, it was sought to be contended that the judgment of the Madras High Court had merged with the order of the apex court and, therefore, the judgment of the Madras High Court which had upheld the constitutional validity of the said statute, was approved by the apex court and was binding. The apex court while dismissing the said appeal against the judgment in the matter of M. Varadaraja Pillai [1972] 85 M LW 760 had held that (see : [2003]263ITR658(SC) ) :
'The constitutional validity of Act 13 of 1960 amending the Madras City Tenants' Protection Act, 1921, is under challenge in these appeals. The State of Tamil Nadu was not made a party before the trial court. However, the State was impleaded as a supplemental respondent in appeal as per orders of the High Court. When the appellants lost the appeal, they sought leave to appeal to this court. The State of Tamil Nadu was not made a party in the said leave petition. In the S. L. P. before this court also the State of Tamil Nadu was not made a party. A challenge to the constitutional validity of the Act cannot be considered or determined, in the absence of the concerned State. Learned counsel now prays for time to implead the State of Tamil Nadu. This appeal is of the year 1973. In our view it is neither necessary nor proper to allow this prayer at this distance of time. No other point survives in these appeals. Therefore, we dismiss these appeals, but without any order as to costs.'
55. While referring to the said order in the appeal, it was observed by the apex court in S. Shanmugavel Nadar's case : [2003]263ITR658(SC) ) :
'It is clear that this court did not go into the question of constitutional validity of Act 13 of 1960 nor did this court apply its mind to the correctness or otherwise of the view taken by the High Court in M. Varadaraja Pillai's case [1972] 85 M LW 760. This court simply dismissed the appeals as not properly constituted, and hence incompetent, in view of the State of Tamil Nadu, a necessary party, having not been impleaded in the special leave petitions and the appeals. Thus, briefly stated, the appeals were disposed of without any adjudication on the merits.'
56. Thereafter, referring to its earlier decision in Kunhayammed v. State of Kerala : [2000]245ITR360(SC) , it was ruled that (page 663) :
'Recently a three-judge Bench of this court had an occasion to deal with the doctrine of merger in Kunhayammed v. State of Kerala : [2000]245ITR360(SC) and this court reiterated that the doctrine of merger is not of universal or unlimited application ; the nature of jurisdiction exercised by the superior forum and the content or subject-matter of challenge laid or which could have been laid, shall have to be kept in view. In this view of the law, it cannot be said that the decision of this court dated September 10, 1986, had the effect of resulting in merger into the order of this court as regards the statement of law or the reasons recorded by the Division Bench of the High Court in its impugned order. The contents of the order of this court clearly reveal that neither the merits of the order of the High Court nor the reasons recorded therein nor the law laid down thereby were gone into nor they could have been gone into.'
57. While explaining the doctrine of merger, the apex court therein also ruled that (page 663) :
'Though loosely an expression merger of judgment, order or decision of a court or forum into the judgment, order or decision of a superior forum is often employed, as a general rule the judgment or order having been dealt with by a superior forum and having resulted in confirmation, reversal or modification, what merges is the operative part, i.e., the mandate or decree issued by the court which may have been expressed in positive or negative form. For example, take a case where the subordinate forum passes an order and the same, having been dealt with by a superior forum, is confirmed for reasons different from the one assigned by the subordinate forum, what would merge in the order of the superior forum is the operative part of the order and not the reasoning of the subordinate forum ; otherwise there would be an apparent contradiction. However, in certain cases, the reasons for the decision can also be said to have merged in the order of the superior court if the superior court has, while formulating its own judgment or order, either adopted or reiterated the reasoning, or recorded an express approval of the reasoning, incorporated in the judgment or order of the subordinate forum.'
58. The said decision was followed in Justice P. Venugopal v. Union of India : AIR2003SC3887 . Considering the doctrine of merger, and the law laid down by the apex court on the subject, certainly 'the decision' of the High Court of Madhya Pradesh in Civil Appeal No. 2053 of 2000 stood merged in the order of the apex court passed on July 26, 2001, in Narendra Doshi's case : [2002]254ITR606(SC) . The said order of the Madhya Pradesh High Court was, however, not on the point of liability to pay interest on interest by the Revenue under the provisions of the said Act but it was in the circumstances where the Department was bound by the ruling of the Gujarat High Court on account of the fact that it was not challenged and had attained finality. The High Court of Madhya Pradesh was neither called upon to decide the issue regarding the liability of the Department to pay interest on interest, nor the correctness of the view about such liability nor that was the subject matter of dispute before the High Court of Madhya Pradesh in Narendra Doshi's case. The only issue before it was whether the Appellate Tribunal was justified in upholding the decision of the Commissioner (Appeals) in the given set of facts. Even the decision of the Gujarat High Court was not on the point of liability to pay interest on interest under the provisions of the said Act but was on account of the peculiar facts of the case and in spite of the absence of the provisions in that regard in the said Act. Under no circumstances, the decisions of the Gujarat High Court in D. J. Works' case : [1992]195ITR227(Guj) or in Chimanlal's case : [1994]210ITR419(Guj) , can be said to have merged with the order of the apex court in Narendra Doshi's case : [2002]254ITR606(SC) . The arguments on the basis of doctrine of merger sought to be canvassed by the advocate for the petitioners are therefore devoid of substance.
59. The decision of the Kerala High Court in Ambat Echukutty Menon : [1988]173ITR581(Ker) is on a totally different issue and is of no help in the case in hand. The decision therein is to the effect that when any amount is collected by the Revenue from the assessee in the form of interest, and the same or any part thereof becomes refundable in terms of an order referred to in Section 240, then the Revenue is liable to pay interest on such amount in accordance with the provisions of law contained in Section 244(1) of the said Act. It was held that (page 584) :
'There is no express or implied prohibition in Section 244 of the Act that interest shall not be paid on interest collected under Section 220(2) of the Act.'
60. The decision in Suresh B. Jain's case : [1992]194ITR148(Bom) is also of no assistance to understand the meaning of the word 'refund' in Section 237 or 240 or 244, as the said decision is in relation to the provision of law contained in Section 245 which deals with the subject of set-off of refund against tax remaining payable by the assessee. It was held therein that while interpreting the provisions of Section 245 a restricted meaning cannot be given to the word 'refund'. It is always to be remembered that the presumption that when the same word is used in different parts of a statute, it is used in the same sense, is a weak one and in reality displaced by the context and it is rather appropriate to state that where the draftsman uses the same word or phrase in similar contexts, he must be presumed to intend it in each place to bear the same meaning (vide Shamrao Vishnu Parulekar v. District Magistrate, : 1957CriLJ5 and Aswini Kumar Ghose v. Arabinda Base, : [1953]4SCR1 ). Bearing in mind the object and the purpose behind the provision relating to set-off in Section 245 of the said Act, the learned single judge of this court in Suresh Jain's case : [1992]194ITR148(Bom) had observed that after all, the amount of interest payable to an assessee under Section 244(1A) is also an amount payable by the Department to the assessee, and if the same is not permitted to be adjusted under Section 245 while permitting the excess refundable amount to be adjusted, almost absurd, if not ridiculous, result may ensue inasmuch as the Department would be required to pay a certain sum of money on account of interest with one hand and take back the same amount as tax liability with the other. Being so, the word 'refund' in Section 245 was construed to mean not only the return of amount paid to the Department by an assessee but also whenever is payable by the Department to the assessee.
61. The decision in Jawala Prasad Sikaria's case was in the peculiar facts of that case. Therein the provisions of law as they stood at the relevant time had created a queer position that as per those provisions, those assessees whose assessment had been completed before the commencement of the new Act were allowed to be entitled for interest whereas the same was not available to those who were assessed under the old Act after the commencement of the new Act, and to overcome the illogical, unjust and discriminatory situation, the Gauhati High Court taking shelter of the provisions of the Requisitioning and Acquisition of Immovable Property Act, 1952, and relying upon the decision of the apex court in Abhay Singh Surana v. Secretary, Ministry of Communication, : [1987]3SCR1045 , held that where an assessment is made under the old Act even after the commencement of the new Act and if refund is granted then it should accompany interest thereon.
62. The decision in Poddar Projects' case : [1999]240ITR572(Cal) is on the point of difference between the interest payable under Section 214 and the one payable under Section 244(1A) and is of no relevancy in the matter in hand.
63. The decision of the Madras High Court in Needle Industries : [1998]233ITR370(Mad) is to the effect that the expression 'amount' in Section 244(1A) would include the amount of interest levied and paid under Section 139(8) and Section 215 of the said Act and collected in pursuance of an order of assessment which was refunded.
64. Likewise is the decision in Chimanlal S. Patel's case : [1994]210ITR419(Guj) , which is in a total different set of facts and relates to different point of law and is absolutely irrelevant for the matter in hand.
65. In Kurumber Betta Estate's case : [2002]257ITR328(Ker) , the Division Bench of the Kerala High Court had ruled that the liability of the Revenue under Section 244A is only towards the excess amount of tax or penalty demanded and collected by the Revenue in discharge of the liability of an assessee.
66. We therefore hold that the term 'refund' and the expression 'any amount' in Section 240 refer to the amount paid by the assessee in excess of the chargeable amount of tax or interest or penalty under the said Act and which, either in entirety or part thereof, becomes refundable by the Revenue Department to such assessee, but the same does not include any amount payable by the Department in the form of interest on such refundable excess amount of the assessee. The interest payable on the refund amount under Section 244(1) is a simple interest at the rate specified therein and neither compound interest nor interest on interest. Once interest is calculated and paid under Section 244(1A) no further interest shall be payable under Section 244(1) for the same period and on the same amount. There is no provision in the said Act for payment of interest on interest. In Narendra Doshi's case : [2002]254ITR606(SC) , the apex court had not laid down any law contrary to any of these propositions. The first three questions stand answered accordingly.
67. This brings us to the next contention, which is in the form of claim in the alternative. It is the contention of the petitioners that even if there is no statutory provision in law empowering the assessee to have interest on interest, considering the fact that the interest amount payable to the petitioners was illegally withheld by the respondents for considerably long period, without any justification, the respondents should be directed to pay the interest as claimed by the petitioners. Though the decision in Modi's case : [1995]216ITR759(SC) was delivered in 1995, it is a declaratory decision and thereby relates back to the date of an enforcement of the statutory provision itself.
68. The contention of the learned advocate for the petitioners that declaratory decision takes effect retrospectively from the date of the enforcement of the enactment itself cannot be found fault with. The decisions in Mysore Cements and Kil Kotagiri Tea case : [1988]174ITR579(Ker) relied upon by him are also clear on the point. However, in the matter in hand, undoubtedly there was serious dispute between the parties regarding the entitlement of the interest amount, which was ultimately ordered to be paid pursuant to the order passed by the apex court on April 30, 1997. Undisputedly, the amount pursuant thereto was paid on March 27, 1998.
69. The records, therefore, clearly disclose that the Department had been contesting the claim of the petitioners right from the beginning. When the petitioners sought to demand the interest, then also the claim was resisted and the Assessing Officer accepted the claim only to the extent of Rs. 1,73,940 as against the claim of Rs. 42,58,766. The matter went through all the stages up to the apex court. It is to be noted that the petition under Section 264 before the Commissioner of Income-tax, Pune, was rejected on February 28, 1990, and . therefore the matter was taken in appeal before the apex court. Meanwhile, divergent opinions were expressed by different High Courts regarding the meaning of the expression 'regular assessment' occurring in Section 214 of the said Act and the controversy was ultimately settled by the decision in Modi Industries case : [1995]216ITR759(SC) , delivered on September 15, 1995, in Civil Appeal No. 928 of 1980, Civil Appeal No. 1395 of 1974, etc. Once the said controversy was resolved, the apex court by order dated April 30, 1997, disposed of the appeal filed by the petitioners directing the respondents to decide the claim of interest in accordance with the principle laid down in Modi Industries case : [1995]216ITR759(SC) . Undisputedly the claim of interest was under Section 214, when the matter was pending before the apex court or at the time of disposal thereof. The claim for interest on interest was made only after receipt of the amount pursuant to the order passed by the authorities in terms of direction issued by the apex court by its order dated April 30, 1997. Undisputedly, the amount payable in terms of the said direction was paid within a few months from the date of the order of the apex court. In the circumstances, there is no scope for arriving at any conclusion about illegal or wrongful detention of the money of the petitioners by the Revenue Department. The fourth question formulated above is accordingly answered in the negative.
70. In Kirloskar Pneumatic Company's case [1996] 84 ELT 401, it was held by the apex court that the power conferred by article 226 of the Constitution cannot be invoked for directing the authorities to act contrary to the provisions of law.
71. In Orient Enterprises : 1998(99)ELT193(SC) , it was held by the apex court, that the writ petition to claim interest in terms of Section 27A of the Customs Act, 1962, for the period earlier to its enforcement was not maintainable as no legal right was available to the petitioners under any statute to make any such claim.
72. In the facts and circumstances of the case, the same do not warrant any direction to the respondents to pay the amount claimed by the petitioners as the interest or any part thereof. Neither does any statutory provision entitle the petitioners to claim any such amount or part thereof, nor have the petitioners been able to establish existence of state of circumstances which may attract exercise of equitable jurisdiction and to invoke rule of equity in order to justify the claim. In the result, the claim fails and the petitions are dismissed. Rule is discharged in each of the petitions with costs.