Bharucha, J.
1. This is a reference made under section 256(1) of the Income-tax Act, 1961, raising, at the instance of the Revenue, the following question :
'Whether, on the facts and in the circumstances of the case, interest is payable by the Government under section 214 of the Income-tax Act, 1961, up to the date of the original assessment or to the date of the rectification order ?'
2. The only facts that need to be stated are that the assessee had paid advance tax in the sum of Rs. 10,22,096.35. When the Income-tax Officer made the order of regular assessment on January 25, 1968, he did not take this payment into account. He made an order of rectification on July 23, 1968, by reason of which the said amount of Rs. 10,22,096.35 became refundable to the assessee. The question relates to this refund.
3. Mr. Dalvi, learned counsel for the assessee, relied upon Circular Instruction No. 947 issued on April 23, 1976, by the Central Board of Direct Taxes to all Commissioners of Income-tax. Paragraphs 2 to 4 thereof need to be reproduced :
'2. Section 214 of the I. T. Act, 1961, provides for payment of interest on the difference between the advance tax and the amount of tax determined on regular assessment from the first day of April next following the said financial year to the date of regular assessment.
3. Interest under section 214 is, therefore, to be paid up to the date of regular assessment. Regular assessment has been defined in section 2(40) as assessment made under section 143 or section 144. It has been explained in Board's Instruction No. 921 dated February 12, 1946 (F. No. 404/81/75-ITCC), that it is the first assessment that will be treated as the regular assessment and later assessments were immaterial. Therefore, the terminus (i.e., the date of regular assessment) for calculating interest under section 214 cannot be altered because income assessed had undergone changes on account of subsequent vicissitude as a result of appeals before the appellate authorities or revision petitions before the Commissioner of Income-tax, that is, interest payable under section 214 will not be altered with reference to the tax payable according to the appellate order or orders under section 263/264.
4. But, if an assessment made needs rectification under section 154 on account of mistakes apparent from the record, either on the assessee's application or by the Income-tax Officer on his own motion, it might be argued that it is the rectified order which should be considered for the purposes of determining the tax payable on regular assessment. This is only reasonable. It is, therefore, felt that interest under section 214 can be altered with reference to the tax payable as per the rectified order under section 154.'
4. Mr. Dalvi submitted that by reason of this instruction issued by the Central Board of Direct Taxes, the assessee was entitled to interest on the amount refundable by virtue of the rectification order from the date of payment of the advance tax up to July 23, 1968, when the order of rectification was made. Mr. Jetly did not dispute that under the instruction, the assessee is entitled to interest upon the amount refundable by virtue of the order of rectification, but he submitted that the assessee was entitled to interest only up to January 25, 1968, being the date of regular assessment. He relied in this context upon the Full Bench judgments of this court in CIT v. Carona Sahu Co. Ltd. : [1984]146ITR452(Bom) and CIT v. India Re-insurance Corporation Ltd. : [1984]146ITR477(Bom) .
5. It is clear that by virtue of the instructions of the Central Board of Direct Taxes, the assessee is entitled to interest on the amount refundable by virtue of the order of rectification. Perusal of paragraph 3 of the instruction of the Central Board of Direct Taxes shows that the Central Board of Taxes had taken the terminus for calculating interest under section 214 of the Income-tax Act, 1961, into account. It is stated that the terminus could not be altered merely because the income assessed had undergone a change as a result of appeal or revision. It did not refer to an alteration by reason of rectification. Thereafter, all in paragraph 4, it considered the effect of rectification under section 154 of the said Act. It is clear that the Central Board of Direct Taxes intended to give relief to the assessee in cases where a rectification of the order of regular assessment was required to be made. Such relief necessarily encompassed not only the quantum of the amount refundable as a result of the order of rectification but also the date up to which interest on such amount was required to be paid. On a fair construction of the instruction of the Central Board of Direct Taxes, it appears to us that the assessee is entitled not only to interest on the amount required to be refunded by reason of the order of rectification, but he is also entitled to such interest up to the date of the order of rectification. It is within the powers of the Central Board of Direct Taxes to issue instructions of this nature giving relief to the assessee regardless of the fact that the legal position has been held to be different.
6. In the circumstances, the question is answered thus : Interest is payable under section 214 of the Income-tax Act, 1961, up to the date of the order of rectification.
7. No order as to costs.