Sag Construction Associates Vs. Union of India and Others

Sag Construction Associates vs Union of India and Others

Type Court Judgment Court Delhi Decided Jul 28, 1998

~4 min read

https://sooperkanoon.com/case/698859

For advocates & juniors · 7-day free trial

Brief this judgment before chambers

Stop skimming 50 pages - get an 18-section AI Brief on this case, ask scoped follow-ups, and find related precedents with Semantic Search. Full trial, no card required.

18-section brief - facts, issues, ratio, relief
Ask this case - answers cite the judgment
Semantic search - find precedents by meaning
Research drawer - sections, cites, related cases

Citation: sooperkanoon.com/698859
Court: Delhi High Court
Judge: R.C. Lahoti and; C.K. Mahajan, JJ.
Decided On: Jul 28, 1998
Case Number: CW No. 2644 of 1991
Subject: Direct Taxation

Case Summary

AI-generated summary - not the official court judgment text.

The case dealt with the claim of interest on refund under Section 244(1A) of the Income Tax Act, 1961 - The refund was made with respect to the tax deducted at source (TDS) and the assessed had filed his return - It was held that TDS had lost its character with the passage of the assessment order and the same was de...

Key legal issue: Direct Taxation
Acts & sections: Income Tax Act, 1961 - Sections 244(1A)

Parties & Advocates

Appellant / Petitioner

Sag Construction Associates

Advocate Sh. Dharam Vir Singh Gupta, Adv

Respondent

Union of India and Others

Advocate Sh. Sanjeev Khanna and ; Ms. Premlata Bansal, Advs.

Legal References

Acts: Income Tax Act, 1961 - Sections 244(1A)
Reported In: 1999IAD(Delhi)867; (1999)155CTR(Del)120; [1998]234ITR501(Delhi); 1999RLR248

Excerpt

the case dealt with the claim of interest on refund under section 244(1a) of the income tax act, 1961 - the refund was made with respect to the tax deducted at source (tds) and the assessed had filed his return - it was held that tds had lost its character with the passage of the assessment order and the same was deemed to have been paid in pursuance of the assessment order - thus the interest on the same was allowed under section 244(1a) of the act and the petition filed for the same was allowed - - hence, section 244(1a) would be clearly attracted.orderr.c. lahoti, j.1. this is a petition by an assessed seeking direction to respondent no. 5 to release payment of interest to the petitioner under section 244(1a) of the income-tax act, 1961. 2. the facts relevant may briefly be noticed. amount of rs. 7,235/- was deducted as tds from the assessee. the assessed filed a return and an order of assessment was made on 22.2.83. there was an appeal wherein by order dated 13.12.85, the asstt. commissioner of income tax set aside the order of assessment. thereafter a fresh order of assessment was made on 6.3.88. on 31.3.88, the petitioner moved an application to the ito 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 reject-ed. 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 commissioner of income tax. by order dated 22.6.90, the petitioner's application was rejected holding that section 244(1a) was not attracted to the facts of the case. the writ petition has thereafter been filed by the petitioner. 3. the issue arising for decision is no more rest integra and stands concluded by the law laid down by the supreme court in modi industries vs . cit : [1995]216itr759(sc) . at page 780, their lordships have approved the view taken by punjab & haryana high court in the case of cit vs . leader engineering works holding that the advance tax paid lost its identity the moment it was adjusted towards the tax liability created under the regular assessment and took the shape of payment of tax in pursuance of the order of assessment. at page 787, their lordships have held :- 'if the assessment order is set aside by a higher authority in its entirety and a direction is given to pass a fresh assessment order, the position will remain the same. the amount of advance tax paid by the assessed loses its character by virtue of.....

Full Judgment

ORDER

R.C. Lahoti, J.

1. This is a petition by an assessed seeking direction to respondent No. 5 to release payment of interest to the petitioner under Section 244(1A) of the Income-tax Act, 1961.

2. The facts relevant may briefly be noticed. Amount of Rs. 7,235/- was deducted as TDS from the assessee. The assessed filed a return and an order of assessment was made on 22.2.83. There was an appeal wherein by order dated 13.12.85, the Asstt. Commissioner of Income Tax set aside the order of assessment. Thereafter a fresh order of assessment was made on 6.3.88. On 31.3.88, the petitioner moved an application to the ITO 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 reject-ed. 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 Commissioner of Income Tax. By order dated 22.6.90, the petitioner's application was rejected holding that Section 244(1A) was not attracted to the facts of the case. The writ petition has thereafter been filed by the petitioner.

3. The issue arising for decision is no more rest integra and stands concluded by the law laid down by the Supreme Court in Modi Industries Vs . CIT : [1995]216ITR759(SC) . At page 780, their Lordships have approved the view taken by Punjab & Haryana High Court in the case of CIT Vs . Leader Engineering Works holding that the advance tax paid lost its identity the moment it was adjusted towards the tax liability created under the regular assessment and took the shape of payment of tax in pursuance of the order of assessment. At page 787, their Lordships have held :-

'If the assessment order is set aside by a higher authority in its entirety and a direction is given to pass a fresh assessment order, the position will remain the same. The amount of advance tax paid by the assessed loses its character by virtue of Section 199 as soon as the first assessment order is made and the advance tax is set-off against the demand raised in the assessment order. In 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. The argument made on behalf of the Revenue that in such a case a fresh assessment may be treated as 'regular assessment' is misconceived and is not in consonance with the scheme of the Act and the language of various sections dealing with regular assessment.'

4. It is, thereforee, clear that with the passing of the order of assessment dated 22.2.83, without regard to the fact that assessment order was set aside by Astt. Commissioner of Income Tax, the amount of TDS lost its such character and the same was deemed to have been paid in pursuance to the order of assessment. Hence, Section 244(1A) would be clearly attracted.

5. The petition is, thereforee, allowed. The order of the CIT dated 22.6.90 (page 26 of the paper book) and the order of the ITO dated 22.6.91 (copy not filed) - both declining payment of interest to the petitioner are hereby quashed and set aside. Admittedly the refund voucher was issued to the petitioner on 16.3.88. The respondent No. 5 shall within two months from the date of production of copy of this order before him calculate the interest due and payable to the petitioner in accordant with the provisions of Section 244(1A) of the Income-tax Act, 1961 on an amount of Rs. 7,235/- for the period 22.3.83 (the date falling one month after the date of first order of assessment) and 16.3.88 the date of refund voucher and release the same to the petitioner within one month thereafter.

6. The petition stands disposed of accordingly.

7. No order as to the costs.

Same Court & Year Delhi · 1998 Same Parties Sag Construction Associates vs Union of India and Others Same Subject Direct Taxation Same Judge R.C. Lahoti and; C.K. Mahajan, JJ. Acts & Sections Income Tax Act, 1961 - Sections 244(1A)

Direct Taxation