Dipak Kumar Sen, J.
1. Bowater Corporation Limited, the assessee, was assessed to income-tax for the assessment year 1973-74. By the assessment, a further demand was raised by the Income-tax Officer on March 25, 1976, on which the assessee paid a sum of Rs. 25,39,575 on May 11, 1976.
2. On appeal by the assessee against the said assessment, the Appellate Assistant Commissioner on October 15, 1976, directed a refund of Rs. 23,85,295 to the assessee. The refund was withheld under Section 241 of the Income-tax Act, 1961. The matter was finally disposed of by the Tribunal on an appeal of the Revenue on May 26, 1977. A refund of Rs. 22,01,545 has finally been directed to be made to the assessee.
3. The Income-tax Officer awarded interest under Section 244(1A) while allowing the refund by his order passed under Section 244. Later, the Income-tax Officer sought to rectify the said order on the ground that excess interest has been granted to the assessee and the mistake was apparent on the face of the record. Proceedings were initiated under Section 154 of the Income-tax Act, 1961. By an order passed on August 18, 1978, it was held that excess interest amounting to Rs. 1,48,150 paid was refundable by the assessee.
4. Being aggrieved by the said order dated Augustus, 1978, the assessee preferred an appeal to the Commissioner of Income-tax (Appeals). The Commissioner upheld the order of the Income-tax Officer. He held that while Section 244(1A) of the Act dealt with general cases, Section 244(2) dealt specifically with the case where a refund was withheld under the provisions of Section 241. There being no dispute that in the instant case refund had been withheld under Section 241, the assessee would be entitled to interest only under the provisions of Section 244(2) of the Act.
5. Being aggrieved by the order of the Commissioner of Income-tax (Appeals), the assessee went up on further appeal before the Income-tax Appellate Tribunal. The Tribunal noted the relevant sections of the Act and held that Section 244(2) was in the statute from its commencement. The Tribunal held that when a new section like Section 244(1A) was brought into the statute with effect from a particular date and provided a special benefit to the assessee, the same could not be curtailed by the existing sections. The Tribunal held that the words of Section 244(1A) could not be interpreted as to mean that for the period for which refund was withheld under Section 241, interest will be granted only under Section 244(2) and not under the new Section 244(1A). The Tribunal noted that the Legislature had introduced the new section with a particular object in which the crucial dates for calculation of interest had been specifically laid down. The Tribunal came to the conclusion that the case of the assessee was governed by Section 244(1A) and, in any event, it was a debatable issue on two grounds, viz., (a) whether Section 244(1A) applied to the assessee instead of Section 244(2), and (b) whether Section 244(2) curtailed the operation of Section 244(1A) when an order was passed by the Commissioner of Income-tax under Section 241, The issue being debatable, the Tribunal held that the provisions of Section 154 should not be invoked in the case.
6. On an application by the Revenue under Section 256(1) of the Income-tax Act, 1961, the following questions have been referred as questions of law arising out of the order of the Tribunal for the opinion of this court :
' 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the provisions of Section 244(1A) and not under Section 244(2) would control the grant of interest on the refund due?
2. Whether, on the facts and in the circumstances of the case, and in view of the specific provision contained in Section 244(2) of the Income-tax Act, 1961, the Tribunal was justified in holding that the question whether Section 244(1A) or Section 244(2) would apply was of debatable nature and, therefore, outside the ambit of Section 154 ?'
7. At the hearing, learned advocate for the Revenue drew our attention to the relevant sections which are noted hereafter as follows :
8. Section 240 : 'Where as a result of any order passed in appeal or other proceeding under this Act, refund of any amount becomes due to the assessee, the Income-tax Officer shall, except as otherwise provided in this Act, refund the amount to the assessee without his having to make any claim in that behalf.'
9. Section 241 : 'Where an order giving rise to a refund is the subject-matter of an appeal or further proceeding or where any other proceeding under this Act is pending, and the Income-tax Officer is of the opinion that the grant of the refund is likely to adversely affect the Revenue, the Income-tax Officer may, with the previous approval of the Commissioner, withhold the refund till such time as the Commissioner may determine.'
10. Section 244 : '(1) Where a refund is due to the assessee in pursuance of an order referred to in Section 240 and the Income-tax 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 twelve 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.
11. (1A) Where the whole or any part of the refund referred to in Subsection (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.
(2) Where a refund is withheld under the provisions of Section 241, the Central Government shall pay interest at the aforesaid rate on the amount of refund ultimately determined to be due as a result of the appeal or further proceeding for the period commencing after the expiry of three months from the end of the month in which the order referred to in Section 241 is passed to the date the refund is granted.'
12. Construing the said sections, learned advocate for the Revenue contended that two distinct situations were envisaged in cases of refund. One case was where no order has been made under Section 241 withholding the refund and the other case was where such an order has been made directing withholding of the refund. If there was no order for withholding, it was conceded that the case would be governed by Section 244(1A). But if an order withholding refund had been made under Section 244, it was contended that the provisions of Section 244(2) would come into play. It was submitted that Section 244(2) dealt with a particular class of cases whereas Section 244(1A) dealt with general class of cases of refund and if the facts of any particular case are governed by Section 244(2), the same would prevail over Section 244(1A).
13. Learned advocate submitted that on a proper construction of the sections, it would be apparent that interest should have been allowed under Section 244(2). This was a mistake apparent from the record. No two views were possible except by misreading the sections.
14. In support of his contentions, learned advocate for the Revenue cited :
(a) Alkali and Chemical Corpn. of India Ltd. v. CIT : [1980]122ITR490(Cal) . In this case, a Division Bench of this court construed the rules of the Second Schedule to the Companies (Profits) Surtax Act, 1964, and held that under the said rules, the computation of capital would be an exercise in arithmetic. Where there was an increase in the share capital by the issue of bonus shares, corresponding decrease of amounts in the reserve could not be overlooked in computing capital. The alternative view, if any, could be taken only, by misreading the rules and would result in a mistake apparent from the record.
(b) CIT v. Mcleod & Co. Ltd. : [1982]134ITR674(Cal) . In this case, it was held by another Division Bench of this court that if by misreading a section of the Act, a wrong view was taken or a wrong calculation made, then the conclusion would come within the purview of Section 154 of the Income-tax Act, 1961, as a mistake apparent on the face of the record.
15. Learned advocate for the assessee contended to the contrary. He submitted that the construction of the section was not free from doubt in view of the fact that Section 244(1A) was a new section which had been introduced in the Act subsequently giving special benefits to the assessee. If there were two possible views, then the Income-tax Officer was not justified in invoking the provisions of Section 154. He submitted that even the Commissioner of Income-tax (Appeals) had noted that there was some substance in the contentions of the assessee. In support of his contentions, learned advocate for the assessee cited :
(a) T. S. Balaram, ITO v. Volkart Brothers : [1971]82ITR50(SC) . This decision was cited for the following observations (at page 53) :
'It was not open to the Income-tax Officer to go into the true scope of the relevant provisions of the Act in a proceeding under Section 154 of the Income-tax Act, 1961. A mistake apparent on the record must be an obvious and patent mistake and not something which can be established by a long drawn process of reasoning on points on which there may conceivably be two opinions.' The Supreme Court further observed that it was not open to the High Court to go into the correctness of the one or the other view.
(b) CIT v. Simplex Concrete Piles (India) Pvt. Ltd. : [1978]112ITR812(Cal) . In this case, the controversy arose whether the assessee in that case was engaged mainly in manufacture or mainly in construction. The activity of the assessee, viz., manufacture of concrete piles, had to be determined in the background of the said controversy whether such manufacture was ancillary to construction or whether such manufacture was an activity in itself. A Division Bench of this court held that two views were possible in the matter and the mistake, if any, in the record was not apparent and could not be rectified under Section 154 of the Income-tax Act, 1961.
16. In the instant case, it is not in dispute that refund was due to the assessee and that the excess amount had been paid by the assessee after March 31, 1975, pursuant to an order of assessment. This refund is certainly due and remained due to the assessee who comes within the four corners of Section 244(1A). An order passed under Section 241 would not extinguish the debt nor would the refund cease to be due, but will only permit the Income-tax Officer to withhold refund. It is a matter of debate whether the special benefit granted under the new section was intended to be curtailed by the existing Sections 241 and 244(2). Two views are certainly conceivable.
17. For the above reasons, we agree with the conclusion of the Tribunal that the question was a debatable one and it was not open to the Income-tax Officer to invoke the provisions of Section 154 of the Income-tax Act, 1961. It cannot be said that only one view of the sections was conceivable and the other view could be taken only by misreading the sections.
18. We make it clear that we do not intend to lay down a final conclusion on the construction of the said sections in this case. As observed by the Supreme Court, it is not open to the High Court to lay down finally which is the correct view.
19. For the above reasons, we decline to answer question No. 1 and we answer question No. 2 in the affirmative and in favour of the assessee. There will be no order as to costs.
Shyamal Kumar Sen, J.
20. I agree.