ORDER
R.D. Agrawala, Judicial Member
1. By this common order we propose to dispose of the aforesaid six appeals as they arise out of the same facts and involve identical question of law.
2. The solitary challenge as made in these appeals turns on the interpretation of Section 244(1A) of the Income-tax Act (referred as ‘Act’ for brief) according to which the appellants, as they have claimed before us, were entitled to interest from 22-2-1978 the date when the tax was deposited by them, rather from the date of the assessment order recorded by the Income-tax Officer on two dates, namely, 9-3-1982 and 14-3-1983.
3. Let us deal with a few relevant facts first. Succinctly to be put, they are these: All the appellants who are coparceners of a divided joint family of one Shri Papalal received compensation on acquisition of their lands in the year 1970. Owing to certain disputes pertaining to this acquisition, the amount of compensation was deposited in the District Court. The Income-tax Officer filed a petition before the Chief Judge, City Civil Court during the year 1975 praying for withholding a part of the compensation on the plea that the same may be appropriated towards the liability of the appellants under Section 45 of the Income-tax Act for payment of “capital gains”. In the case of Shri Papalal the Income-tax Officer decided that compensation could be released provided all the 12 co-owners pay their due share of tax on the ‘capital gains’. It was in terms of this directive of the Income-tax Officer that the appellants made a deposit of Rs. 1,01,296 (rounded off to Rs. 1,02,000) (as per chart at page 2 of the paper book) on the 22nd of February 1978 as tax payable for the assessment year 1970-71. Later on the Income-tax Officer completed the assessment in the case of these appellants under Section 148 on two different dates, vis., 9-3-1982 and 14-3-i983. Dissatisfied, the appellants preferred first appeals, wherein the learned Appellate Asstt. Commissioner, following the view taken by this Tribunal in the case of Shri Papalal, that no tax was leviable on the compensation as the character of the land in question was agricultural, granted them full relief. The result, the tax paid by the appellants became refundable.
4. Modification order was passed by the Income-tax Officer on 14-6-1984. Dealing with the question of interest allowable under Section 244(1A) of the Act, the Income-tax Officer took the view that the appellants were entitled to get interest only from the date of the assessment orders completed by him and not with effect from 22-2-1978 as was claimed by them.
5. The appellants went in appeal. The learned Appellate Asstt. Commissioner confirmed the view taken by the Income-tax Officer. The main order is passed by the first appellate authority in I.T.A. No. 500/Hyd/86 which has been followed in the other appeals.
6. We shall reproduce the portion of the Appellate Asstt. Commissioner’s order containing the reasons for confirming the view taken by the Income-tax Officer. It runs as under:
According to the strict letter of the law, therefore, the amount should have been paid in pursuance of any order of assessment or penalty and such amount or any part thereof should have been remitted in appeal in order to be entitled for the payment of any interest. In this case, though the amount was paid much earlier i.e., 22-2-1978 itself, it becomes an amount paid in pursuance of an assessment only on 9-3-1982, i.e., the date of assessment. I, therefore, feel that the ITO is right in allowing the interest only from the date of assessment. Accordingly, I uphold the order under Section 154 and dismiss the appeal.
7. Before we proceed further, we will also extract the relevant part of Section 244 of the Act.
(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:
8. Referring now to the various submissions made by Shri Ch. Parthasarathy, learned counsel, representing the appellants, the central point taken before us is that the payment of Rs. 1,02,000 made by the appellants on the 22nd of February, 1978 should be treated as having been made in deference to an assessment order passed by the Income-tax Officer, as was abundantly clear from a communication of the 5th December, 1977 addressed by him to Shri Shivendra Kumar Mishra available at page 1 of the paper book. Further the term ‘assessment’, though defined by Section 2(8) of the Income-tax Act not at all being exhaustive should be given a liberal interpretation by taking a pragmatic view of the matter. Inter alia, it was also contended by the learned counsel that once Sub-section (1A) was introduced in Section 244 and made effective from 1st of October, 1975, the legislative intent, as was manifestly clear, went a long way to suggest that the inspiration and the chief good for bringing this provision on the statute book was to discourage delay in assessments and grant interest to the assessee whose money used to remain blocked for years and years and refunded to him very belatedly. That this was also done to bring the revenue at par with the assessees who are fastened with liability of paying the interest, apart from running the risk of levying penalty in the event of their depositing the tax due under various provisions of the Act beyond the stipulated period. In support of their plea of the correct interpretation of Section 244(1A), the learned counsel placed reliance on CIT v. B.N. Bhattachargee [1979] 118 ITE, 461 (SC) and K.P. Varghese v. ITO [1981] 131 ITR 597 (SC).
9. Replying, the learned Senior Departmental Representative, Shri M.L. Kuppuswamy assisted by Shri P. Radhakrishnamurthy contended that in the first instance, since it was in essence an appeal only against the grant of interest, the matter was non-appealable. On merits, it was conceded on behalf of the revenue that the term ‘assessment’ although admits of a wider connotation, but the mandate of Sub-section (1A) of Section 244 placed an embargo on the powers of the Income-tax Officer to allow interest only on a sum. paid by an assessee “in pursuance of any order of assessment or penalty”, and not otherwise. That being the position under law, it was submitted before us that the authorities below were fully justified in granting to the appellants interest from the respective dates of the assessment orders.
10. We have cogitated over the issue carefully by exercising our mind to the various pleas taken on behalf of the appellants and the revenue in the rival submissions made before us. We begin with the jurisdictional objection pleaded by the revenue in the first instance.
As is evident, the learned Appellate Asstt. Commissioner disposed of these appeals vide orders rendered by him on 15th November, 1986 and 6th May, 1986, the lead order resting in ITA No. 500/Hyd/86. In all the cases, the assessees being dissatisfied exercised their option of coming to us under Section 254 of the Act. Obviously the Income-tax Department, if they so wished, to challenge the very invocation of the jurisdiction of hearing a second appeal by the Tribunal under’ Section 254 of the Act, could have and indeed should have filed cross-objections, as envisaged by Section 253(4) of the Act read with Rule 227 of the Appellate Tribunal Rules, 1963 and this could have been done by them within 30 days of the receipt of the notice, to be treated as an appeal before us. They have not done so at any point of time. That being the position, we fully subscribe to the view taken on behalf of the appellants that such a plea cannot be permitted to be taken by the revenue now. However, since the plea was taken during the hearing it is befitting to deal with it briefly here.
In these appeals before us, as is evident, the question for consideration is not of interest. It pertains to the admissibility of the interest from a particular date in terms of Section 244(1A) of the Act. During the hearing, the revenue also tried to buttress their plea of want of jurisdiction on ground that the interest was not claimed by the appellants before the Income-tax Officer in all the cases but this plea got answered on behalf of the appellants by the submission that this was done so by them in all these cases vide their letters dated 10th June, 1984 which was not disputed by the learned departmental representative. In any event, the controversy, as has been rightly pointed out before us, is set at rest by a recent judgment rendered by the Division Bench of the Andhra Pradesh High Court in Bakelite Hylam Ltd. v. CIT [1988] 37 Taxman 210 wherein their Lordships held that while giving effect to an appealable order the assessee can appeal against a modification order passed by the Income-tax Officer on the point that interest has been denied to him under Section 244. In view of this, we need not discuss the two decisions rendered by the Tribunal in Satishchand Sanghi v. ITO [1985] 13 ITD 542 Indore and Nandanam Construction Co. v. ITO [1985] 13 ITD 916 (Hyd.). Before, however, passing on to the merits of the matter let us also refer to the plea of the assessee about putting a liberal interpretation to the provisions of Section 244(1A) of the Act.
Interpretation of a statutory provision should be done in a manner so that it is equitable and purpose-oriented and not harsh. It should not proceed on the basis of literal construction that leads to absurdity or unjust result. We are fortified in this view by the decisions of the Hon’ble Supreme Court in B.N. Bhattachargee’s case (supra) in K.P. Varghese’s case (supra) and relied on by the assessee.
11. We will now go on the merits of the case. We will start with, what an assessment order, in our opinion, means as it is the main plank of the revenue’s case in denying to the assessee interest from 22nd of February 1978, the date of the tax deposited by them. As far as Income-tax Act, 1961 is concerned, Sub-section (8) of Section 2 simply stops by saying that assessment includes reassessment. Obviously it is not at all exhaustive a definition. What is generally understood by an order of assessment is that it is an order in which computation of income/loss and computation of tax or both are done. It would, therefore, flow that such a computation could be done by the Income-tax Officer not alone by resorting to a regular assessment as envisaged by Section 145(3) of the Act but from various other orders/directives passed by him as an Income-tax Officer from time to time. That the term assessment admits of a wider connotation, as stated above, has also not been disputed on behalf of the revenue. It is in this context we will now reproduce below the direction given by the Income-tax Officer, B-Ward, Circle-I, Hyderabad vide his communication of the 5th Dec. 1977 placed at page 1 of the paper book of the assessee which runs as follows:
Office of the Income-tax Officer
B-Ward, Circle-I, Hyderabad,
Dated 5-12-1977
GIR No. 209 P/Hyd/I(B)
To
Shri Shivendra Kumar Mishra,
S/o Late D.P. Mishra,
5-8-504, Nampally,
Hyderabad.
Sir,
Sub: Payment of compensation in the case of Sri Papalal and Others–Regarding….
I have today informed the Court of the Chief Judge, City Civil Court about the lifting of prohibitory order. The entire payment of the compensation with interest will be paid to you. Towards income-tax dues I request you to withhold an amount of Rs. 1,02,000 and pay the same to me.
You will be personally held responsible for deducting the tax due and paying the same to me.
Yours faithfully,
Sd/-
(K. Dorai Swami)
Income-tax Officer,
B-Ward, Circle-1,
Hyderabad.
12. As is evident the last sentence appears to be the heart of the letter wherein the Income-tax Officer specifically and consciously appears to have cautioned the counsel for the appellant that he would be personally held responsible for “deducting the tax due and paying the same to me.” Obviously in view of the Income-tax Officer, it is needless to say nothing remained short in the determination of the figure of Rs. 1,02,000 towards tax due which he demanded and called for from Shri Shivendra Kumar Mishra to pay to him. Giving our utmost consideration to the facts of the case, we do not find any other legal option but to hold that this direction of the Income-tax Officer as is contained in the communication of 5th December, 1977 (supra) does not fall short of an assessment order in any event. Not alone this, proceeding further if we peep into the various assessment orders made by the Income-tax Officer and which are available at pages 17 to 35 of the paper book supplied by the assessee adjustment of these sums comprised in this figure of Rs. 1,02,000 has been subtracted from the liability to tax arrived at by him making, following similar significant entries:
Less Tax paid on 22-2-1978
Tax is paid only against a demand and not in vacuum. It was not any ‘on account’ money paid by the assessee nor a payment which could be termed as having been deposited by them voluntarily. Lock, stock and barrel, the payment made by the assessee comprised in this sum of Rs. 1,02,000 was demanded by them towards tax due, deposited by them as tax due and rightly treated by the Income-tax Officer as tax paid. We are thus of the considered view that what was paid by the assessee on 22-2-1978, therefore, was only tax as demanded by the Income-tax Officer vide his letter of 5th December, 1977 which as held above, is an order akin to assessment order.
13. We may also consider the matter from a different angle. As is stated above, the amount was withheld by the Civil Court from the year 1970 only at the behest of the Income-tax Officer who had moved a petition for such withholding on the ground that a part of compensation may be appropriated against possible tax payable by the appellants under Section 45 of the Act. There being no provision of law entitling the appellants to get any interest till such time the Legislature intervene by inserting Sub-section (1A) in Section 244 by the Taxation Laws (Amendment) Act, 1975 providing for interest payment by the Central Government in certain circumstances as are enumerated therein ; the appellants became entitled to claim interest on the refunds becoming due to them. Although Section 244(1A) grants interest payment on deposits made after 31st March, 1975 it is pertinent to mention here that the appellant had not claimed any interest from this date although their amounts were withheld from much before in terms of the ITO’s request, to the learned Chief Judge. They claimed interest and rightly so and the Income-tax Officer quantified and appropriated a sum of Rs. 1,02,000 towards tax due deposited by them on 22-2-1978..
14. If the Income-tax Officer, whatever be the reasons, could not pass assessment orders before 9-3-1982 or 14-3-1983, we are unable to appreciate even for argument’s sake as to why and how the appellants could be deprived of getting interest on the sums which became due to them as refunds in terms of the appellate orders from the date these sums were recovered from them as tax due.
15. Any different view taken by us in these cases is also likely to result in discrimination and dissimilar treatment meted out to the various appellants inter se although placed under exactly similar situation. We say so as in some cases the assessment orders have been passed by the Income-tax Officer on 9-3-1982 while in others on 14-3-1983. Taking the revenue’s stand to its logical end, it would mean that while some appellants would become entitled to get interest from 9-3-1982 others with effect from 14-3-1983. Say, if the assessment order has not been passed in the case of one of these appellants due to any possible administrative reason, interest to him could have been further denied, we are unable to discern. What is the summum banum of the controversy in a case like the one, we are confronted with is to see as to when an amount was paid by the assessee in pursuance of an order of assessment. That having been done in the case before us on 22-2-1978, by exactitude, there does not remain any room for a doubt being raised that the appellants are entitled to the interest from this very date.
16. To sum up the case, we are of the view that it was only in terms of the directions of the Income-tax Officer as are contained in letter dated 5th December, 1977 (supra) that a sum of Rs. 1,02,000 was deposited by the appellants on 22-2-1978 towards tax due, which order, we take as an assessment order for all purposes. The assessees are, therefore, entitled to the interest from 22-2-1978 as claimed by them.
17. All the appeals are allowed.