M/S. ULTRAMARINE and PIGMENTS LTD. vs. O.P. SRIVASTAVA, COMMISSIONER OF INCOME TAX, B'BAY CITY III,

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WP/1387/1992HC Bombay13 December 2005Bench: HON'BLE SHRI JUSTICE H.L. GOKHALE, HON'BLE SHRI JUSTICE J.P. DEVADHAR4 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the Commissioner of Income Tax was not justified in rejecting the revision application solely on the ground of delay, given the facts presented. Regarding the applicability of Section 214(1A), the Court relied on the Division Bench judgment in CIT vs. Saswad Mali Sugar Factory Ltd. (249 ITR 756). This precedent established that the Taxation Laws (Amendment) Act, 1984, is procedural in nature and therefore applies to all pending actions. Consequently, sub-section (1A) introduced in Section 214 would apply to the petitioner's case. The Court found no substance in the second ground for rejection. Therefore, the petition was allowed, the order of the Commissioner of Income Tax dated 30th January 1992 was set aside, and the respondents were directed to pay interest to the petitioner as permissible under Section 214(1A) of the Income Tax Act, 1961. No issue was expressly left undecided.

What were the facts?

The assessee, M/s. Ultramarine & Pigments Ltd., filed a return for Assessment Year 1982-83 declaring income of Rs. 56,53,380/-. The assessment order dated 31.1.1985 determined income at Rs. 71,91,717/-, granting a refund of Rs. 10,25,207/- including interest. After an appeal allowed by CIT(Appeals) on 21.1.1986, the assessing officer gave effect on 10.3.1986, entitling the assessee to a refund of Rs. 15,45,081/-. A refund order dated 16.5.1986 was issued for Rs. 18,36,801/-, comprising Rs. 15,45,081/- as tax refund and Rs. 2,91,720/- as interest under Section 214. The assessee, upon receiving a break-up of interest on 30.12.1988, noticed that interest was calculated ignoring the amended Section 214. The assessee filed a revision under Section 264, which was rejected by the Commissioner of Income Tax on 30.1.1992. This rejection is under challenge.

What were the issues?

1. Whether the Commissioner of Income Tax was justified in rejecting the revision application on the ground of delay, considering the timeline of events? (Mixed question of law and fact, concerning Section 264 of the Income Tax Act, 1961). 2. Whether the amended provisions of Section 214(1A) of the Income Tax Act, 1961, which came into effect from 1st April 1985, are applicable to the Assessment Year 1982-83, especially when the Taxation Laws (Amendment) Act, 1984, is considered procedural? Assessee's Contentions: The assessee argued that the interest under Section 214 was calculated by ignoring the amended provisions of Section 214. The assessee relied on the Division Bench judgment of the Bombay High Court in CIT vs. Saswad Mali Sugar Factory Ltd. (249 ITR 756) to contend that the amended Section 214(1A) should apply as the amendment is procedural and applies to pending actions. Revenue's Contentions: The revenue, through the Commissioner's order, rejected the revision on two grounds: delay and the non-applicability of amended Section 214(1A) for the assessment year in question.

Which sections of the Income-tax Act were involved?

Section 264,Section 214,Section 214(1A)

AI-generated summary — verify with the full judgment below

-1- IN THE HIGH COURT OF JUDICATURE AT BOMBAY ORDINARY ORIGINAL CIVIL JURISDICTION WRIT PETITION NO.1387 OF 1992 M/s.Ultramarine & Pigments Ltd. .. Petitioner v/s. O.P.Srivastava, Commissioner of Income tax. .. Respondent Mr.S.J. Mehta for petitioner. Mr.Ashok Kotangale for respondent. ---- CORAM : H.L. GOKHALE & CORAM : H.L. GOKHALE & CORAM : H.L. GOKHALE & J.P. DEVADHAR, JJ. J.P. DEVADHAR, JJ. J.P. DEVADHAR, JJ. DATED : 13th December 2005 DATED : 13th December 2005 DATED : 13th December 2005 ORAL JUDGMENT (Per H.L.Gokhale, J.) : ORAL JUDGMENT (Per H.L.Gokhale, J.) : ORAL JUDGMENT (Per H.L.Gokhale, J.) : 1. Heard Mr.Mehta for the petitioner. Mr.Kotangale appears for the respondent. 2. This Petition has been admitted way back in the year 1992 and has been pending for final determination. The Petition seeks to challenge the order dated 30th January 1992 passed by the Commissioner of Income Tax under Section 264 of the Income Tax Act, 1961 rejecting the revision filed by the petitioner. 3. The facts leading to this revision and the said order dated 30th January 1992 are as follows:- CNR No : HCBM020029141992 Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 06:38:47

-2- . For Assessment Year 1982-83, the petitioner filed return of income on 31.7.1982 declaring income of Rs.56,53,380/-. The assessment order was passed on 31.1.1985 determining the income at Rs.71,91,717/- by making various disallowances. As per the assessment order, the assessing officer granted the petitioner refund of Rs.10,25,207/- inclusive of interest. It may be noted that Section 214 of the Income Tax Act, 1961 came to be amended on 1st April 1985 whereby interest payable by the Government to the assessee could be increased or reduced by the assessing officer while giving effect to the higher authorities. 4. Regarding the disallowance made by the assessing officer, the petitioner filed an Appeal and it was allowed by the CIT (Appeals) on 21.1.1986. On 10.3.1986 the assessing officer gave effect to the order of CIT(A) dated 21.1.1986. As per the said order dated 10.3.1986, the petitioner was entitled to refund of Rs.15,45,081/-. On 16.5.1986, the assessing officer issued refund order for Rs.18,36,801/- consisting of Rs.15,45,081/- being refund of tax and Rs.2,91,720/- towards interest under Section 214. Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 06:38:47

-3- 5. The petitioner made a representation on 1st April 1987 to the assessing officer seeking the details of the refund so as to know how the interest was calculated. Reminders were sent and finally on 30th December 1988 the assessing officer gave the break-up of interest given to the petitioner. On noticing that interest under Section 214 has been calculated on the refund due as per the original assessment order, by totally ignoring the amended Section 214, the petitioner filed a revision application before the C.I.T. under Section 264 of the Income Tax Act. The said revision came to be rejected by the order dated 30th January 1992 which is impugned before us. 6. Two grounds are given in that order. Firstly that there was delay. As far as this aspect is concerned, on the facts which are narrated above, it cannot be said that there was delay and the revision could not be rejected only on that ground. The second ground for rejecting the application was that the amended provisions of Section 214(1A) are applicable w.e.f. 1.4.1985 and not in respect for the year in question. Mr.Mehta, learned Counsel appearing for the petitioner, has drawn our attention to a Division Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 06:38:47

-4- Bench judgment of this Court in the case of Commissioner of Income Tax vs. Saswad Mali Sugar Commissioner of Income Tax vs. Saswad Mali Sugar Commissioner of Income Tax vs. Saswad Mali Sugar Factory Ltd. reported in 249 ITR 756 Factory Ltd. reported in 249 ITR 756 Factory Ltd. reported in 249 ITR 756. The Division Bench has held therein that the Taxation Laws (Amendment) Act, 1984 is procedural in nature and, therefore, it will apply to all the pending actions. This being so, sub-section (1A) which was introduced in Section 214 will apply to the petitioner’s case. There is no substance in the second ground of rejection of revision. 7. In the circumstances, we allow this Petition and set aside the order dated 30th January 1992 passed by the Commissioner of Income Tax. The respondents are accordingly directed to pay the interest to the petitioner as permissible under Section 214(1A) of the Income Tax Act. 8. Rule is made absolute as above. There will be no order as to costs. (H.L. GOKHALE, J.) (H.L. GOKHALE, J.) (H.L. GOKHALE, J.) (J.P. DEVADHAR, J.) (J.P. DEVADHAR, J.) (J.P. DEVADHAR, J.) Uploaded on - 21/08/2020 Downloaded on - 28/10/2026 06:38:47 Powered by TCPDF (www.tcpdf.org)

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