MODI INDUSTRIES LTD., MODINAGAR ETC. ETC. versus COMMISSIONER OF INCOME TAX, DELHI AND ANR. ETC. ETC.

Citation: [1995] SUPP. 3 S.C.R. 642 · Decided: 15-09-1995 · Supreme Court of India · Bench: B.P. JEEVAN REDDY, S.C. SEN, S.B. MAJMUDAR · Disposal: Appeal(s) allowed

Judgment (excerpt)

A 
MODI INDUSTRIES LTD., MODINAGAR ETC. ETC. 
B 
c 
v. 
COMMISSIONER OF INCOME TAX, DELHI 
AND ANR. ETC. ETC. 
SEPTEMBER 15, 1995 
[B.P. JEEVAN REDDY, SUHAS C. SEN AND 
S.B. MAJMUDAR, JJ.] 
Ind.Jan Income Tax Act, 1922/Income Tax Act, 1961: 
Ss.18A(5)!2(40), 214, 244(1A)-Advance tax-Excess payment of-
Refund-lnterest payable to assessee-Held: interest on excess amount of 
advance tax is payable to assessee under 1922 Act from date of payment upto 
regular assessment and under 1961 Act from 1st day of April next following 
D relevant financial year upto regular assessment and not till date of refund-If 
any tax paid pursuant to an assessment oraer after March 31, 1975 becomes 
refundable as a result of any appellate or other order passed, interest thereon 
to be paid under s.244( IA) . 
'Regular assessment'-Means first/original order of assessment passed 
E 
under s.143 or s.l44-Any consequential order or fresh order passed by 
Income Tax Officer to give effect to appellate/revisional order etc: passed by 
a higher authority cannot be treated as 'regular assessment' nor can date of 
consequential order be treated as date of regular assessment. 
F 
Advance tax-Nature of-Explained. 
Words and Phrases : Expression 'regular assessment' occuning in 
s.18A(5) of Indian Income Tax Act, 1922 and Ss.2(40) and 214 of Income 
Tax Act, 1961-Meaning of-Explained. 
Prior to 1944, income tax was payable by an assessee under the 
G Indian Income Tax Act, 1922 only on an assessment being made by the 
Assessing Officer. In 1994, s.18A was introduced to the 1922 Act providing 
for payment of tax in advance. Sub-s. (5) thereof provided for payment of 
simple interest on entire amount paid by way of advance tax from the date 
of payment to the date of provisional assessment made under s.23B or to 
H the date of the assessment called the "regular assessment" made under 
642 
MODI INDS.LTD. v. COMMNR.OFI. TAX 
643 
s.23. With the introduction of the second proviso to Sub-s. (5) of s.18A by A 
Indian Income Tax (Amendment) Act, 1953, interest became payable only 
on the amount paid in excess of tax determined on 1·egular assessment and 
not upon the entire amount. Under the Income Tax Act, 1961, sub-s.(l)of 
s.214 provided that Central Government would pay interest on the amount 
by which the aggregate sum of any instalments of advance tax paid ex-
ceeded the amount of tax determined o~ regular assessment from the 1st 
day of April next following the relevant financial year to the date of the 
regular assessment. The expression "regular assessment" was not defined 
in the 1922 Act. However sub-section ( 40) of s.2 of the 1961 Act defined the 
term "regular assessment" as the assessment made under s.143 or s.144. 
The expression "regular assessment" gained significance in the situa-
tion where an assessee dissatisfied with the order of assessment, filed an 
appeal; the appeal was allowed as a result of which the assessment order 
B 
c 
was revised and consequently the tax refundable to the assessee became 
larger than that under the original assessment. In cases arising out of D 
similar circumstances, diverse views were expressed by different High 
Courts of the country, both as regards the period up to which as also the 
amount on which the interest was payable, The High Courts of Bombay, 
Kerala, Allahabad, Punjab and Haryana, Andhra Pradesh and Gauhati 
held that interest would be payable from the date of payment (as regards 
1992 Act) and from the 1st day of April of the assessment year( as regards 
1961 Act), till the date of first/original assessment and not up to the revised 
assessment made pursuant to appellate/revisional orders, only on the 
excess amount as determined in the first/original assessment. It also 
meant that if according to first/original assessm~nt, advance tax paid was 
E 
not in excess of the tax assessed, but as a result of the revised assessment F 
it was found that there was an excess payment, no interest would be 
payable to the assessee at all. On the other hand, the High Courts of 
Calcutta, Madras and Gujarat defined the term "regular assessment" 
including as final/modified/revised assessment pursuant to appellate or 
revisional order. According to the Delhi High Court, though the expression G 
"regular assessment" meant first/original assessment, the assessee would 
be entitled to interest on the amount refunded as a result of revised 
assessment order made pursuant to appellate/revisional order from the 

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