LexTHE INCOME TAX OFFICER, NEW DELHI versus DELHI DEVELOPMENT AUTHORITY
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THE INCOME TAX OFFICER, NEW DELHI
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v.
DELHI DEVELOPMENT AUTHORITY
NOVEMBER 29, 2001
[S.P. BHARUCHA, C.J., Y.K. SABH!}{WAL AND BRIJESH KUMAR, JJ.]
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Income Tax Act :
Section 194-A-Deduction o.f Incon1e Tax at source on interest-Revenue
raised demand of tax-Assessee's appeal to Revenue.failed-On appeal, !TAT
held, the arnount assessed was not in the nature o,f interest and directed to
r~fund the ammmt-Assessee filed Writ Petition-Allowing the Writ Petition,
High Court directed Revenue, to dispose of the claim of assess·ec as per
provisions under Section 244 (IA) and Section 244(A) ~{the Act-On appeal,
held, it cannot be said that the r~fundee will not be an assessee only for the
reason that no assessnzent proceeding had taken place.
Section 2(7)-Assessee-Meaning of-Assessee means a person whom
uny tax or any other siun of 1none_v is payable and includes deen1ed assessee-
Section 201-Deenzed assessee discussed.
c
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Section 240 and Section 244-Distinction between-Whereas as per
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provision in Section 240 cunount becon1es refundable to the assessee by virtue
ofanyorder passed in appeal/proceeding under the Act, Section 244 deals with
refund as a result o.f an order pa.'>~.•ed in appeal or proceeding under the Act-
High Court has _rightly provided for applyin11 sub-section ( 1 A) qf Section 244
qf the Act.for determining interest.
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Assessee, the Delhi Development Authority could not construct and
allot flats to the buyers within the stipulated time as per agreements with
the buyers, and was thus, liable to pay interest to buyers. Accordingly, it
paid interest but failed to deduct Income Tax at source. Demand was
raised by the Income Tax Department for the assessment years 1987-88,
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1988-89 and 1989-90. Assessee's appeal to Revenue failed and it preferred
an appeal before the Income Tax Appellate Tribunal. The appeal was
allowed by the Tribunal holding that amounts credited to the allottees
were not in the nature of interest within the meaning of Section 2(28A) of
the Act. The order passed by t!le Revenue was quashed and the Income
H
383
384
SUPREME COURT REPORTS
[2001] SUPP. 5 S.C.R.
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Tax Department was directed to refund the amount, if recovered from the
assessee.
In compliance with the Tribunal's order, Revenue refunded the.
amount with interest calculated under Section 244(I) of the Act. D.D.A.
'
filed a Writ Petition before the High Court praying that interest should
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have been for the year I987-88 as per provision under Section 244 (IA)
and under Section 244A for th~ years I988-89 and I989-90. High Court
allowed the Writ Petition. Hence this appeal. In the meantime, Revenue
had refunded the amount with interest calculated in accordance with
Section 244(1) of the Act. Therefore, the issue before the Court was as to
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whether interest was payable under Section 244(I) or under Section 244(IA)
and 244(A) of the Act.
It was contended for the appellant that interest had rightly been
calculated under Section 244(I) of the Act; and that sub-section (IA) of
Section 244 would not be applicable since the payment of tax was not made
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in pursuance of any order on assessment.
Dismissing the appeal, the Court
HELD : I.I. It would not be necessary that in all cases before pay-
ment is made, there nmst always be an actual order of assessment. Tax is
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payable in advance as well; it is deducted at source also. What is important
under Section 244 of the Income Tax Act is that the amount becomes
refundable to the assessee by virtue of an order passed in appeal or any
proceeding under the Act. [387-B]
1.2. It cannot be said that 'refundee' will not be an assessee only for
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the reason that actually no assessment proceeding had taken place; Section
20I clearly provides that if the principal officer or the company liable to
deduct the Income Tax at source fails to do so, he shall be deemed to be
assessee in default in respect of the tax. Further, it is clear as per definition
of the word assessee as contained under sub-section (7) of Section 2 that
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term 'assessee' includes actual assessee as well as deemed assessee.
[388-D; E; HJ
I.3. High Court has rightly directed that sub-section (IA) of Section
244 of the Act be applied for determining interest for period covered by
the assessment year I988-89. It is also for the reason that the amount was
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paid by way of deduction after 31.3.I975 as provided under sub-section
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l.T.0. v. D.D.A. [BRIJESH KUMARExcerpt shown. Read the full judgment & AI analysis in Lexace.