CALTEX OIL REFINING (INDIA) LTD. VS COMMISSIONER OF INCOME-TAX, 1994 PTD-BOMBAY-HIGH-COURT-INDIA 481 (1992)

(a) Income-tax---

----Appeal---General Principles---No inherent right of appeal---Must be conferred by statute.

There is no dispute about the proposition that there is no inherent right of appeal. It is to be specifically conferred by the statute providing for an appeal. But if there is a provision conferring a right of appeal it should be read in a reasonable, practical and liberal manner.

(b) Income-tax---

----Appeal to AAC---Advance tax---Interest payable by Government---Dispute regarding interest---Appeal to AAC competent---Income Tax Act, 1961, Ss.214, 229, 246(c).

The power of the Income-tax Officer is to make an assessment under section 143 or section 144 of the Income Tax Act, 1961. It is that assessment which is the subject-matter of appeal. Evidently, the effect of an appellate order is that the order either stands confirmed, reduced or enhanced or it stands annulled or set aside. It is thus clear that what remains as a final order after giving effect to the orders of the appellate authorities is an order of assessment under section 143 or section 144. It cannot be anything else.

(c) Income-tax---

----Assessment order---Fresh order to give effect to an appellate order---Is also an assessment order---Income Tax Act, 1961, S.143.

Clause (c) of section 246 is in two parts. The first part deals with an order against an assessee where the assessee denies his liability to be assessed under the Act. The second part deals with any order of assessment under subsection (3) of section 143 or section 144. In the second case, however, there is a further restriction that an appeal against such order lies only where the assessee objects (i) to the amount of income assessed, or (ii) to the amount of tax determined, or (iii) to the amount of loss computed, or (iv) to the status under which he is assessed. The first part of this clause deals with denial of liability. Interest under section 214 does not fall under the heading "liability" of the assessee. It is in effect the liability of the Government to pay interest to the assessee on the excess amount of advance tax. paid by him. An assessment under section 143(3) would include not only the determination of the amount of tax calculated at the rate prescribed under the Finance Act but also interest or any other thing which has the effect of reducing or enhancing the total amount payable by the assessee under such an assessment. There is a distinction between interest under the provisions of the Act which is charged from the assessee and interest under section 214 which is payable by the Government. This has been made clear by stating in subsection (1-A) while dealing with excess of refund given to the assessee that such interest shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly. This deeming clause incorporated in section 214 has to be given some meaning. Interest has been deemed to be tax and the provisions of this Act have been made applicable meaning thereby provisions including section 246. The well-known principle of interpretation is that no part of the statute should be construed in a way to make it redundant. Section 229 makes the provisions relating to recovery of tax applicable to recovery of interest and only for that limited purpose equates interest with tax but so far as subsection (1A) is concerned, it has made all the provisions of the Act applicable to interest under section 214 as they apply to the tax, payable by the assessee. This legal fiction, therefore, has to be carried to its logical conclusion. In construing the scope of a legal fiction it would be proper and even necessary to assume all those facts on which alone the fiction can operate.

(d) Income-tax---

----Interpretation of statutes---Legal fiction---Must be carried to its logical conclusion.

Hence interest under section 214 is a part of the assessment and is deemed to be tax for the purposes of this Act including clause (c) of section 246. The appeal by an assessee aggrieved by an order of assessment made under section 143(3) or section 144, either originally or in consequence of an appellate order with a view to giving effect to the directions contained therein, objecting to the amount of interest payable by the Government under section 214 to the assessee as determined by the Income-tax Officer is, therefore, maintainable under clause (c) of section 246.

Chockalingam (M.) and M. Meyyappan v. CIT (1963) 48 ITR (SC) 34 applied.

CIT v. Ashoka Engineering Co. (1992) 194 ITR 645 (SC); Empire Industries Ltd. v. CTT (1992) 193 TTR 295 (Bon,); Garikapati Veeraya v. N. Subbiah Choudhry AIR 1957 SC 540; Kooka Sidhwa and Co. v. CIT (1964) 54 ITR 54 (Cal.) and Umaji Keshao Meshram v. Suit. Radhikabai AIR 1984 SC 1272 fol.

Central Provinces Manganese Ore Co. Ltd. v. CTT (1986)160 ITR 961 (SC); CIT v. Wesman Engineering Co. Pvt. Ltd. (1991)188 ITR 327 (SC); East End Dwellings Co. Ltd. v. Finsbury Borough Council (1951) 2 All ER 587; (1952) AC 109 (HL); Mahalakshmi Sugar Mills Co. v. CIT (1980)123 ITR 429 (SC) and Reliance Jute and Industries Ltd. v. CIT (1981) 127 ITR 842 (Cal.) ref.

S.J. Mehta with I.M. Munim for the Assessee.

G.S. Jetley with P.S. Jatley instructed by Ms. S. Sengupta for the Commissioner.

A.V. Sonde instructed by M/s. Crawford Bayley & Co. for the Intervener.

JUDGMENT

DR. B.P. SARAF, J: --By this reference under section 256(1) of the Income Tax Act, 1961, the Income-tax Appellate Tribunal has referred the following question of law to this Court for opinion at the instance of the assessee:

"Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that no appeal lay to the Appellate Assistant Commissioner of Income-tax against the computation of interest under section 214 made by the Income-tax Officer?"

The facts giving rise to this reference, briefly stated, are as follows:

For the assessment year 1970-71, by an order dated February 11, 1972, the Income-tax Officer assessed the total income of the assessee at Rs.82,72,020 and allowed interest under section 214 of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), on advance payment of tax in excess of the tax determined on regular assessment. The matter went in appeal up to the Tribunal. In consequence of the order of the Tribunal passed on February 12, 1974, the total income of the assessee was reduced to Rs.80,70,666. The Income-tax Officer gave effect to the order of the Tribunal on June 15, 1974, and observed that interest payable to the assessee by the Government under section 214 will remain unchanged.

For the assessment year 1972-73, by his order of assessment dated March 28, 1973, under section 143(3) of the Act, the Income-tax Officer assessed the total income of the assessee at Rs.41,21,251. In consequence of the order of the Appellate Assistant Commissioner of Income-tax passed on November 14, 1973, the total income of the assessee was reduced to Rs.37,24,970. In the assessment order made in pursuance of the direction of the Appellate Assistant Commissioner, the Income-tax Officer, however, did not allow interest under section. 214 of the Act on the refund granted by him.

Against the orders of assessment passed giving effect to the appellate orders for both the years, the assessee went in appeal before the, Appellate Assistant Commissioner. The only grievance of the assessee in the appeals was that the Income-tax Officer was in error in not recalculating/allowing interest under section 214 of the Act. The appeals were dismissed by the Appellate Assistant Commissioner as being not maintainable on the ground that no appeal was provided for in respect of interest under section 214 and, as such, he had no jurisdiction to deal with the same.

Against the orders of the Appellate Assistant Commissioner, the assessee went in appeal before the Tribunal. The Tribunal confirmed the view taken by the Appellate Assistant Commissioner and held that the assessee's appeal against the order of the Income-tax Officer in respect of interest under section` 214 was not competent. Aggrieved by the order of the Tribunal, the assessee sought for reference of the question of law under section 256(1) of the Act which was granted by the Tribunal. Hence the present reference.

The determination of the controversy in this case will depend upon the interpretation of section 246 which deals with appealable orders and the interpretation of section 214 of the Ad. Section 246 gives a right of appeal to any assessee to appeal to the Appellate Assistant Commissioner against any of the orders enumerated therein in the various clauses thereof. The relevant clauses for the present purpose are clauses (c), (f), (g), (m) and (n). Section 246, so far as it is relevant, is set out below:

"246. Any assessee aggrieved by any of the following orders of an Income-tax Officer may appeal to the Appellate Assistant Commissioner against such order--- .....

(c) an order against the assessee, where the assessee denies his liability to be assessed under this Act or any order of assessment under subsection (3) of section 143 or section 144, where the assessee objects to the amount of income assessed, or to the amount of tax determined, or to the amount of loss computed, or to the status under which he is assessed; .....

(f) an order under section 154 or section 155 having the, effect of enhancing the assessment or reducing a refund or an order refusing to allow the claim made by the assessee under either of the said sections;

(g) an order made under section 163 treating the assessee as the agent of a non-resident; ....

(m) an order under section 216;

(n) an order under section 237; ....

Section 214 of the Act provides for payment of interest by the Government to the assessee on the advance tax paid by an assessee in excess of the amount of tax determined on regular assessment. This section as it stood at the relevant time, so far as it is relevant, reads as follows:---

'214. Interest payable by Government: -(1) The Central Government shall pay simple interest at twelve per cent per annum on the amount by which the aggregate sum of any instalments of advance tax paid during any financial year in which they are payable under sections 207 to 213 exceeds the amount of the tax determined on regular assessment, from the 1st day of April next following the said financial year to the date of the regular assessment for the assessment year immediately following the said financial year, and where any such instalment is paid after the expiry of the financial year during which it is payable by reason of the provisions of section 213, interest as aforesaid shall also be payable on that instalment from the date of its payment to the date of regular assessment:

Provided that in respect of any amount refunded on a provisional assessment under section 141-A, no interest shall be paid for any period after the date of such provisional assessment.

(1-A) Where on completion of the regular assessment the amount on which interest was paid under subsection (1) has been reduced, the interest shall be reduced accordingly and the excess, if any, paid shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly ...."

It may be pertinent to mention that the proviso to subsection (1) and subsection (1-A) were inserted by the Finance Act, 1968, with effect from April, 1,1968.

The contention of the assessee is that an appeal lies to the Appellate Assistant Commissioner under clause (c) of section 246 of the Act. This submission is based on the footing that computation of interest under section 214 is a part of the process of assessment and that the allowance/disallowance or allowance of a lesser amount affects the assessment. As such an appeal against an order under section 214 is in effect an appeal against an order of assessment under section 143 of the Act. The further submission of the assessee is that interest under section 214 is in truth and substance a part and parcel of the tax and has the effect of enhancing or reducing the amount of tax determined by the Income-tax Officer in an order of assessment under section 143 of the Act.

The alternate submission of .the assessee is that if it is contended by the Revenue that an order of assessment passed in consequence of an appellate order with a view to giving effect to it is not an order of assessment then in that case such an order has to be treated as an order under section 154 of the Act. In that event an appeal against such an order will be maintainable under clause (f) of section 246. In support of this contention reliance is placed on a decision of this Court in Empire Industries Ltd. v. CIT (1992) 193 ITR 295. The further submission of counsel for the assessee is that in any event an appeal will be maintainable under clause (n) of section 246 because he is entitled to get by way of refund the amount of interest on the excess of advance tax paid by him over and above the amount of tax determined as payable on regular assessment by virtue of section 214 of the Act and if such an amount is not refunded to the assessee or a lesser amount is refunded an appeal will lie under clause (n).

We will deal with these contentions elaborately a little later. Before that it may be expedient to set out the stand taken by counsel for the Revenue. Counsel for the Revenue submits that an appeal is not maintainable under any of the aforesaid clauses as claimed by the assessee. According to him, an order of assessment passed by the Income-tax Officer in consequence of an order passed in appeal to give effect to the findings or directions contained therein is not an order of assessment under section 143(3). According to him such an order is only an administrative order against which no appeal has been provided. Counsel further submits that even if such an order is held to be an order under section 143(3) of the Act, an appeal will still not be maintainable under clause (c) of section 246 of the Act inasmuch as an appeal can be filed against such an order by an aggrieved assessee only if he objects, inter alia, to the amount of tax determined. Clause (c) does not permit an appeal by an aggrieved assessee who objects to the amount of interest and not tax According. to learned counsel, under the Income-tax Act, tax and interest are two different and distinct items and tax cannot be so construed as to take within its ambit interest also. On the same reasoning, according to learned counsel, an appeal is not maintainable under clause (n). So far as clause (f) is concerned, learned counsel submits that the order of assessment passed by the Income-tax Officer giving effect to the directions contained in the appellate order cannot be termed as an order of rectification under section 154 of the Act. The decision of this High Court in Empire Industries Ltd. v. CIT (1992) 1 193 ITR 295 has been distinguished by pointing out that in that case the Income-tax Officer himself had passed the order under section 154 of the Act and it was in that view of the matter that the aforesaid judgment was rendered by the High Court. According to counsel for the Revenue, the said judgment' cannot have a general application.

We have carefully considered the rival submissions. There is no dispute about the proposition that there is no inherent right of appeal. It is to be specifically conferred by the statute providing for an appeal. But as stated by the Supreme Court in CIT v. Ashoka Engineering Co. (1992)194 ITR 645, it is an equally well-settled proposition of law that, if there is provision conferring a right of appeal, it should be read in a reasonable, practical and liberal manner. We have, therefore, to construe the provisions of section 246 in the light of this well-settled legal position. So fat as the first submission, which relates to the nature of an order passed by the Income-tax Officer in consequence of orders of the appellate authorities with a view to giving effect to the directions contained therein, is concerned, it is difficult to hold that such an order is an administrative order. The power of the Income-tax Officer is to make assessment under section 143 or 144 of the Act. It is that assessment which is the subject-matter of appeal. The appellate authority, on an appeal against an order of assessment, has power to confirm, reduce, enhance or annul the assessment or to set aside the assessment and refer the case back to the Income-tax Officer for making a fresh assessment in accordance with the directions given by such authority (section 251). Evidently the effect of an appellate order is that the order either stands confirmed, reduced or enhanced or it stands annulled or set aside. In the case of confirmation, reduction or enhancement, the original order of assessment stands modified to the extent of the directions given by the appellate authority. In the case of annulment the order becomes non est. In case an order is set aside, the authority has to start the entire process afresh and make a fresh order of assessment complying with the directions given by the appellate authority. It is thus clear that what remains as a final order after giving effect to the orders of the appellate authorities is an order of assessment under section 143 or 144. It cannot be anything else.

This aspect of the matter also came to be considered by the Calcutta High Court in Kooka Sidhwa and Co. v. C.I.T. (1964) 54 ITR 54 in which it was held that where, pursuant to the directions of the Appellate Tribunal in an order under section 33(4) of the Indian Income-tax Act, 1922 (section 254 of the 1961 Act), to revise and amend the assessment made by the Income-tax Officer, the Income-tax Officer revises the assessment, the order passed by the Income-tax Officer partakes the character of a fresh assessment order and is referable only to section 23 of the Income-tax Act (corresponding to sections 143 and 144 of the 1961 Act). An appeal would therefore, lie under section 30 of the Act (section 246 of the 1961 Act) to the Appellate Assistant Commissioner against an order of the Income-tax Officer amending or revising an assessment pursuant to the directions of the Appellate Tribunal under section 33(4) (section 254 of the 1961 Act). It was observed (at page 65):

"The Income-tax Officer's duty to assess the total income of the assessee and to determine the sum payable by him on the basis of the return under section 23 of the Act is the whole process of assessment which may end with his order or may be revised by the higher appellate authorities including the Appellate Assistant Commissioner and the Tribunal recognised by the Income-tax Act. If, therefore, such higher appellate authorities such as the Appellate Assistant Commissioner or the Tribunal direct or order him to do something again with regard to the assessment he has already made and that by way of revision or amendment, the Income-tax Officer must be held to be still under section 23 (corresponding to sections 143 and 144 of the 1961 Act) of the Act on the process of assessing the total income of the assessee and determining the sum payable on the basis of the return already filed by him. No other construction or interpretation of section 23 of the Act seems to me to be sensible or consistent with the scheme of the Act:"

This view is also fully supported by a decision of the Supreme Court in Garikapati Veeraya v. N. Subbiah Choudhry AIR 1957 SC 540, where it was observed (at page 553):

"The legal pursuit of a remedy, suit, appeal and second appeal are really but steps in a series of proceedings all connected by an intrinsic unity and are to be regarded as one legal proceeding."

This view was reiterated recently by the Supreme Court in Umaji Keshao Meshram v. Smt. Radhikabai AIR 1986 SC 1272, where it was observed that an appeal is not a fresh proceeding but merely a continuation of the original proceedings.

In the light of these decisions and for the reasons given above, we are of the opinion that the impugned order of assessment passed by the Income tax Officer pursuant to the directions of the appellate authorities with a view to giving effect to the directions contained therein is an order of assessment within the meaning of section 143 or section 144 of the Act and an appeal lies under section 246(c) of the Act against such an order.

Having come to this conclusion, we have to deal with the objection of learned counsel for the Revenue against the maintainability of appeal in the present case. His contention is that even if such an order is an order of assessment, an appeal can lie against it only in a case where the assessee objects to the amount of income assessed or to the amount of tax determined or to the amount of loss computed or to the status under which he is assessed. An assessee objecting to the authority of the Income-tax Officer to compute interest under section 214 of the Act or to compute it at a lesser figure cannot file an appeal under this section because such an appeal does not fall in any of the four grounds set out in clause (c) of section 246. Counsel for the Revenue also submits that an appeal against interest may be filed only under the first part of clause (c) of section 246 and that is only in a case where the assessee denies his total liability to be subjected to interest. Reliance in this connection is placed on a decision of the Supreme Court in Central Provinces Manganese Ore Co. Ltd. v. CIT (1986) 160 ITR 961. Learned counsel also submits that there too an appeal will not lie against refusal to grant interest under section 214 or grant of lesser amount by way of interest than what is due because it is question of interest payable by the Department and not interest charged from the assessee. There is no question of liability of the assessee to pay interest. According to him, the first part of clause (c) only deals with cases where the assessee denies his liability either to pay tax or interest -- liability to be assessed meaning thereby .either his liability to be assessed to tax or subjected to charge of interest.

We have carefully considered all these submissions. Clause (c) of section 246 is in two parts. The first part deals, with an order against an assessee where the assessee denies his liability to be, assessed under the Act. The second part deals with any order of assessment under subsection (3) of section 143 or section 144. In the second case, however, there is a further restriction that an appeal against such order lies only where the assessee objects (i) to the amount of income assessed, or (ii) to the amount of tax determined, or (iii) to the amount of loss computed, or (iv) to the status under which he is assessed. The first part of this clause deals with denial of liability. The decision of the Supreme Court referred to by learned counsel in Central Provinces Manganese Ore Co. Ltd. v. CIT (1986) 160 ITR 961, also deals with a case where interest was levied on the assessee and the assessee was aggrieved by the levy of interest on him. The controversy there was whether an appeal will lie in a case where the assessee denies his total liability or it will also lie in a case where he does not deny his total liability to be assessed to interest but is aggrieved by the quantum of the interest levied. We do not propose to go into this aspect of the matter at length because, in our opinion, the interest under section 214 does not fall under the heading "liability" of the assessee. It is in effect the liability of the Government to pay interest to the assessee on the excess amount of advance tax paid by him. Counsel for the assessee, however, placed before us another decision of the Supreme Court in CIT v. Wes man Engineering Co. Pvt. Ltd. (1991) 188 ITR 327, where also a similar expression used in section 195(2) of the Act came up' for interpretation and the Supreme Court held that denial of the liability will also incl4& denial of partial liability or dispute in regard to the quantum. In our opinion, the controversy regarding interest under section 214 is not covered by the first part of clause(c). It may, however, fall in the second part which provides for an appeal against an order of assessment under subsection (3) of section 143 of the Act. The only ground under which such an objection may fall is "objection to the. amount of tax determined". Now, here again the question arises whether interest under section 214 is a part of assessment and even if it be so, can it be said to be tax determined in the year of assessment for the purpose of appeal under clause (c) of section 246. So far as the first part is concerned, we do not find much difficulty in view of the decision of the Supreme Court in M.Chockalingam and M. Meyyappan v. CIT (1963) 48 ITR (SC) 34. In this case the power of rectification was the subject-matter of scrutiny by the Supreme Court. By an order of rectification penal interest under section 18-A of the old Act was enhanced. No opportunity of hearing as contemplated by section 35 of the said Act was given to the assessee before making the rectification and enhancing the amount of interest. It may be observed that the proviso to section 35 of the 1922 Act provided for a hearing to be given to the assessee when the effect of rectification would be the enhancement of the "assessment". What was sought to be argued on behalf of the Revenue was that the addition of penal interest was not enhancement of assessment as stated in the said proviso. Repelling this contention the Supreme Court said (at page 41): "We do not see what else it could be. The word `assessment' is used in the proviso not as an equivalent of the tax calculated at the rate given in the Finance Act but the total amount which the assessee is required to pay. The proviso applies whenever the effect of the order is to touch the pocket of the assessee and in our opinion this was such a case."

In view of this decision, there is no scope for doubt that an assessment under section 143(3) would include not only determination of the amount of tax calculated at the rate prescribed under the Finance Act but also interest or any other thing which has the effect of reducing or enhancing the total amount' payable by the assessee under such an assessment.

The next question that arises for consideration is whether the expression "tax" used in clause (c) of section 246 would include interest also. We propose to confine our decision in this matter to interest under section 214 only, i.e. interest payable by the Revenue to the assessee. Counsel for the assessee submitted that interest simpliciter having no penal element in it is nothing but additional tax. Reliance was placed in this connection on the decision of the Supreme Court in Mahalakshmi Sugar Mills Co. v. CTT (1980) 123 ITR 429. It was a case where the Supreme Court was called upon to consider the nature of interest paid by the assessee on the cess payable under the U.P. Sugarcane Cess Act, 1956. The interest was claimed as a deduction. The admitted position was that the cess payable under the said Act was deductible expenditure in the computation of the income. The controversy was whether interest charged under the said Act for delayed payment of cess was also an allowable deduction. The Supreme Court considered the nature of interest under the said Act. It was held that the interest payable on an arrear of cess under section 3(3) is in reality part and parcel of the liability to pay cess. It is an accretion to the cess. The arrear of cess "carries" interest; if the cess is not paid within the prescribed period a larger sum will become payable as cess. The enlargement of the cess liability is automatic under section 3(3). Relying ~on this decision counsel for the assessee submitted that if we substitute the word "cess" by the word "tax" and apply the aforesaid judgment, the interest for late payment of tax will also have to be treated as tax more so while dealing with the expression in a remedial provision dealing with the right of appeal of the assessee. We have considered this decision of the Supreme Court. We find some force in the submission of counsel for the assessee that interest payable by the Government to the assessee on the advance tax paid by him has directly the effect of reducing the amount or enhancing the amount of tax payable by him. Hence, while interpreting a provision dealing with appeal, we should give such a construction that if the assessee can have a right of appeal, he is given the same. There is no doubt that there is a distinction between interest under the provisions of the Act which is charged from the assessee and interest under section 214 which is payable by the Government. This has been made clear by saying in subsection (1-A) while dealing with excess of refund given to the assessee that such interest "shall be deemed to be tax payable by the assessee and the provisions of this Act shall apply accordingly". This deeming clause incorporated in section 214 has to be given some meaning. Interest has been deemed to be tax "and the provisions of this Act" have been made applicable meaning thereby the provisions including section 246. The contention of counsel for the Revenue is that this provision has been made only to facilitate recovery. We do not find force in this submission because of the specific provision contained in section 229 of the Act which provides:

"Any sum imposed by way of interest, fine, penalty or any other sum payable under the provisions of this Act, shall be recoverable in the manner provided in this Chapter for the recovery of arrears of tax."

A reading of the aforesaid section makes it clear that so far as recovery of interest is concerned, the provisions of the Act relating to recovery of arrears of tax have been made applicable. For that purpose no further deeming clause was required to be incorporated in section 214 of the Act. The deeming provision in section 214, therefore, has to be ascribed some meaning because there must have been some purpose for which it was inserted. The well-known principle of interpretation is that no part of the statute should be construed in a way to make it redundant. Section 229 makes the provisions relating to recovery of tax applicable to recovery of interest and only for that is limited purpose equates interest with tax but so far as subsection (1-A) is concerned, it has made all the provisions of the Act applicable to interest under section 214 as they apply to tax payable by the assessee. This legal fiction, therefore, has to be carried to its logical conclusion. It is a well-settled rule of interpretation that in construing the scope of a legal fiction it would be proper and even necessary to assume all those facts on which alone the fiction can operate. As observed by Lord Asquith, in the case of East End Dwellings Co. Ltd. v. Finsbury Borough Council (1951) 2 All ER 587, 599; (1952) AC 109 (HL):

"If you are bidden to treat an imaginary state of affairs as real, you must surely, unless prohibited from doing so, also imagine as real the consequences and incidents which, if the putative state of affairs had in fact existed, must inevitably have flowed from or accompanied it. One of these in this case is emancipation from the 1939 level of rents. The statute says that you must imagine a certain state of affairs; it does not say that having done so, you must cause or permit your imagination to boggle when it comes to the inevitable corollaries of that state of affairs."

The provisions of subsection (1-A) of section 214 in the cod text of the right of appeal under clause (c) of section 246 came up for consideration before the Calcutta High Court in Reliance Jute and Industries Ltd. v. CIT (1981) 127 ITR 842. The Court there observed (at page 848):

"Subsection (1-A) of section 214 deals with excess interest paid which is recoverable from the assessee and that has to be treated as tax. Counsel for the Revenue, then, contended that section 214(1-A) had made the excess interest tax only for the purpose of recovery. He drew our attention to the heading of Chapter XVII which deals with collection and recovery of tax He, therefore, submitted that such excess interest was to be treated as tax only for the purpose of collection and recovery and not for appeal which is a matter of substantive right. It is, however, difficult to accept this contention because Parliament has not chosen to use the expression `shall be deemed to be tax' for the purpose either of any sic section or of any spec chapter. Parliament has provided for two matters. It has provided that it shall be deemed to be tax payable by the assessee. That is one deeming that Parliament has enjoined. The other part of it is that Parliament has directed that the provisions of the Act shall apply accordingly, that is say, it will apply as it applies to a tax payable by the assessee. Now, in order to be tax payable by an assessee, there must be a determination of the tax payable. An order of this nature for excess interest paid would be deemed to be tax payable and such a determination of tax payable has been made appealable under clause (c) of section 246 of the Income Tax Act, 1961, and Parliament has clearly expressed its intention to treat such excess interest as tax payable, by the assessee and has further directed that the provisions of the Act would be applicable accordingly."

In the light of foregoing discussion, we are of the opinion that interest under section 214 is a part of assessment and is deemed to be tax for the purposes of this Act including clause (c) of section 246. An appeal by an assessee aggrieved by an order of assessment made under -section 143(3) or section 144 of the Act, either original or in consequence of an appellate order with a view to giving effect to the directions contained therein, objecting to the amount of interest payable by the Government under section 214 of the Act to the assessee as determined by the Income-tax Officer, is, therefore, maintainable under clause (c) of section 246 of the Act.

In view of this conclusion, we do not think it necessary to go into the other aspects of the matter. We do not propose to discuss the decision of this Court in Empire Industries Ltd. v. CIT (1992) 193 ITR 295, where an order passed by the Income-tax Officer giving effect to the appellate orders was treated to be an order of rectification under section 154 of the Act. The said judgment is confined to the facts of that case. In that particular case all the authorities below right from the Income-tax Officer onwards proceeded on the footing that it was an order of rectification. The High Court also proceeded on that presumption. In our opinion, that judgment does not lay down any legal proposition of general application. That is confined to the facts of that case. There too we have got our own reservation. Whether a label put by the authorities below on a particular order is binding on the High Court is a question that may need serious consideration in view of a number of decisions of the Supreme Court on the point. As it is not necessary to go into that aspect of the matter in this case in view of the conclusion already arrived at by us that the appeal is maintainable under section 246(c) of the Act, we do not propose to discuss the same.

In the result, the question referred to us is answered in the negative and in favour of the assessee.

No order as to costs.

M.B.A./33/TFReference answered