IMPORTANT POINT
Since the payment made u/s 172(4) of the Income Tax Act, 1961 is, by fiction, treated as advance tax; all the provisions in respect of the advance tax will apply and if on regular assessment made u/s 172(7) of the Act, there is any excess payment made by the assessee, then the assessee would be entitled to it and also interest thereon u/s 214 of the Act.

JUDGMENT

Paripoornan, J.-This batch of appeals is preferred against the common judgment delivered by the High Court of Kerala in ITR Nos. 162-167 of 1977 dated 24th March, 1981. The judgment is reported in 130 ITR 301.

2. The appellants-assessees, are non-resident shippers represented by one common agent. The ships carry goods from the Port of Cochin to various places. The ships concerned are, Fernbrook, Fernwave, Fernmoor, Fergate and Ferndale. Fernbrook called at the Cochin Port during the previous years relating to the assessment years 1967-68, and 1969-70; Ferndale called at the Cochin Port during the year relating to the assessment year 1967-68 and the other ships, Fernwave, Fernmoor and Ferngate called at the Cochin Port during the year relating to the assessment year 1969-70. In respect of the freight earnings, assessments were made on the shippers under Section 172(4) of the Income-tax Act, hereinafter referred to as the Act . The said provision enables the Income Tax Officer to make "adhoc" assessment, on the tram-ships. The assessees paid tax so assessed under Section 172(4) of the Act. Thereafter the assessees exercised the right conferred on them under Section 172(7) of the Act and claimed "regular assessments" to be made. Returns were filed. It turned out that the total income assessed in all the cases were far less than the one earlier assessed under Section 172(4) of the Act and on which taxes were paid by the assessees. Reckoning this, the Income Tax Officer held that the assessees are entitled to refunds of the excess amount paid by them. Such amounts were refunded. The assessees claimed that they are entitled to interest for the excess amounts paid by them, which were refunded. Such claims were rejected by the Income-tax Officer. The said rejection was upheld in the appeals by the Appellate Assistant Commissioner. The claims for interests were rejected on the ground that the payment made in pursuance to assessments under Section 172(4) of the Act cannot be said to be "advanced income tax". In the further appeals filed by the assessees, the Income Tax Appellate Tribunal, Cochin Bench, after review of the relevant provisions of the Act, held that under Section 172(7) of the Act, the payments made (earlier in the Assessments under Section 172(4) of the Act) would be on par with "advance tax" payments. It was further held that since these payments have, by fiction, been treated as advance tax, it necessarily follows that all the provisions in respect of the payment of advance tax in the Act will apply. From the point of regular assessment, i.e., if there is any excess payment made by the assessee, then the assessee would be entitled to the interest under Section 214 of the Act. The Appellate Tribunal directed the Income Tax Officer to allow the interest claimed by the assessees.

3. As directed by the High Court, the Income Tax Appellate Tribunal referred the following question of law in all the cases for the decision of the High Court :

"Whether the amount directed under Section 172 clause (7) of the Income-tax Act, to be treated as a payment in advance of the tax leviable for the assessment year in question, would carry interest as the amount the advance tax would under Section 214 of the same is payable under Section 207 to 213 of the Act".

The High Court of Kerala, by a common judgment, delivered in all the References took the view that the tax paid under Section 172(4) of the Act is a payment on assessment and not a payment of advance tax under the Act. It was held that Section 172(7) of the Act permits only "an adjustment" of the payment made under the Section as "payment in advance of the tax leviable for the assessment year" and not a payment of advance tax made under the Act. The question referred to the High Court was answered in the negative, in favour of the Revenue and against the assessees. It is thereafter, the assessees moved this Court in S.L.P. (Civil) Nos. 8792-97/1981 and obtained special leave to