( 1 ) THIS is a reference under Section 256 (1) of the Income-tax Act, 1961. The assessee is a limited company. The assessment year involved is 1964-65.

( 2 ) DURING the financial year 1963-64, the assessee paid Rs. 12,56,466 as advance tax under Section 210 of the I. T. Act, 1961, for the aforesaid assessment year. Its business income was assessed at Rs. 36,05,811 under Section 143 (3) of the Act and the tax claimed was more than the advance tax paid by the assessee. The assessee filed appeal before the AAC against the assessment order. The AAC reduced the income by Rs. 14,98,592 (?) and also included additional income of Rs. 12,637. Thus, the revised business income of the assessee became Rs. 21,20,760.

( 3 ) THE ITO then passed an order dated March 17, 1971, under Section 251 of the Act calculating the tax at Rs. 9,68,567 against which the assessee had already paid advance tax of Rs. 12,56,466 and, after allowing the assessee Rs. 60,899 as interest under Section 214, calculated the total amount refundable at Rs. 3,48,798 to the assessee.

( 4 ) SUBSEQUENTLY, the ITO thought that he had wrongly allowed the aforesaid interest and accordingly passed an order under Sectio