Per M.L Pendse, J.:— The petitioner is a Company incorporated under the Indian Companies Act, 1913 and carries on the business of manufacture and sale of high technology products in agro-chemicals, drugs and pharmaceuticals and animal health. The petitioner is assessed to tax under the Income-tax Act, 1961 (hereinafter referred to as the ‘Act’) and the previous year of the petitioner relevant to the assessment year 1973-1974 is the period of 12 months ended on November 1972. The Company paid advance tax of Rs. 2,41,33,582/-. The Company filed return on July 23, 1963 and the returned income was Rs. 3,92,16,460/-. The assessment under section 143(3) of the Act was completed by order dated March 31, 1975 and the Company was assessed on an income of Rs. 4,06,93,891. The tax payable was Rs. 235,00,720. The Income-tax Officer, after giving credit for the advance tax and tax deducted at source determined a refund due to the Company of Rs. 6,46,140/- and granted interest under section 214 on the said amount of refund. By order dated March 30, 1976, the assessment order was rectified under section 154 of the Act as certain mistakes apparent from the record were noticed. As a result of the rectification, the income of the Company was enhanced by Rs. 5,918/- and the total income was Rs. 4,06,99,809/-. The Income-tax Officer raised the demand for income-tax of Rs. 3,419/- and the said amount was paid by the Company on August 16, 1976.

2. The Company preferred an appeal to the Appellate Assistant Commissioner, Income-tax against the original order of assessment under section 143(3) of the Act. The Company also preferred appeal against the order of rectification passed by the Income-tax Officer. By order dated October 25, 1978, the Commissioner of Income-tax (A) partly allowed both the appeals and effect was given to the orders of Commissioner of Income-tax and of the Tribunal by order dated July 30, 1979. The total income of the Company was computed at Rs. 4,02,54,680/- and the total refund of Rs. 2,54,533/- was found due. The said amount of refund comprised of sum of Rs. 1,588/- being the amount due as a result of the order of the Commissioner of Income-tax and the balance amount being the amount of refund due as a result of the order of the Tribunal. The Company received the refund on September 20, 1979.

3. For the assessment year 1974-1975, the Company bad paid advance tax of Rs. 2,71,30,402/-. The return was filed on June 27, 1974 and the income returned was Rs. 4,64,20,130/-. The assessment was completed under section 143(3) of the Act by order dated September 29, 1975 and the Company was assessed to income of Rs. 4,70,76,060/-. The Income-tax payable was Rs. 2,71,86,424/-. After giving credit for the advance tax paid and the tax deducted at source the Officer raised the demand of Rs. 36,441/- on the Company. The Company was entitled to refund of the tax for the assessment year 1972-1973 and, therefore, the entire demand was adjusted to the said amount of refund.

4. By order dated October 27, 1976, the Income-tax Officer in exercise of powers under section 154 of the Act rectified certain mistakes which were apparent on the face of record and revised the total income to Rs. 4,70,26,320/- and the Company was called upon to pay further tax of Rs. 7,717/-. The demand was also adjusted against the refund due to the Company for the assessment year 1962-1963.

5. The Company preferred an appeal against the order of the original assessment to Commissioner of Income-tax (A) and the appeal was partly allowed by order dated July 5, 1979. The Income-tax Officer gave effect to the order determining the refund due to the Company of Rs. 2,82,132/-. The amount of refund was adjusted in January 1980 against the surtax demand for assessment year 1976-1977. The amount of Rs. 2,82,132/- included the refund of excess advance tax paid of Rs. 2,60,024/-.

6. Under section 214(1) of the Act, the assessee is entitled to interest on the amount of advance tax paid during the financial year and which exceeds the tax determined on regular assessment from April 1 next following the said financial year to the date of regular assessment for the assessment year immediately following the said financial year. Sub-section (2) of section 214 of the Act provides that interest shall be payable only up to the date on which the refund is made. In respect of assessment year 1973-1974, and assessment year 1974-1975, the Company addressed letter to respondent No. 2 - Inspecting Assistant Commissioner for grant of interest as prescribed under section 214 and section 244(1A) of the Act. As respondent No. 2 did not take any steps, the Company applied to respondent No. 1 - Commissioner of Income-tax under section 264 of the Act for revision of the order passed by respondent No. 2 and requesting that respondent No. 2 should be directed to grant interest due to the Company under sections 214, 244(1) and 244(1A) of the Act on the excess tax refunded pursuant to the order of respondent No. 2 giving effect to the order of Commissioner of Income-tax and the Tribunal. The respondent No. 1 consolidated the two petitions in respect of two assessment orders and by order dated July 16, 1981 held that interest under section 214 cannot be allowed on the revised excess advance tax determined on the result of the appellate decision. The respondent No. 1 held that the material date for the purpose of allowing interest under section 214 of the Act is the date of regular assessment and that means the date of original assessment. The respondent No. 1 thereupon rejected the claim for interest under section 214 of the Act for both the assessment years. So far as the interest under section 244(1A) of the Act in concerned, respondent No. 1 held that as the payment of tax has been made long before March 31, 1975, the provisions of section would have no application and, therefore, the claim was turned down. The respondent No. 1 allowed the claim for interest under section 244(1) of the Act for the assessment year 1973-1974. The refusal of respondent No. 1 to grant the claim made for the two assessment years has given rise to the filing of the present petition under Article 226 of the Constitution of India.

7. Before adverting to the submission made by Shri Dastur, learned Counsel appearing on behalf of the Company, it would be advantageous to set out the provisions of sub-section (1) of section 214 and sub-sections (1) and (1A) of section 244 of the Income-tax Act:

“214. (1) The Central Government shall pay simple interest at fifteen 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 assessed tax 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”.

“244. (1) Where a refund is due to the assessee in pursuance of an order referred to in section 240 and the Assessing Officer does not grant the refund within a period of three months from the end of the month in which such order is passed, the Central Government shall pay to the assessee simple interest at fifteen per cent per annum on the amount of refund due from the date immediately following the expiry of the period of three months aforesaid to the date on which the refund is granted.

“(1-A). Where the whole or any part of the refund referred to in sub-section (1) is due to the assessee, as a result of any amount having been paid by him after the 31st day of March, 1975, in pursuance of any order of assessment or penalty and such amount or any part thereof having been found in appeal or other proceedings under this Act to be in excess of the amount which such assessee is liable to pay as tax or penalty, as the case may be, under this Act, the Central Government shall pay to such assessee simple interest at the rate specified in sub-section (1) on the amount so found to be in excess from the date on which such amount was paid to the date on which the refund is granted:

Provided that where the amount so found to be in excess was paid in instalments, such interest shall be payable on the amount of each such instalment or any part of such instalment, which was in excess, from the date on which such instalment was paid to the date on which the refund is granted:

Provided further that no interest under this sub-section shall be payable for a period of one month from the date of the passing of the order in appeal or other proceedings:

Provided also that where any interest is payable to an assessee under this sub-section, no interest under sub-section (1) shall be payable to him in respect of the amount so found to be in excess”.

8. Chapter XIX of the Act deals with the subject of refunds and provides that if any person satisfies the Assessing Officer that the amount of tax paid by him for any assessment year exceeds the amount with which he is properly chargeable, then he shall be entitled to the refund of the excess. Chapter XVII-C of the Act deals with subject of advance payment of tax and section 207 demands that tax shall be payable in advance during any financial year, in accordance with the provisions of sections 208 to 219 in respect of the total income of the assessee which would be chargeable to tax for the assessment year immediately following that financial year. Section 219 of the Act prescribes that any sum paid by or recovered from an assessee as advance tax in pursuance of Chapter XVII shall be treated as a payment of tax in respect of the income of the period which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable, and credit therefor shall be given to the assessee in the regular assessment.

9. To appreciate the claim for interest made by the Company in respect of two assessment years, the relevant dates are required to be set out. For assessment year 1973-1974, the assessment was completed on March 31, 1975 and order of rectification was passed on March 30, 1976 and the additional tax of Rs. 3,419/- in pursuance of the rectification order was paid on August 16, 1976. Effect was given to the appellate order against the order of assessment and rectification on July 30, 1979. Shri Dastur submitted that the Company is entitled to interest under section 214(1) of the Income-tax Act upto September 20, 1979 the date on which refund was made. The refund, Shri Dashtur claims, is out of the excess advance tax paid by the Company and interest should be paid from April 1, 1973 till the date of refunds, i.e September 20, 1979. The second claim is in respect of refund of the tax paid as per the rectification order and which was also received on September 20, 1979 and in respect of this refund amount, Shri Dastur claims that interest is payable under section 244(1A) of the Act from the date of payment, i.e August 16, 1976 till the date of refund, i.e September 20, 1979.

10. As regards assessment year 1974-1975, the assessment was completed on September 29, 1975 and demand of Rs. 36,441/- was raised and the demand was adjusted to the refund due to the Company for assessment year 1972-1973. The order of rectification was passed on October 27, 1976 and demand of Rs. 7,717/- raised was adjusted towards the refund due for the assessment year 1973-1974. The effect to the orders passed by the appellate authorities was given on October 3,1979 and the adjustment was completed on January 3, 1980. Shri Dastur submits that the Company is entitled to interest under section 244(1A) of the Act in respect of assessment year 1974-1975 right from April 1974 till January 3, 1980.

11. Shri Dastur submitted that respondent No. 1 was in error in denying relief under section 214(1) of the Act to the Company for the assessment year 1973-1974 by holding that the interest is payable only till the date of regular assessment and that means the date of original assessment. The learned Counsel urged that there is no rationale to treat expression “regular assessment” in section 214(1) as equivalent to the original or initial assessment. It was contended that the expression “regular assessment” should be construed as the final assessment which is made in pursuance of the order passed by the appellate authorities. It is not possible to entertain the submission advanced by the learned Counsel in view of the decision of the Full Bench of this Court reported in 146 Income Tax Reports 452 (Commissioner of Income-tax, Bombay City-IV v. Corona Sahu Co. Ltd.)1. The Full Bench held that the words “regular assessment” means only the first order of assessment and not the last operative order of regular assessment at any given point of time passed in appellate or revisional proceedings. Shri Dastur submitted that the decision of the Full Bench requires reconsideration for more than one reason. In the first instance, appeal preferred against the decision of the Full Bench is pending in the Supreme Court and secondly, several other High Courts have taken the contrary view. It is not permissible to re-examine the view taken by the Full Bench and which is binding on this Court and consequently the conclusion of respondent No. 1 that for the purpose of allowing interest under section 214 of the Act, the material date is the date of original assessment and i.e, March 31, 1975 in respect of assessment year 1973-1974 cannot be faulted with. The rejection of the claim of interest made by the Company for the assessment year 1973-1974 from April 1, 1973 to September 20, 1979, therefore, could not be granted and that order of respondent No. 1 is not required to be disturbed. The claim for interest under section 244(1A) of the Act in respect of amount of refund of tax paid in pursuance of the order of rectification stands on a different footing and the said claim is required to be granted for the reasons to be set out hereinafter.

12. In respect of assessment year 1974-1975, the claim for interest is based on the provisions of section 244(1A) of the Act and the principal debate advanced by the Counsel is in respect of the exact ambit and the applicability of the provisions of sub-section (1A) of section 244 of the Act. To attract the provisions of sub-section (1A) of section 244 of the Act, the essential ingredients are: (a) amount paid after March 31, 1975 in pursuance of the order of assessment, and (b) payment of such amount found in appeal or other proceedings under the Act to be in excess of the amount which the assessee is liable. If these two ingredients are satisfied, then the Government is liable to pay to assessee, interest on the amount so found to be in excess from the date on which the amount was paid to the date on which refund was granted. Shri Dastur submitted that the Company had paid advance tax in regard to the assessment year 1974-1975 and the regular assessment was completed on September 29, 1975 and the amount of advance tax was credited towards the tax liability under section 219 of the Act. Shri Dastur submitted that as the credit has been given after March 31, 1975, it should be held that the first ingredient that amount is paid after March 31, 1975 in pursuance of order of assessment is complied with. The second ingredient that the amount was paid by the Company was found to be in excess of the amount which the Company was liable to pay as tax by the appellate authority is also complied with. The learned Counsel, therefore, urged that the Company is entitled to interest on the excess amount found from the date, on which the amount was paid till the date of grant of refund. The submission was controverted by Shri Jetly, learned Counsel appearing on behalf of the Department, by urging that the provisions of sub-section (1) are attracted only when the payment is made in regard to the disputed liability arising in pursuance of the order of assessment passed after March 31, 1975 and not in respect of advance tax. Shri Jetley submits that the payment of advance tax is not any payment made in pursuance of order of assessment but is a voluntary payment by the assessee. It was also urged that the advance tax in respect of assessment year 1974-1975 was paid before March 31, 1975 and consequently sub-section (1A) has no application. In view of the rival contentions, the question which requires determination is whether the Government is liable to pay interest under sub-section (1A) even when it is found that the amount of advance tax paid by assessee and credited in pursuance of the regular assessment is found to be in excess of the amount the assessee is liable to pay in appeal or other proceedings.

13. The liability for payment of advance tax arises under section 207 of the Act and advance tax can be paid in three instalments. The advance tax is paid by the assessee by computing his total income of the latest previous year, the amount of capital gains and income, etc. The amount of advance tax is credited to the liability of payment of tax arising under the regular assessment under section 219 of the Act. The advance tax loses its character or identity on completion of regular assessment and the amount is credited towards tax liability. Even in cases where the advance tax is paid prior to March 31, 1975, if the regular assessment is completed after March 31, 1975, then the advance tax is credited towards the liability of payment of tax under section 219 only on the date of the passing of the order of assessment. It is not possible to accede to the submission of Shri Jetly that sub-section (1A) of section 244 does not take in its sweep the amount of advance tax paid and which was credited under section 219 but which credit was found to be in excess of the Lability of the assessee by the appellate authority. We are unable to make any distinction between the amounts paid after March 31, 1975 in pursuance of the order of assessment and amount credited under section 219 after March 31, 1975 in pursuance of the order of assessment. Shri Jetly in support of his submission referred to the provisions of sub-section (5) of section 139 of the Act and urged that the interpretation suggested by the Company in regard to the application of sub-section (1A) of section 244 of the Act may lead to anamolous results. We are unable to find any merit in the submission. In our judgment, there is no ambiguity whatsoever in regard to the construction of sub-section (1A) of section 244 of the Act. Reference was made by Shri Jetly to Clause 57 in the Notes to Taxation Laws (Amendment) Bill, 1973 and by which amendment sub-section (1A) was inserted. Clause 57 of the Note sets out that sub-section (1A) is inserted so as to provide that interest on refund of tax due as a result of the appeals is to be allowed from the date the disputed demand was originally paid to the date of grant of refund. Shri Jetly submitted that the expression “disputed demand” must be construed as the demand made in pursuance of the passing of the order of regular assessment and which the assessee challenged in appeal. Shri Jetly submitted that the payment of advance tax being a voluntary one, there was no occasion to dispute the said amount and, therefore, sub-section (1A) is not applicable in respect of claim for payment of interest in respect of refund of part of the advance tax paid by the assessee. We are unable to find any merit in the submission. The disputed amount is not necessarily that which the assessee is required to pay after the regular assessment but the disputed amount is that which was found as the tax liability by the order of regular assessment. The mere payment of advance tax does not mean that the assessee accepts that the entire amount of advance tax is liable to be credited as the amount payable as tax. Shri Jetley also referred to third proviso to sub-section (1) of section 244 of the Act, but we are unable to appreciate how the contents of the same proviso has any bearing on the construction of sub-section (1A). In our judgment, the plain reading of sub-section (1A) leaves no manner of doubt that the liability to pay interest under sub-section (1A) covers also the part of advance tax paid prior to March 31, 1975 but credited towards tax liability in pursuance of order of assessment passed after March 31, 1975.

14. Shri Jetley placed strong reliance upon the decision of the Full Bench of the Gujarat High Court reported in 151 I.T.R 389 (Bardolia Textile Mills v. Income-tax Officer, Circle II. Ward-E, Surat)2. The Full Bench of the Gujarat High Court held that section 244(1A) of the Act does not apply to amounts paid as advance tax because advance tax paid is not an amount paid in pursuance of the order of assessment or any penalty and such amount will have to be taken care of independent of section 244(1A). The Full Bench of Gujarat High Court arrived at the conclusion after dis-agreeing with the decision of the Full Bench of this Court reported in 146 I.T.R 452, Commissioner Of Income-Tax, Bombay City-Iv v. Carona Sahu Co. Ltd., and holding that interest payable under section 214(1) is not up to the date of first assessment but up to the date of revised assessment. The Full Bench held that the expression “regular assessment” under section 214(1) must be construed as the date of final assessment or the revised assessment made in pursuance of the orders of the appellate authorities, and the Department is liable to pay interest on the excess amount found in the final or revised assessment. In view of that conclusion, the Full Bench of the Gujarat High Court held that section 214(1) and section 244(1A) operate in different fields. As we are bound by the Full Bench decision of our High Court and the assessee is not entitled to interest under section 214(1) of the Act beyond the date of first assessment, the assessee cannot be deprived of seeking interest in respect of the amount paid as advance tax by denying benefit of the provisions of section 244(1A) of the Act. The decision of the Full Bench proceeds to conclude that section 244(1A) of the Act has no application to amounts paid as advance tax only because the Full Bench holds that interest is payable under section 214(1) of the Act not up to the first assessment but up to the date of revised assessment. In our judgment, the Gujarat High Court decision does not help the claim of Shri Jetly. Reference was also made to the decision of Kerala High Court reported in 186 I.T.R 97 (K.A Karim and Sons v. Commissioner of Income-tax)3, but this decision of the Single Judge is of no assistance because the question which arose was in a different context and the observations made by the Single Judge has no application to the controversy in the present case. On the other hand, the decision relied upon by Shri Dastur reported in 178 I.T.R 529 (Commissioner of Income-tax v. Leader Engineering Works)4, is appropriate. The Punjab High Court held that advance tax paid lost its identity the moment it was adjusted towards the tax liability created under the regular assessment and took the shape of payment of tax in pursuance of the order of assessment. We are in respectful agreement with the view taken by the Division Bench of Punjab High Court. In the decision reported in 31 I.T.R 698 (Sarangpur Cotton Manufacturing Co. Ltd. v. Commissioner of Income-tax, Bombay North)5, Chief Justice Chagla speaking for the Bench observed that the liability to pay arises once the order of assessment is made and that liability would cover not only the advance tax already paid but any additional amount that might have to be paid by the assessee. In other words, the learned Chief Justice held that the advance tax loses its character and is credited towards the liability arising out of the order of assessment. The Full Bench of the Kerala High Court in the decision reported in 155 I.T.R 548 (Commissioner of Income-tax v. G.B Transports, Guruvayur)6, observed that once an order under section 143 of the Act is passed, then the amount paid as advance tax changes the character as advance tax and partakes the character of tax paid as per demand. It was observed that what is credited is treated as tax paid and in subsequent assessment order as a result of modification in appeal, the Income-tax Officer determines the sum payable by the assessee or refundable to him only with reference to the amount of tax collected or treated as paid and not with reference to the amount of advance tax which has already adjusted or refunded. In our judgment, the contention of Shri Dastur as regards applicability of sub-section (1A) of section 244 of the Act to the amount of advance tax paid is well supported by the decision of the Punjab and Kerala High Courts and with which we respectfully agree.

15. The respondent No. 1, therefore, was clearly in error in denying relief to the Company under section 244(1A) in respect of assessment year 1974-1975 and in respect of tax paid in pursuance of rectification order for assessment year 1973-1974 and the Company is entitled to the interest in respect of these two claims.

16. Accordingly, petition partly succeeds and the Department is directed to pay interest to the Company on amount of refund of tax made in regard to the giving effect to the appellate order in respect of rectification order for assessment year 1973-1974. The Department is also directed to pay interest on the amount of refund for assessment year 1974-1975 for the period commencing from April 1, 1974 till January 3, 1990. The Department is directed to calculate the amount of interest payable and make the payment within a period of eight weeks from today. In the circumstances of the case, there will be no order as to costs.

Order accordingly.