RAMNARAYAN CHIRANJILAL Vs. COMMISSIONER OF INCOME TAX
HIGH COURT OF ORISSA
COMMISSIONER OF INCOME TAX
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RAY, J. -
(1.) THESE cases are heard analogously and should be governed by this order. The assessee has asked us to issue a writ of mandamus to the Income -tax Tribunal to state a case on a point of law arising out of their order.
(2.) THE circumstances are that the assessee, in carrying on business, is in the habit of borrowing money for capital purposes, and under Section 10(2)(iii), he is entitled to a deduction, in computation of assessable profits or gains of business, of the amount of interest nearing about Rs. 11,000 and odd was paid for the respective assessment years to one Ghanashyam Das. This Ghanashyam Das, creditor, is a resident of Nayagarh State which was outside 'British India' at the time of assessment. For the purpose of this case, he should be considered to be a non -resident. The proviso to Section 10(2)(iii) provides for exception to such deduction. It says that no allowance (for the interest paid) shall be made under this clause in any case for any interest chargeable under this Act which is payable without British India except (i) interest on which tax has been paid, or (ii) from which tax has been deducted under Section 18, or (iii) in respect of which there is an agent in British India who may be assessed under Section 43, or (iv) in the case of a firm, for any interest paid to a partner of the firm. Mr. Mohanty, the learned counsel for the petitioner, in fact, relies upon exceptions upon exceptions, and in this comexion he relies upon the third exceptions, namely, that there is an agent in British India who may be assessed under Section 43. It is conceded by him that he cannot avail of the other exceptions, referred to above. With regard to this, he urges, relying upon a Bombay decision, reported in Maharaja of Patiala v. Commissioner of Income -tax (Central), Bombay, that a case, where the principal himself can be assessed, as he was assessed in the aforesaid reported case, is as good as a case in which there is an agent in British India who may be assessed under Section 43. The Legislature, however, has chosen to make a distinction that mere existence of an agent is sufficient to bring the case within the exception while assessability of the principal under Section 42 of the Act is not enough for the purpose. It is only when the principal or anybody on his behalf in respect of the very item of interest received by him is assessed to income -tax, that the debtors business has to be exempted from being assessed again in respect thereof. We cannot, therefore, accede to the prayer that we should ask the Tribunal to state a case.
The Tribunal have made the right observation in their order that at the time when the petitioner was being assessed, the business firm of Ghanashyam Das at Jatni had submitted the returns to the very Income -tax department, may be to the very s ame officer or to a neighbouring officer (to use their words), of their income which included this identical item of interest received from the assessee and that the Income -Tax department conce rned should have waited till Ghanashyam Das business was fully assessed. However, they have thrown a suggestion that in case Ghanashyam Das is assessed for the same it will be proper for the Income -tax department to refund the money to the assessee. We entirely concur with this view. It has been brought to our notice at the Bar that in the meantime the assessment of Ghanashyam Das has been completed and that he had been assessed for this sum as a part of his profits. If that be so, it is open to the assessee to approach the Income -tax department for a refund. We are sure that the department will not try to have double assessment on the selfsame item of money. This cannot be treated for assessment purposes as profits of the debtor as well as of the creditor. Under the circumstance, Mr. Mohantys remedy is somewhere else than in this Court. In case the Income -tax department does not perform their duty, his remedy in this Court would then be opened. Under the circumstance, we dismiss these S. J. Cases. As all these cases have been heard analogously, there will be one consolidated hearing fee for the learned Standing Counsel for the department. We assess it at two gold mohurs. We are impressed with the fact that the assessee has some yet unredressed grievance at any rate. - -
NARASIMHAM, J. - I agree.
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