INSPECTING ASSISTANT COMMISSIONER Vs. E MERCK I P LTD
LAWS(IT)-1989-9-6
INCOME TAX APPELLATE TRIBUNAL
Decided on September 29,1989

Appellant
VERSUS
Respondents

JUDGEMENT

R.P. Garg, Accountant Member - (1.)THIS is an appeal by the revenue against the order of the CIT (A) for the assessment year 1976-77.
(2.)The only dispute in this appeal is concerning the levy of interest under Section 215 of the Income-tax Act, 1961. The following two grounds have been raised in this appeal:
(1) On the facts and in the circumstances of the case and in law, the learned CIT(A) erred in entertaining appeal against the ITO's order levying interest Under Section 215 when there are no provisions in the I.T. Act for the same. (2) Without prejudice to the above, the learned CIT(A) erred in deleting the interest of Rs. 7,33,346 levied Under Section 215.

An estimate of advance tax was filed at 'nil' on 15-12-1975. The assessment was, however, completed on a total income of Rs. 28,88,820. The tax thereon was worked out by the ITO at Rs. 18,19,956. As no advance tax was paid, the ITO had levied an interest under Section 215 at Rs. 7,33,346.

(3.)IN an appeal filed against the order of assessment, the assessee, inter alia, challenged the levy of interest as well. The assessee, at the outset, denied its liability altogether to pay any interest and, even on merits, it was submitted that the profits and gains of the business shown at Rs. 30 lacs were subject to brought forward deficiency under Section 80J at Rs. 60,28,000 and therefore, there was no positive income. It was contended that it was only after the amendment was brought about by the Finance (No. 2) Act, 1980 to the provisions of Section 80J, the assessee's claim under Section 80J was denied and, therefore, the assessee should not be penalised for the levy of interest. The CIT(A) found that the relief quantified for the assessment year 1975-76 was in accordance with the decision of the Calcutta High Court in Century Enka which came to Rs. 30,47,373 besides the claim for the year under consideration at Rs. 32,19,640. As against the assessee's income for the year under consideration before adjustment under Section 80J was Rs. 31,25,153. He, therefore, observed that if such relief, as computed in accordance with the Calcutta High Court decision was set off against the current year's business income, there would not have been any positive income on which the assessee would have been liable to pay any advance-tax. According to him, at the relevant time, the provisions of Section 80J were neither amended nor the decision of the Supreme Court upholding the validity of Rule 19A of the INcome-tax Rules, 1962, was available. If the assessee had determined the relief in accordance with the Calcutta High Court decision, the assessee could not be found fault with. The estimate filed by the assessee, therefore, could not be considered to be an under-estimate. The levy of interest, in his opinion, was bad in law. As regards the maintainability of the appeal, he observed that the statute did not provide for an appeal against the imposition of any such interest, but, however, if the assessee denies its liability to pay interest, appeal can be entertained and it was for this reason that the appeal was adjudicated by him.


Click here to view full judgement.
Copyright © Regent Computronics Pvt.Ltd.