Sen, J. - (1.) THE following two questions of law have been referred to this Court by the Tribunal under s. 256(1) of the IT Act. 1961 ('the Act'): "1. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in directing that Rs.1,80,621 should be deducted in computation of interest leivable under ss. 139(8) and 215 of the IT Act. 1961? 2. Whether, on the facts and in the circumstances of the case, the Tribunal was correct in deciding the issue regarding chargeability of interest under s. 139 and s. 215 when the assessee's prayer before the AAC was not denial of liability but error in computation in charging interest under ss. 139 and 215 of the IT Act?"
(2.) THE assessment year involved in this reference is the asst. yr. 1981-82, for which the relevant period of accounting is the financial year ending on 31st March, 1981. The facts found by the Tribunal, as narrated in the statement of case, are as under: The assessee is a non-resident company. The assessee filed a return of income for the asst. yr. 1981-82 on 10th Feb., 1982 which was obviously not within the prescribed period. The ITO, therefore, levied interest under s. 139(8) of the Act. The ITO while making the assessment, found that a sum of Rs.1.94,168 was deposited by way of advance tax on 25th March, 1981. Since the amount deposited was beyond the prescribed period, the ITO treated it as 'tendered'. The ITO, thus, found that the assessee did not deposit the advance tax so required in law and he charged interest under ss. 215 and 139(8) without giving credit of the aforesaid amount.
(3.) AGAINST the order of the ITO, the assessee preferred an appeal before the CIT (A). The CIT (A) followed the Calcutta High Court decision in the case of CIT vs. Karam Chand Thapar and Bros.(P) Ltd. (1979) 119 ITR 751 (Cal) and held the appeal as incompetent. On further appeal, the Tribunal observed as follows: "No doubt, in the case of Karam Chand Thapar and Bros.(P) Ltd., the High Court had observed that where the assessee had only partially denied his liability to pay interest his appeal objecting to the imposition of interest would be incompetent and he could agitate his grievance over the computation or calculation or method of imposition and ask for reduction or waiver of the interest in the manner prescribed by r. 40 of the IT Rules, 1962." The Tribunal, however, held that since the assessee had not only challenged the levy of interest but had also challenged the quantum of tax payable by it, the appeal was competent. Relying on the decision in Santha S.Shenoy vs. Union of India (1982) 29 CTR (Ker) 127 : (1982) 135 ITR 39 (Ker), the Tribunal directed the ITO to give credit of Rs.1,80,621 while calculating interest under ss. 139(8) and 215. It has to be seen that this was not a case of appeal against interest simpliciter but other points were involved. The levy of interest was only one of the points taken incidentally to the main points taken in the appeal. In that view of the matter, the Tribunal was right in entertaining the appeal and in directing that Rs. 1,80,621 should be deducted in computation of interest leviable under ss. 139(8) and 215. The second question is concluded by the judgment of this Court in the case of CIT vs. Surajbhan Mahawar (IT Ref. Nos. 379 and 406 of 1979, dt. 3rd March, 1989). On behalf of the Revenue reliance has been placed in the case of CIT vs. Ajoy Paper Mills Ltd. (1990) 181 ITR 454 (Cal). In our view this case, far from coming to the aid of the Revenue, goes against the argument made on behalf of the Revenue. Accordingly, both the questions are answered in the affirmative and in favour of the assessee. There will be no order as to costs.;