AJIT K.SENGUPTA, J. - (1.) IN this reference under s. 256(2) of the IT Act, 1961, for the asst. yr. 1984-85, the following question of law has been referred to this Court : "Whether, on the facts and in the circumstances of the case, the Tribunal was justified in law in holding that interest under s. 217 of the IT Act, 1961, is not exigible in this case?"
(2.) THE brief facts of the case are that the assessee, Shree Sitaram Public Charitable Trust, is a public charitable trust. The Assessing Officer denied the benefit of s. 11 of the Act to the assessee holding that the assessee held shares in M/s K.C. Thapar and Brothers and Hindusthan General Electric Corporation. Besides shares of the aforesaid two companies, the assessee also advanced loan to M/s K.C. Thapar and Bros. Ltd. The Assessing Officer held that the aforesaid investments were in violation of s. 13(1)(d)/11(5) of the Act as the assessee continued the investment after 30th Nov., 1983, and the claim for exemption under s. 11 of the Act was rejected, and consequentially, interest under s. 217 was charged for violation of the provisions of s. 209A(1) of the Act. The assessee appealed before the CIT(A) against the levy of interest under s. 217 of the Act. Before the CIT(A), it was submitted on behalf of the assessee that, as per the provisions of s. 209A (1) of the Act, the assessee was required to file a statement of advance-tax payable by it on or before 15th June, 1983, since the assessee was an assessee regularly assessed to tax in the past. But the assessee was enjoying exemption under s. 11. Therefore, as on 15th June, 1983, the latest income returned and assessed was "nil". There was no liability to pay advance tax on the part of the assessee as on 15th June, 1983. There was, therefore, no obligation to file a statement of advance-tax under the provisions of s. 209A(1) of the Act. Accordingly, no statement was filed by the assessee for the asst. yr. 1984-85. In view of the above facts, charging of interest under s. 217 of the Act was not justified. The CIT(A), relying on the decision of the Bombay High Court in the case of Patel Aluminium Pvt. Ltd. vs. K.M. Tawadis, ITO (1986) 51 CTR (Bom) 322 : (1987) 165 ITR 99 (Bom), deleted the interest levied under s. 217 of the Act.
(3.) FEELING aggrieved, the Department came up in appeal before the Tribunal. The Tribunal considered the submissions of the parties. The Tribunal found that the assessee being "an only assessee" and the latest completed assessment having resulted in the assessee's taxable income being computed at nil by reason of the operation of s. 11, the assessee was not obligated to file a statement under s. 209A(1). That section incorporates a twin requirement, namely, filing of a statement and paying of advance tax in accordance with the statement. The focus is naturally on the payment of advance tax. The fact that, in the assessment for the asst. yr. 1984-85, the assessee was initially denied the benefit of exemption under s. 11 is neither here nor there. This is because at the time when the assessee is obligated to file the statement under s. 209A(1), what needs to be looked into is whether the assessee had any taxable income in the latest completed assessment. Even if it is assumed that somehow the denial of exemption under s. 11 is a material factor, the matter does not improve because the issue relating to exemption under s. 11 is one on which there can be an honest difference of opinion between the assessee and the Department. In such circumstances, there is no question of levying interest under s. 217 of the Act. As indicated, the Tribunal has found as a fact that, in the last completed assessment, i.e., on 15th June, 1983, the latest income returned and assessed was "nil". Thus, there was no liability to pay advance-tax on the part of the assessee as on 15th June, 1983. Therefore, there was no obligation to file a statement of advance-tax under the provisions of s. 209A(1) of the Act. ;