COMMISSIONER OF INCOME TAX Vs. TRAUB INDIA PRIVATE LIMITED

JUDGEMENT

(1.) THIS is an application by the CIT under S. 256(2) of the IT Act, 1961, and the CIT wants us to make an order in respect of the following two questions :

(2.) WE propose to deal with question No. 2 first. Pursuant to notice issued by the ITO under S. 210 of the Act, the assessee had made diverse payments by way of advance tax on June 29, 1971, September 20, 1971, December 21, 1971, and March 17, 1972. According to counsel for the CIT, the last mentioned payment, viz., the one made on March 17, 1972, was beyond the prescribed date which was March 15, 1972. According to his submission in order to be entitled to interest under the provisions of S. 214 of the Act, the payment of advance tax must have been made in accordance with the Schedule prescribed under ss. 207 to 213 and since the Schedule has not been adhered to, but there has been a default (though only of a period of two days) the assessee would not be entitled to interest under S. 214. The question whether this is a proper reading of S. 214 is debatable. In any case, there is a clear finding by the Tribunal in para. 17 of its appellate order that the payment made by the assessee on March 17, 1972, has been accepted by the Department as payment of advance tax instalment. All the other requirements of S. 214 having been satisfied, the Tribunal held that the assessee was entitled to interest in respect of the excess of advance tax so paid by it. In view of this factual finding that the payment, though belated by two days, was accepted by the Department as payment of advance tax instalment, the conclusion that the assessee was entitled to interest does not give rise to any question of law and, accordingly, in our opinion, question No. 2 is not required to be referred to this Court.

(3.) IN Associated Cement Company's case (supra), the University of Bombay, through its Department of chemical technology, requested the assessee company for the fabrication of a small rotary experimental furnace for the Department which would enable that Department to complete an investigation of national importance. Two resolutions were subsequently passed by the directors of the assessee company permitting expenditure of the aggregate amount of Rs. 6,600 for manufacturing the'pilot kiln' and in the second resolution it was clearly indicated that it was this pilot kiln which was to be presented after manufacture to the University, Department of Chemical Technology.(see page 485 of the report) Before the High Court the counsel on behalf of the Revenue had contended that the language of S. 15B of the Indian IT Act, 1922, was clear and that it only permitted deduction of the sums (i.e., cash) paid by the assessee as donations. The Court held that such a submission was technical in the extreme and that if one were to look to the substance of the transaction, there would be no doubt that what the assessee company gave to the University of Bombay was ultimately a sum of Rs. 6,600. The Court found that the assessee had spent the amount of Rs. 6,600, fabricated the kiln and handed over the same to the University, Department of Chemical Technology. According to the Court, in substance this was equivalent to handing over Rs. 6,600 to the University which entitled the assessee to claim deduction under S. 15B. It is clear from the report (see page 486) that the Court found as a matter of fact that it was the kiln which was handed over to the University but, in the view of the Court, in substance the handing over of the kiln (after fabrication at the aggregate cost of Rs. 6,600) was equivalent to handing. over of the amount of Rs. 6,600. It is in this context that the headnote has been prepared and it, inter alia, reads as follows : "Held also, that in order that an assessee may be entitled to the rebate under S. 15B in respect of 'sums paid as donations' the donations need not be in the shape of actual cash."