Calcutta High Court
Commissioner Of Income-Tax vs Koomsong Tea Co. Ltd. on 2 July, 1985
Equivalent citations: [1985]156ITR384(CAL)
Author: G.N. Ray
Bench: G.N. Ray
JUDGMENT Dipak Kumar Sen, J.
1. M/s. Koomsong Tea Co. Ltd., the assessee, was assessed to income-lax for the assessment year 1974-75, the accounting year ending on December 31, 1973. The assessee is a non-resident company whose accounts are maintained outside India, By reason of non- receipt of necessary particulars, in time, the assessee applied for extension of time for filing its return. Time to file its return was extended up to December 31, 1974. The assessee, in fact, filed its return on February 27, 1975.
2. On March 14, 1974, the assessee had filed an estimate of its income and made a voluntary payment of Rs. 3 lakhs on account of advance tax, though there was no demand under Section 210 of the I.T. Act, 1961, from the ITO for such payment.
3. In the assessment, however, the ITO did not treat the said Rs. 3 lakhs as an advance payment of tax and charged interest under Section 139 withholding from the assessee the benefit of the said payment.
4. On appeal by the assessee, the AAC held that the ITO erred in not taking into account the said advance payment and in charging interest on the entire amount of tax determined for the period of delay in filing the return. He directed the ITO to charge interest on the amount which remained payable by the assessee after deducting the amount paid in advance.
5. Being aggrieved by the order of the AAC, the Revenue went up on appeal before the Income-tax Appellate Tribunal. It was found by the Tribunal that the assessee had been given credit for the amount paid in advance as tax and held that the assessee was entitled to the deduction of the said amount for the purpose of computation of interest. The order of the AAC was upheld.
6. On an application of the Revenue under Section 256(1) of the Act, the following question has been referred, as a question of law stated to have arisen out of the order of the Tribunal, for the opinion of this court;
"Whether, on the facts and in the circumstances of the case, and on a correct interpretation of Section 139(8) of the Income-tax Act, 1961; the Tribunal was correct in law in holding that in computing the interest payable under the above section, the sum of Rs. 3 lakhs paid by the assessee voluntarily should be deducted from the amount of tax payable on the total income of the assessee as determined on regular assessment ?"
7. Sections 207, 208, 209 and 211 impose liability on an assessee to pay income-tax in advance where his income exceeds the minimum prescribed under Section 208. In the case before us, the assessee, in the absence of any notice under Section 210, itself made an estimate of its income and paid a part of the tax in advance. The said amount has been treated and credited as tax paid.
8. On the above facts, we do not find any justification for the hyper-technical stand taken by the ITO. Interest should not have been charged on an amount paid on account of advance tax on estimate and credited as such.
9. The question referred is answered in the affirmative and in favour of the assessee. The assessee is allowed the costs of this reference, G.N. Ray, J.
10. I agree.