Calcutta High Court
C.I.T.Wb-Vii Cal vs L.I.C.Of India Cal on 10 July, 2014
Author: Girish Chandra Gupta
Bench: Girish Chandra Gupta
ORDER SHEET
I.T.A. No. 86 of 2000
IN THE HIGH COURT AT CALCUTTA
Special Jurisdiction (Income Tax)
ORIGINAL SIDE
C.I.T.WB-VII CAL.
Versus
L.I.C.OF INDIA CAL.
BEFORE:
The Hon'ble JUSTICE GIRISH CHANDRA GUPTA
The Hon'ble JUSTICE DR. MRINAL KANTI CHAUDHURI Date : 10th July, 2014.
Appearance :
Mr. M. P. Agarwal, Adv.
... for the appellant Mr. Atish Dipankar Ray, Adv.
Ms. Sanjukta Ray, Adv.
The Court : This appeal is directed against the judgement and order dated 7th October, 1999 by which the learned Tribunal agreed with the appellate authority that the judgement of this Court in the case of All India Insurance Employees Association and others vs. Union of India (1989) 176 ITR 225 was in operation when there was an omission on the part of the assessee to deduct tax upon city compensatory allowance. The learned commissioner of appeal took the view that since the law declared by the jurisdictional Court was operative, the assessee cannot be said to have acted illegally in not deducting tax at source. The learned Tribunal agreed with the aforesaid views of the commissioner of appeal and dismissed the appeal preferred by the revenue. The revenue came up before this Court.
Mr. Agarwal, learned advocate appearing for the revenue submitted that the assessee had in fact admitted the fault on its part to deduct TDS and on the basis of such admission has also deposited the amount of TDS which should have been deducted by way of TDS. The dispute was raised only with regard to interest.
Mr. Agarwal, submitted that interest becomes payable automatically on a failure to pay the dues on the due date. He in support of his submission relied on a judgement of the Supreme Court in the case of C.I.T. vs. Prem Nath Motors (Pvt.)Ltd. reported in 2002(253) I.T.R. 705 wherein the apex Court opined as follows;-
"Interest" is a consideration paid either for use of money or for forbearance in demanding it, after it has fallen due. It is a compensation allowed by law or fixed by parties or permitted by custom or usage for use of money belonging to another or for the delay in paying the money after it has become payable. It can be said to be the cost of using credit or funds of another. The liability for payment of interest at the rate stipulated accrues automatically on a failure to pay the amount of tax by the due date. This is so because such a provision is not a claim for any tax, but is a procedural matter providing machinery for recovery of tax which is compensatory in nature (see Karimtharuvi Tea Estate Ltd. v. State of Kerala[1996] 60 ITR 262 (SC);CST v. Qureshi Crucible Centre [1993] 89 SCT 467 (SC) and Prahlad Rai v. STO [1992] 84 STC 375 (SC)). Liability to pay interest arises by operation of law, being automatic. Looking at the nature of levy, it is clear that it is compensatory in character and not in the nature of penalty. It is seen that there are several provisions where the Legislature has made a distinction between interest payable and penalty imposable. The ultimate liability for tax being not there does not dilute the requirements for the non- compliance with which interest is levied under section 201(1A) Mr. Agarwal, submitted that this fact was not taken into consideration by the learned Tribunal.
We have not been impressed by the submission advanced by Mr. Agarwal, because the income tax authorities are guided by the provisions of the Act. The Act does not require any amount to be claimed from the assessee merely because he may have admitted the claim which was not contemplated by the statute. The principle is that consent cannot confer jurisdiction. Merely on the basis of consent of the assessee, the claim could not have been lawfully raised. Consent cannot give jurisdiction to the authorities to realise tax which is not payable.
Mr. Agarwal submitted that the law was subsequently amended with retrospective effect. The retrospective effect can be given to those cases where the tax are yet to be deducted in an appropriate case but not to a case like this.
We are as such of the opinion that the contention raised by the revenue cannot be upheld. The appeal is, therefore, dismissed.
(GIRISH CHANDRA GUPTA, J.) (DR. MRINAL KANTI CHAUDHURI, J.) sbi