Indian Kanoon - Search engine for Indian Law

3. Turning to the first question, a few facts giving rise to the question may be stated. The question relates to the assessment year 1958-59, the relevant previous year being the year ended on 31st March, 1958. The assessee M/s. Daimler Benz A. G., West Germany is a non-resident company having two sources of income : (a) the share of profit and royalty receivable from Telco under an agreement dated October 3, 1955, and (b) dividend on shares of Telco held by it. In the assessment done under section 23(3) of the Act, the Income-tax Officer assessed the total income of the assessee at Rs. 15,11,303 which was comprised of net income from the business (Rs. 10,09,157) and dividend income (Rs. 5,02,146). After granting certain reliefs under section 15C(4) in respect of dividends (with which we are not concerned while dealing with the question under reference) the Income-tax Officer charged penal interest under section 18A(8) (wrongly mentioned as section 18A(6)) and also directed that action under section 18A(9)(b) will be taken separately for the failure of the assessee to file under section 18A(3) an estimate of income and deposit taxes payable on the basis of such estimate. Against the order charging penal interest under section 18A(8) the assessee preferred an appeal to the Appellate Assistant Commissioner but the Appellate Assistant Commissioner refused to entertain the appeal on the ground that no appeal was provided in the Act against the levy of penal interest. The assessee carried the matter in further appeal to the Appellate Tribunal and the Tribunal relying upon the decision of this court in Mathuradas B. Mohta v. Commissioner of Income-tax [1965] 56 ITR 269 (Bom) took the view that the position taken up by the Appellate Assistant Commissioner was untenable. The Tribunal held that the ratio of that decision was that the amount of interest determined under section 18A(8) was a tax within the meaning of the Act, that the assessee would have a right to file an appeal to the Appellate Assistant Commissioner against an order under section 18A(8) by virtue of the clause "denying his liability to be assessed under this Act" occurring in section 30 and that though the decision related to interest charged under section 18A(8) the ration thereof was quite wide to cover a case under section 18A(6) (treating the Income-tax Officer's order as one under sub-section (6) of section 18(A). The Tribunal accordingly set aside the order of the Appellate Assistant Commissioner and directed him to dispose of the contention of the assessee on merits de novo. At the instance of the Commissioner of Income-tax the first question set out at the commencement of the judgment has been referred to this court for its opinion.