Search Results Page
Search Results
1 - 10 of 14 (0.51 seconds)State Bank Of Travancore vs Commissioner Of Income Tax, Kerala on 8 January, 1986
The other judgment on which reliance was placed by the
Department was a judgment of a Bench of two judges of this
Court in Kerala Financial Corportion V. Commissioner of
Income-Tax (1994 (4) SCC 375) where this Court, following
the majority view in State Bank of Travancore v.
Commissioner of Income-Tax (Supra) held that interest which
had accrued on a "sticky" advance has to be treated as
income of the assessee and taxable as such. It is said that
ultimately, if the advance takes the shape of a bad debt,
refund of the tax paid on the interest would become due and
the same can be claimed by the assessee in accordance with
law. For reasons set out above, we are not in agreement
with the said judgment. The relevant circulars of C.B.D.T.
cannot be ignored. The question is not whether a circular
can override or detract from the provisions of the Act; the
question is whether the circular seeks to mitigate the
rigour of a particular section for the benefit of the
assessee in certain specified circumstances. So long as
such a circular is in force it would be binding on the
departmental authorities in view of the provisions of
Section 119 to ensure a uniform and proper administration
and application of the Income-tax Act.
Section 12 in The Income Tax Act, 1961 [Entire Act]
Section 145 in The Income Tax Act, 1961 [Entire Act]
Navnitlal C. Javeri vs K. K. Sen, Appellate Assistant ... on 28 October, 1964
This would be
contrary to the ratio laid down by the Bench of five judges
in Navnitlal C. Javeri v. K.K. Sen (Supra).
K.P. Varghese vs The Income Tax Officer,Ernakulam, And ... on 4 September, 1981
The Court said that the earlier circulars
being executive in character cannot alter the provisions of
the Act. These were in the nature of concessions which
could always be prospectively withdrawn. The Court also
observed that the circulars cannot detract from the Act.
The decision of the Constitution Bench of this Court in
Navnitlal C. Javeri v. K.K. Sen (Supra), or the
subsequent decision in K.P. Varghese v. Income Tax Officer
(supra) also do not appear to have been pointed out to the
Court. Since the later circular of 9.10.1984 was not
pointed out to the Court, the Court naturally proceeded on
the assumption that the benefit granted under the earlier
circular was no longer available to the assessee and those
circulars could not be resorted to for the purpose of
overcoming the provisions of the Act. Interestingly, the
concurring judgment of the second judge has not dealt with
this question at all but has decided the matter on the basis
of other provisions of law.
The Income Tax Act, 1961
Keshavji Ravji & Co. Etc. Etc vs Commissioner Of Income Tax on 5 February, 1990
In fact,
State Bank of Travancore v. Commissioner of Income- Tax
(Supra) has already been distinguished in the case of
Keshavji Ravji and Co. v. Commissioner of Income-Tax
(Supra) by a Bench of three judges in a similar fashion. It
is held only as laying down that a circular cannot alter the
provisions of the Act. It being in the nature of a
concession, could always be prospectively withdrawn. In the
present case, the circulars which have been in force are
meant to ensure that while assessing the income accrued by
way of interest on a "sticky" loan, the notional interest
which is transferred to a suspense account pertaining to
doubtful loans would not be included in the income of the
assessee, if for three years such interest is not actually
received. The very fact that the assessee, although
generally using a mercantile system of accounting, keeps
such interest amounts in a suspense account and does not
bring these amounts to the profit and loss account, goes to
show that the assessee is following a mixed system of
accounting by which such interest is included in its income
only when it is actually received. Looking to the method of
accounting so adopted by the assessee in such cases, the
circulars which have been issued are consistent with the
provisions of Section 145 and are meant to ensure that
assessees of the kind specified who have to account for all
such amounts of interest on doubtful loans are uniformly
given the benefit under the circular and such interest
amounts are not included in the income of the assessee until
actually received if the conditions of the circular are
satisfied. The circular of 9.10.1984 also serves another
practical purpose of laying down a uniform test for the
assessing authority to decide whether the interest income
which is transferred to the suspense account is, in fact,
arising in respect of a doubtful or "sticky" loan. This is
done by providing that non-receipt of interest for the first
three years will not be treated as interest on a doubtful
loan. But if after three years the payment of interest is
not received, from the fourth year onwards it will be
treated as interest on a doubtful loan and will be added to
the income only when it is actually received.
Section 2 in The Income Tax Act, 1961 [Entire Act]
Kerala Financial Corpn vs Cit on 12 May, 1994
The other judgment on which reliance was placed by the
Department was a judgment of a Bench of two judges of this
Court in Kerala Financial Corportion V. Commissioner of
Income-Tax (1994 (4) SCC 375) where this Court, following
the majority view in State Bank of Travancore v.
Commissioner of Income-Tax (Supra) held that interest which
had accrued on a "sticky" advance has to be treated as
income of the assessee and taxable as such. It is said that
ultimately, if the advance takes the shape of a bad debt,
refund of the tax paid on the interest would become due and
the same can be claimed by the assessee in accordance with
law. For reasons set out above, we are not in agreement
with the said judgment. The relevant circulars of C.B.D.T.
cannot be ignored. The question is not whether a circular
can override or detract from the provisions of the Act; the
question is whether the circular seeks to mitigate the
rigour of a particular section for the benefit of the
assessee in certain specified circumstances. So long as
such a circular is in force it would be binding on the
departmental authorities in view of the provisions of
Section 119 to ensure a uniform and proper administration
and application of the Income-tax Act.