1995 (3) TMI 428 - Commission - Income Tax

Summary

Issues Involved:
1. Period for which interest u/s 234B is payable in various situations.
2. Interpretation of the term "regular assessment" in the context of settlement orders.
3. Authority of the Settlement Commission to reduce or waive interest u/s 234B.
4. Legislative intent and interpretation of machinery provisions for charging interest.

Summary of Judgment:

Issue 1: Period for Interest u/s 234B
The main issue was the period up to which interest u/s 234B is payable for defaults in payment of advance tax under five specific situations. The judgment provided detailed interpretation for each situation:
- Situation (i): Interest is chargeable from 1st April next following the financial year in which the advance tax was payable to the date of determination of total income u/s 143(1).
- Situation (ii): Interest is chargeable up to the date of regular assessment u/s 143(3) or 144.
- Situation (iii): Interest is chargeable up to the date of furnishing the return of total income.
- Situation (iv): Interest is chargeable up to the date of regular assessment u/s 143(3) or 144.
- Situation (v): Interest is chargeable from the day following the date of determination of total income u/s 143(1) or regular assessment and ending on the date of reassessment or recomputation u/s 147.

Issue 2: Interpretation of "Regular Assessment"
The judgment clarified that the term "regular assessment" does not include the order of the Settlement Commission u/s 245D(4). The Commission's order is distinct and different from a regular assessment and cannot be treated as such for the purpose of charging interest u/s 234B.

Issue 3: Authority to Reduce or Waive Interest
The judgment upheld the earlier decision in Ashwani Kumar Aggarwal's case, stating that the Settlement Commission does not have the power to reduce or waive interest u/s 234B. The Commission can only modify the amount of interest based on the revised tax liability as determined in the settlement order.

Issue 4: Legislative Intent and Machinery Provisions
The judgment emphasized that the machinery provisions for charging interest should be interpreted to make the statutory scheme workable. The period for charging interest is a machinery provision and should be interpreted to ensure that the legislative intent of compensating the state for the delay in tax payment is fulfilled.

Conclusion:
The period for charging interest u/s 234B is determined based on the specific situations outlined in the judgment. The Settlement Commission's order cannot be treated as a regular assessment for the purpose of charging interest. The Commission does not have the authority to reduce or waive interest, and the machinery provisions should be interpreted to make the statutory scheme effective. The miscellaneous applications were remanded to the Additional Bench for appropriate orders in line with the principles set out in the judgment.