1995 (11) TMI 54 - HC - Income Tax

Summary

Issues:
1. Whether the Income-tax Appellate Tribunal was justified in admitting the assessee's appeal after a revision order by the Commissioner of Income-tax.
2. Whether interest is chargeable under section 7C of the Companies (Profits) Surtax Act, 1964.

Analysis:

Issue 1:
The Revenue filed an application under section 256 of the Income-tax Act, 1961, seeking reference of questions of law to the High Court. The first question was whether the Tribunal was legally justified in admitting the assessee's appeal after a revision order by the Commissioner of Income-tax under section 17 of the Companies (Profits) Surtax Act, 1964. The High Court rejected the prayer citing that the question was covered by a Supreme Court judgment. The Court agreed with the Tribunal's finding that no reference was necessary in this regard.

Issue 2:
The second question raised was whether interest was chargeable under section 7C of the Companies (Profits) Surtax Act, 1964. The Tribunal held that the assessee's claims were legitimate and not deliberately incorrect. The Tribunal considered the nature of disallowances made by the Assessing Officer and concluded that the claims were bona fide. The Tribunal did not accept the Revenue's argument regarding the liability of paying interest under section 7C. The High Court observed that there was no authoritative pronouncement on the scope of section 7(1) of the 1964 Act. Therefore, the Tribunal was directed to refer this question to the High Court for adjudication.

In conclusion, the High Court found that while the first question did not warrant a reference, the second question regarding the chargeability of interest under section 7(1) of the Companies (Profits) Surtax Act, 1964, required further examination. The Tribunal was instructed to refer this specific question to the High Court for a legal opinion and adjudication.