1983 (11) TMI 330 - HC - Income Tax

Summary

Issues:
1. Interpretation of the first proviso to s. 32(1)(ii) of the Income Tax Act regarding deduction of machinery costs.
2. Appealability of the levy of interest under s. 217 of the Income Tax Act.

Analysis:

Issue 1: Interpretation of the first proviso to s. 32(1)(ii) of the Income Tax Act regarding deduction of machinery costs:
The case involved a dispute over whether the entire sum spent on types used for composing newspapers should be allowed as a deduction under the first proviso to s. 32(1)(ii) of the Income Tax Act. The assessee argued that since the daily purchase of types did not exceed &8377; 750, the entire cost should be deductible. However, the Revenue contended that the limit should be based on purchases for the whole year, not daily purchases. The Tribunal ruled in favor of the assessee, allowing the deduction based on daily purchases. The High Court disagreed with this interpretation, stating that the proviso should not be applied based on daily purchases but should consider purchases made throughout the year. The court emphasized that the proviso does not specify a time frame for purchases and should be uniformly applied to all individuals, irrespective of the periodicity of their purchases. Therefore, the court held against the assessee on this issue.

Issue 2: Appealability of the levy of interest under s. 217 of the Income Tax Act:
The second question addressed whether the assessee could appeal against the levy of interest under s. 217 of the Income Tax Act. The High Court referred to previous judgments and held that an appeal against the levy of interest under s. 217 is maintainable if filed within the relevant assessment appeal. The court cited precedents where it was established that the levy of interest could be challenged in an appeal against the assessment itself. Therefore, the court answered this question in favor of the assessee, allowing them to challenge the levy of interest under s. 217 in the ongoing proceedings.

In conclusion, the High Court ruled against the assessee regarding the interpretation of the first proviso to s. 32(1)(ii) of the Income Tax Act but in favor of the assessee on the appealability of the levy of interest under s. 217.