1993 (8) TMI 30 - HC - Income Tax

Summary

Issues Involved:
1. Liability for payment of interest on provisional estate duty assessment.
2. Interpretation and application of Section 70 of the Estate Duty Act, 1953.
3. Validity of the imposition of interest before the final assessment.

Detailed Analysis:

1. Liability for Payment of Interest on Provisional Estate Duty Assessment:
The petitioner, A.N. Shamsuddin, filed an estate duty account admitting a principal value of Rs. 12,21,992 after the death of A. Noor Mohammed. A provisional assessment of Rs. 3,11,142.60 was made under Section 57 of the Estate Duty Act, 1953, with a demand notice served on March 28, 1978. The petitioner requested extensions and made partial payments but failed to meet the deadlines. The Department ultimately realized the provisional demand by August 2, 1982. Subsequently, an interest demand of Rs. 36,950 was raised by the Assistant Controller, Thanjavur, which the petitioner contested, leading to the current writ petition seeking to quash the interest demand.

2. Interpretation and Application of Section 70 of the Estate Duty Act, 1953:
The petitioner argued that the Act does not provide for automatic running of interest on estate duty leviable and that interest imposition is permissible only upon final assessment as per Section 70. The respondent contended that Section 70 allows for interest imposition at any stage, whether provisional or final, as there are no restrictive words in the section.

3. Validity of the Imposition of Interest Before the Final Assessment:
To resolve the issues, the judgment analyzed Sections 57, 58, and 70 of the Estate Duty Act. Section 57 allows for provisional assessment, with the amount payable immediately and credited towards the final assessment. Section 58 deals with the process of regular assessment. Section 70 permits the Controller to allow postponement of payment with interest not exceeding four percent or any higher interest yielded by the property, applicable to both provisional and final assessments. The court noted that the estate duty becomes due from the date of death, and the Controller has the power to make provisional assessments and demand immediate payment.

The court referenced the Division Bench decision of the Karnataka High Court in Smt. Jayakumari v. Assistant CED, which held that Section 70 applies to any estate duty payment, provisional or final, if payment is postponed. The court disagreed with the Division Bench decision of the Patna High Court in Bettiah Estate v. Union of India, which limited interest imposition to post-final assessment.

Conclusion:
The court concluded that the imposition of interest on the provisional assessment was in conformity with the statutory provisions of the Estate Duty Act. The writ petition was dismissed, and the rule nisi discharged, with no order as to costs.