1992 (9) TMI 63 - HC - Income Tax

Summary

Issues:
Calculation of interest under section 215 of the Income-tax Act, 1961 up to the date of assessment under section 143(1) or the assessment made under section 143(3) of the Act.

Analysis:
The case involved a reference made at the instance of the Revenue regarding the computation of interest under section 215 of the Income-tax Act, 1961. The original assessment of the assessee was completed under section 143(1) on December 26, 1979, and a fresh assessment was subsequently completed under section 143(3) on July 17, 1982. The issue revolved around whether interest under section 215 should be calculated up to the date of the assessment under section 143(1) or the assessment under section 143(3) of the Act.

The Tribunal held that an assessment under section 143(1) should also be considered a regular assessment, and therefore directed the interest to be recomputed up to the date of the first assessment made under section 143(1), i.e., December 26, 1979, rather than up to June 30, 1982. However, the High Court disagreed with this interpretation.

The High Court analyzed the provisions of section 143 of the Act, which distinguish between assessments under sub-section (1) and sub-section (3). It noted that when an assessee objects to the assessment under section 143(1), a fresh assessment is required to be made under section 143(3). The Court emphasized that the fresh assessment under section 143(3) is the relevant regular assessment for the purpose of calculating interest under section 215.

The Court further explained that the assessed tax for the purpose of calculating interest under section 215 should be based on the regular assessment made under section 143(3) on July 17, 1982, rather than the initial assessment under section 143(1). It highlighted the need for a harmonious construction of different sections of the statute to achieve the objective of charging interest for short payment of advance tax.

Ultimately, the High Court held that interest under section 215 should be computed up to the date of the assessment made under section 143(3) and not up to the date of the assessment made under section 143(1). The Court ruled in favor of the Revenue, emphasizing the importance of the fresh assessment under section 143(3) in determining the assessed tax for the calculation of interest under section 215.

In conclusion, the High Court provided a detailed analysis of the relevant provisions of the Income-tax Act, highlighting the significance of the regular assessment under section 143(3) for the computation of interest under section 215. The judgment clarified the correct interpretation of the law in this context and resolved the issue in favor of the Revenue.