2007 (1) TMI 70 - HC - Income Tax

Question arises (i) Whether all business tours undertaken by employee during the PY consider for admissible expenditure under rule 6D of ITR,1962 (ii) Whether interest calculated and sent with demand notice is part of the assessment - Held (i) favour of assessee (ii) favour of revenue

Summary

Issues:
1. Interpretation of business tour expenditure under Rule 6D for determining admissibility.
2. Charging of interest under Section 215 of the Income Tax Act without proper direction in the assessment order.

Issue 1 - Interpretation of business tour expenditure under Rule 6D:
The High Court addressed the question of whether all business tours undertaken by an employee during the previous year should be considered together for determining the admissibility of expenditure under Rule 6D of the Income Tax Rules, 1961. The Court noted that the principle of consistency should be maintained, highlighting that the revenue cannot raise an issue in isolation for one year or one assessee while accepting similar findings for other years and assessees. Citing a Supreme Court judgment, the Court ruled in favor of the assessee, emphasizing the importance of consistency in such matters.

Issue 2 - Charging of interest under Section 215:
Regarding the charging of interest under Section 215 of the Income Tax Act, the Court examined whether the Tribunal was correct in deleting the interest charged. The revenue contended that the interest was wrongly deleted, while the assessee argued that the interest issue had become academic due to the final assessment showing an excess of advance tax paid. The Court referred to a previous judgment and held that the calculation of interest is part of the assessment process and valid. Despite ruling in favor of the revenue on this issue, the Court left it open for the Tribunal to consider any subsequent developments related to the assessee's plea.

In conclusion, the High Court disposed of the reference by answering the first question in favor of the assessee and the second question in favor of the revenue, while allowing for further consideration of the interest issue by the Tribunal based on subsequent developments.