1986 (3) TMI 42 - HC - Income Tax

Summary

Issues Involved:
1. Entitlement to Refund of Advance Tax and Interest.
2. Interpretation and Application of Section 43B of the Income-tax Act.
3. Obligation of Income-tax Officer to Make Provisional Assessment u/s 141A.

Summary:

1. Entitlement to Refund of Advance Tax and Interest:
The petitioner, a public limited company and an assessee under the Income-tax Act, 1961, sought a refund of Rs. 74,79,006 with interest at 15% per annum from April 1, 1984. The petitioner had paid advance tax and tax deducted at source totaling Rs. 74,79,006 for the accounting year ending December 31, 1983. The petitioner filed a return u/s 139(1) showing a loss of Rs. 75,84,532 for the assessment year 1984-85 and requested a refund u/s 141A. The Income-tax Officer did not respond, prompting the petitioner to escalate the matter to higher authorities.

2. Interpretation and Application of Section 43B of the Income-tax Act:
The petitioner argued that customs duty and excise duty paid in 1983 should be deductible for the assessment year 1984-85, despite the goods being part of the closing stock. The respondent contended that allowing such deductions would result in double deductions, contrary to section 43B, which mandates that deductions are allowable only in the year of actual payment. The court clarified that section 43B, with its non-obstante clause, overrides other provisions and allows deductions in the year of actual payment, irrespective of the accrual of liability. The court found that the petitioner was entitled to the deductions for the year 1983 as the duties were paid in that year, and no double deduction was claimed.

3. Obligation of Income-tax Officer to Make Provisional Assessment u/s 141A:
The court held that the Income-tax Officer failed to discharge his statutory duty by not making a provisional assessment within six months from the date of filing the return, as mandated by section 141A. The section requires the officer to make adjustments based on prima facie admissible information in the return and documents. The court emphasized that the officer's failure to act within the stipulated time cannot be used as a defense against the petitioner's claim. The court directed the Income-tax Officer to pass an order u/s 141A within eight weeks, considering the observations made in the judgment.

Conclusion:
The petition was allowed, and the Income-tax Officer was directed to pass an order u/s 141A within eight weeks. The petitioner was entitled to the costs of the petition.