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Issues involved: Interpretation of the term "month" in relation to the levy of interest for delay in filing income tax return under section 139(8) of the Income Tax Act, 1961.
Summary: The petitioner, a partnership firm, filed its income tax return for the assessment year 1976-77 after the due date, resulting in the Income Tax Officer (ITO) levying interest under section 139(8) of the Act. The petitioner challenged the validity of this interest levy under Article 226 of the Constitution. The petitioner argued that since the delay was for "less than a month," the ITO was not authorized to levy interest. The petitioner relied on Division Bench rulings from the Madras and Calcutta High Courts to support its contention. On the other hand, the senior standing counsel for the Income-tax Department argued that the term "month" should be reckoned as a period of 30 days, making the interest levy legal and valid. This argument was supported by a Division Bench ruling of the High Court of Allahabad. The term "month" was not defined in the Act or Rules, leading to the application of the definition from the General Clauses Act of 1897, which defines a month as per the British calendar. The High Court analyzed the conflicting interpretations of the term "month" by different High Courts. It noted that the High Courts of Madras and Calcutta considered a month to be according to the British calendar, while the High Court of Allahabad interpreted it as a period of 30 days. The Court agreed with the former interpretation, stating that the term "month" in the Act and Rules should align with the definition in the General Clauses Act. Ultimately, the Court held that the ITO was only empowered to levy interest for "not less than a month," and since the delay was less than a month based on the British calendar, the interest levy was unauthorized and illegal. Consequently, the Court quashed the impugned order and directed each party to bear their own costs.
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