1962 (11) TMI 79 - HC - Income Tax

Summary

Issues:
1. Entitlement to adjustment of advance tax paid in Lahore against the demand raised by the Income-tax Officer in Delhi.
2. Legality and validity of the order directing a refund to the assessee out of the advance tax paid in Lahore.

Analysis:
The judgment by the Punjab and Haryana High Court involved a reference under section 66(1) of the Income-tax Act, arising from the assessment of income-tax for the year 1947-48. The assessee, a company with its registered office in Lahore before partition, had paid advance tax under section 18A of the Indian Income-tax Act in Lahore. The Income-tax Officer in Delhi assessed the total income for 1947-48, which was later reduced on appeal. The assessee claimed credit for the advance payment made in Lahore, but this claim was denied as the amount was adjusted by the Lahore income-tax authorities against an earlier assessment order. The Income-tax Appellate Tribunal held that the assessee was entitled to credit for the Lahore payment and directed a refund of the excess amount. The Commissioner of Income-tax sought a reference to the High Court on two questions of law.

The first question raised was whether the assessee could adjust the advance tax paid in Lahore against the demand raised by the Income-tax Officer in Delhi. The Court noted that the payment in Lahore was made under the Indian Income-tax Act, and as per section 18A(11), any sum paid by an assessee under this section should be treated as a payment of tax and credited during regular assessment. The Court emphasized that the Lahore authorities' actions could not affect the assessee's rights under the Indian Income-tax Act, and the direction in section 18A(11) must be followed. Therefore, the Court agreed with the Tribunal's decision that the assessee was entitled to credit and a refund of the excess amount.

The second question regarding the legality of the Tribunal's order for a refund depended on the first question, which the Court answered in the affirmative. The Court held that the assessee was entitled to the refund as the advance tax paid in Lahore exceeded the tax due on regular assessment. Consequently, both questions were answered in favor of the assessee, and the Court allowed the costs of the proceedings. The Chief Justice concurred with the judgment.