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2017 (2) TMI 782 - HC - Income TaxDenial of the assessee s liability to interest under Section 215 - Held that - It is clear that an appeal would lie against the charging of interest under Section 215 of the Act only if the appellant assessee denies his liability to pay the advance tax at all or challenges the quantum of advance tax determined by the Assessing Officer. Therefore, an appeal simplicitor to reduce the interest or waive the interest without challenging the determination of the advance tax either in whole or in part, would not be maintainable. Therefore, if the amount of advance tax is not disputed, the respondent cannot challenge only the levy of interest. This understanding of our is fortified by the decisions of this Court in Gammon India Vs. CIT 1993 (2) TMI 89 - BOMBAY High Court & Phaltan Sugar Vs. Commissioner of Income Tax 1993 (8) TMI 41 - BOMBAY High Court wherein even the Advocates for the assessee conceded the position that no appeal would lie only against levy of interest under Section 215 of the Act. It is made clear that we have independently applied our mind to the decision of Central Provinces Manganese Ore Co. Ltd. (1986 (5) TMI 3 - SUPREME Court ) to reach to the conclusion that no appeal under Section 246(1) (c) of the Act would lie only against levy of interest. As we are conscious that the above two decisions of this Court proceeded on concession of the Counsel for the assessee therein. Thus, this question is to be answered in favour of the applicant assessee. Liable to pay any interest under Section 215 of the Act for non-payment of advance tax in December, 1975 - Held that - Considering the submission of the applicant assessee that non-payment of advance tax was on account of circumstances beyond the control of the assessee and for a reasonable cause, would not warrant deletion of interest payable on account of short payment / non-payment of the advance tax while considering the Subsection (1) of Section 215 of the Act. The considerations may have been different if we were considering an application of waiver under Subsection (4) of Section 215 of the Act.In the above view the applicant assessee is liable to pay the interest under Section 215 of the Act as held by the Tribunal.- Decided against the applicant assessee.
Issues Involved:
1. Appealability of the assessee's liability to interest under Section 215 of the Income Tax Act, 1961. 2. Liability of the assessee to pay interest under Section 215 of the Income Tax Act, 1961. Issue-wise Detailed Analysis: 1. Appealability of the Assessee's Liability to Interest under Section 215 of the Income Tax Act, 1961: (a) The issue of whether an appeal can be made regarding the interest charged under Section 215 of the Act, in the context of Section 246(1)(c) of the Act, is settled by the Supreme Court's decision in Central Provinces Manganese Ore Co. Ltd. vs. Commissioner of Income Tax, 160 ITR 961. The Apex Court held that an appeal under Section 246(1)(c) is permissible if the assessee denies liability to be assessed for tax and interest. (b) The relevant extract from the Apex Court's decision states, "Inasmuch as the levy of interest is a part of the process of assessment, it is open to an assessee to dispute the levy in appeal provided he limits himself to the ground that he is not liable to the levy at all." (c) Therefore, an appeal against the charging of interest under Section 215 of the Act is valid if the appellant denies liability to pay the advance tax or challenges the quantum of advance tax determined by the Assessing Officer. However, an appeal solely for reducing or waiving the interest without disputing the advance tax determination is not maintainable. (d) In this case, the appeal filed by the applicant to the CIT(A) was not limited to the interest levied but also challenged the quantification of the advance tax payable, citing the Calcutta High Court's decision in Century Enka Ltd. vs. ITO, 107 ITR 123, which held Rule 19A of the Income Tax Rules, 1962, ultra vires. (e) Therefore, the appeal falls within the ratio of Central Provinces Manganese Ore Co. Ltd., and this question is answered in favor of the applicant assessee. 2. Liability of the Assessee to Pay Interest under Section 215 of the Income Tax Act, 1961: (a) The applicant contended that they were not liable to pay interest under Section 215 for non-payment of advance tax in December 1975, as their estimate was based on the prevailing law, particularly the Calcutta High Court's decision in Century Enka (supra), which was later overruled by the Supreme Court in Lohia Machines Ltd. vs. Commissioner of Income Tax, 152 ITR 308. (b) The applicant argued that the retrospective amendment to Section 80J by the Finance No.2 Act, 1980, should not attract interest liability. They cited various decisions supporting that retrospective amendments should not impose interest liabilities. (c) However, the Supreme Court in Lohia Machines (supra) held that the amendment was clarificatory, meaning the law always stood as declared by the amendment. Thus, the obligation to pay advance tax existed even before the amendment. (d) The decisions cited by the applicant primarily dealt with Section 234B of the Act and were based on retrospective amendments. These cases are distinguishable as they involved unforeseen changes in law, whereas in this case, the law was always as interpreted by the subsequent amendment. (e) The argument of hardship and bona fide conduct could be considered under subsection (4) of Section 215, which allows for waiver/reduction of interest due to circumstances beyond the assessee's control. However, these considerations do not apply while interpreting fiscal legislation under subsection (1) of Section 215. (f) Therefore, the Tribunal correctly held that the applicant is liable to pay interest under Section 215. Conclusion: (a) Question (i) is answered in the affirmative, in favor of the applicant assessee, confirming the appealability of the interest liability under Section 215. (b) Question (ii) is answered in the affirmative, in favor of the respondent Revenue, confirming the liability of the assessee to pay interest under Section 215. The Reference is disposed of accordingly.
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