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2007 (9) TMI 190 - HC - Income TaxSince assessee was assessed to a loss for the A.Y. 1976-77 to 1978-79, thus for the AY 1979-80, assessee was not required to compute advance tax as per sec. 209(1)(a) or file a statement of advance tax interest levied for non-furnishing of statement is not justified
Issues Involved:
1. Whether the Income Tax Appellate Tribunal was correct in law in holding that no interest under Section 217 was chargeable despite the assessee company not filing a statement of income/estimate of income as required under Section 209A of the Income Tax Act for the assessment year 1979-80. Detailed Analysis: Issue 1: Applicability of Interest under Section 217 The key question referred for opinion was whether interest under Section 217 of the Income Tax Act, 1961, was chargeable when the assessee did not file the statement of income/estimate of income as required under Section 209A for the assessment year 1979-80. Background: - The assessee, engaged in manufacturing electronic goods, was assessed to a loss for the assessment year 1976-77 and filed returns showing losses for the subsequent years 1977-78 and 1978-79. - For the assessment year 1979-80, the assessee declared an income of Rs. 3,82,484, but the Assessing Officer assessed the total income at Rs. 6,58,140 and charged interest under Sections 139(8) and 217 due to non-filing of the statement of income or estimate of income under Section 209A. Tribunal's Decision: - The Tribunal held that there was no case for charging interest under Section 217, leading to the reference of the question to the High Court. Revenue's Argument: - The Revenue contended that Section 209A, inserted by the Finance Act 1978, required the assessee to file a statement of advance tax if the current income was positive, as per Section 209(1)(a). - The Revenue emphasized that the assessee was required to determine its current income and compute advance tax if the current income was greater than the income assessed or declared for the previous year. - The Revenue argued that the assessee could not escape the payment of interest under Section 217 for failing to file the statement and pay advance tax as required by Section 209A read with Section 217. Assessee's Argument: - The assessee argued that the Central Board of Direct Taxes (CBDT) clarified that a statement of advance tax was required only when there was a positive income. - The assessee pointed out that since the regular assessment for 1976-77 and the returns for 1977-78 and 1978-79 showed losses, the computation of advance tax under Section 209(1) did not arise. - The assessee cited judgments from the Bombay High Court, Calcutta High Court, and Gujarat High Court supporting the position that no statement was required if no advance tax was payable. Court's Analysis: - The court examined the relevant provisions of the Income Tax Act, including Sections 208, 209, 209A, 211, and 217. - The court noted that Section 209A(1) required an assessee to file a statement of advance tax only if there was a positive income. - The court observed that the computation of advance tax under Section 209(1)(a) starts with the total income of the latest previous year assessed by regular assessment, which in this case was a loss. - The court found that since no advance tax was payable in terms of the computation under Section 209(1)(a) or 209(1)(d)(i), the assessee was not required to file the statement of advance tax under Section 209A(1)(a). Precedents: - The court referred to the Bombay High Court's decision in Patel Aluminium Pvt. Ltd, which held that no statement was required if no advance tax was payable. - The court also cited similar rulings from the Calcutta High Court in Indian Molasses Co. (P.) Ltd and the Gujarat High Court in Gujarat Alkalies And Chemicals Ltd. Conclusion: - The court concluded that Section 209A(4) would only be applicable if the assessee was liable to pay advance tax under Section 209A(1) or (2), which was not the case here. - Therefore, the court answered the question in the affirmative, in favor of the assessee and against the Revenue, holding that no interest under Section 217 was chargeable. Disposition: - The reference was disposed of, affirming the Tribunal's decision that no interest under Section 217 was chargeable in this case.
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