1976 (8) TMI 27 - HC - Income Tax

Summary

Issues Involved: Competency of appeal regarding calculation of interest under section 18A(5) of the Indian Income-tax Act, 1922.

Issue-wise Detailed Analysis:

P Background and Facts:
Messrs. Jardine Henderson Ltd., Calcutta, the assessee, was assessed to income-tax for the assessment year 1958-59. The assessment was completed on 30th December 1961, with a total income of Rs. 21,70,341. The assessee had paid advance tax of Rs. 9,10,250, resulting in an excess payment of Rs. 61,708.64. Interest on such excess was allowable under section 18A(5) and calculated to be Rs. 9,256.31.

P First Appeal:
The assessee appealed to the Appellate Assistant Commissioner, contesting the calculation of interest under section 18A(5). The Appellate Assistant Commissioner held that no appeal lay under section 30 of the Act regarding section 18A(5), rendering the claim inadmissible.

P Second Appeal:
The assessee then appealed to the Income-tax Appellate Tribunal, which allowed claims for deduction of bad or doubtful debts and disallowed a sum of Rs. 65,000. The Tribunal restored the relief under section 49D of the Act, previously withdrawn by the Appellate Assistant Commissioner. The Tribunal's order on 30th November 1966 did not address the interest calculation issue, leading the assessee to file a miscellaneous application. The Tribunal acknowledged the oversight and, in an order dated 9th March 1967, set aside the Appellate Assistant Commissioner's decision, directing him to consider the interest calculation on its merits, following the precedent set in Mathuradas Mohta v. Commissioner of Income-tax [1965] 56 ITR 269 (Bom).

P Reference to High Court:
The Commissioner of Income-tax sought a legal question under section 66(1) of the Act regarding the Tribunal's decision to allow an appeal on the interest calculation under section 18A(5). The Tribunal referred the question: "Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the appeal to the Appellate Assistant Commissioner against the calculation of interest under section 18A(5) was competent?"

P Arguments by Revenue:
Mr. A. Sengupta, representing the revenue, argued that no appeal lies from the calculation of interest under section 18A(5) of the Indian Income-tax Act, 1922. He cited several High Court decisions supporting this view, emphasizing that the calculation of interest is not appealable as it is a benefit conferred by statute, not a tax chargeable to the assessee.

P Arguments by Assessee:
Dr. Debi Pal, representing the assessee, contended that the subsequent Tribunal order was a rectification, thus not appealable, making the reference incompetent. He argued that the Tribunal's decision followed the precedent in Mathuradas Mohta, treating the appeal as one against the entire assessment, including the interest calculation, not solely against the interest calculation.

P Court's Analysis and Conclusion:
The Court noted that the authorities below misunderstood the nature of the appeal, which was against the entire assessment, with the interest calculation being one of the grounds. The question referred was thus academic and did not require an answer. The Court declined to answer the referred question, noting that the law is well settled that a court will not spell out a new or additional question. There was no order as to costs.

Separate Judgments:
DEB J. agreed with the judgment.

Conclusion:
The High Court concluded that the question referred was academic and declined to answer it, affirming that no appeal lies solely against the calculation of interest under section 18A(5) when it is part of an appeal against the entire assessment.