9911796707
|
Home
Issues Involved:
1. Charging of interest under Section 7C of the Companies Profits (Surtax) Act, 1964. 2. Maintainability of the appeal. Issue-wise Detailed Analysis: 1. Charging of Interest under Section 7C of the Companies Profits (Surtax) Act, 1964: The primary issue in this appeal is the charging of interest amounting to Rs. 3,33,410 under Section 7C of the Companies Profits (Surtax) Act, 1964. The assessee's company was required to pay surtax, and the advance surtax paid was less than 83 1/3% of the assessed surtax. Section 7C(1) mandates that if the advance surtax paid by the assessee is less than 83 1/3% of the assessed surtax, simple interest at 12% per annum is chargeable. The assessee's income was assessed at Rs. 2,57,31,363, significantly higher than the income shown in the return, which was Rs. 1,69,15,170. This discrepancy led to an increased surtax liability and the subsequent levy of interest under Section 7C. The assessee argued that the increase in income was due to the addition of Rs. 53,03,606 from the sale of import entitlements, which was not initially considered taxable. The assessee believed this amount was a capital receipt, supported by various judicial pronouncements before the retrospective amendment by the Finance Act, 1990. The Tribunal acknowledged that the issue of taxability of import entitlements was contentious and only clarified by the retrospective amendment. Therefore, the assessee's claim was bona fide and legitimate. The Tribunal also noted other claims made by the assessee, such as expenses on rectification of goods, depreciation, and deductions under Section 35B, which were partly allowed by the Tribunal in the income-tax assessment. These claims indicated that the assessee's return was not entirely baseless. Given the complexity and retrospective nature of the amendment, the Tribunal concluded that the assessee could not be penalized for not filing a true statement of income and a correct estimate of advance surtax. Consequently, the interest charged under Section 7C was canceled. 2. Maintainability of the Appeal: The Revenue raised a legal objection regarding the maintainability of the appeal, arguing that the assessee had already sought a remedy under Section 17 of the Act for the reduction or waiver of surtax. The Commissioner had partly allowed this application, reducing the interest charged under Section 7C to Rs. 1,70,289. The Revenue contended that since the assessee had exhausted the remedy under Section 17, it could not simultaneously pursue an appeal on the same subject matter. However, the Tribunal found that the appeal was not against the order of the Commissioner passed under Section 17 but against the original charging of interest by the Assessing Officer. The Tribunal referred to the Supreme Court's decision in Central Provinces Manganese Ore Co. Ltd v. CIT, which held that orders levying interest are appealable if the assessee denies liability to be assessed. The Tribunal concluded that the assessee's appeal was competent because it challenged the chargeability of interest, not its reduction or waiver. Conclusion: The Tribunal held that the appeal was maintainable and that no interest was chargeable under Section 7C of the Companies Profits (Surtax) Act, 1964. The appeal was partly allowed, and the levy of interest was canceled.
|
