1979 (5) TMI 69 - AT - Income Tax

Summary

Issues:
1. Whether the assessee is a company in which the public were substantially interested.
2. Whether the payment made by the assessee should be treated as advance income-tax.

Analysis:

1. The first issue in the appeal by the Revenue concerns the classification of the assessee as a company in which the public were substantially interested. The Appellate Tribunal considered the transferability of shares to determine this classification. The Tribunal referred to a previous decision in the assessee's case and upheld that the shares of the assessee-company were freely transferable. Consequently, the Tribunal affirmed the decision of the AAC that the assessee was a company in which the public were substantially interested.

2. Regarding the second issue, the Department contended that the payment of Rs. 1,34,000 made by the assessee should not be treated as advance tax. The AAC had found that the cheque was handed over to the Reserve Bank of India before the due date but was encashed after the due date. The Tribunal examined the evidence and noted that there was no indication that the payment was made at the cheque counter as argued by the Department. The Tribunal reasoned that even if the cheque had been tendered at the cheque counter, it should have been cleared and credited before the due date based on normal commercial practices. As there was no evidence of any delay attributable to the assessee, the Tribunal concluded that the payment should be considered as made by the due date, constituting payment of advance tax. Therefore, the appeal by the Department was dismissed.

In conclusion, the Appellate Tribunal upheld the classification of the assessee as a company in which the public were substantially interested based on the transferability of shares. Additionally, the Tribunal ruled that the payment made by the assessee should be treated as advance income-tax, as there was no delay attributable to the assessee in the payment process.