1962 (8) TMI 1 - HC - Income Tax

Whether, on the facts and circumstances of the case, the Appellate Tribunal was justified in, law in holding that the Appellate Assistant Commissioner erred in directing the Income-tax Officer to determine the interest payable by the assessee under section 18A having regard to the fifth proviso of section 18A(6) read with rule 48 of the Income-tax Rules? - Held that There does not appear to be any provision in the Income-tax Act for reduction or waiver of interest where the liability arises under sub-clause (8) of section 18A. - Answered against the assessee.

Summary

Issues Involved:
1. Interpretation of Section 18A(8) of the Indian Income-tax Act.
2. Applicability of the fifth proviso to Section 18A(6) to cases under Section 18A(8).
3. Discretion of the Income-tax Officer under Rule 48 of the Income-tax Rules.

Detailed Analysis:

1. Interpretation of Section 18A(8) of the Indian Income-tax Act:
The primary issue in this case revolves around the interpretation of Section 18A(8) of the Indian Income-tax Act. The court examined whether the fifth proviso to Section 18A(6), which allows the Income-tax Officer to reduce or waive interest, could be applied to cases under Section 18A(8). The court noted that Section 18A(8) pertains to assessees who have not paid any advance tax, while Section 18A(6) deals with assessees who have paid advance tax based on their own estimates but fall short of eighty percent of the final tax assessed.

2. Applicability of the Fifth Proviso to Section 18A(6) to Cases Under Section 18A(8):
The court addressed whether the fifth proviso to Section 18A(6) should be read into Section 18A(8). The proviso allows the Income-tax Officer to reduce or waive interest in specific cases. The court observed that the language of Section 18A(8) requires interest to be "calculated in the manner laid down in sub-section (6)," but this does not inherently include the discretionary power to reduce or waive interest. The court emphasized that the discretion to waive or reduce interest is not part of the calculation process and must be considered separately after the interest liability is determined.

3. Discretion of the Income-tax Officer Under Rule 48 of the Income-tax Rules:
The court examined Rule 48, which provides circumstances under which the Income-tax Officer may reduce or waive interest. The assessee argued that Rule 48 should apply generally to all interest levied under Section 18A, including under sub-section (8). However, the court clarified that Rule 48 is intended to give effect to the fifth proviso of Section 18A(6) and does not extend to Section 18A(8). The court concluded that Rule 48 cannot confer the power to reduce or waive interest where the statute does not provide such discretion.

Conclusion:
The court ultimately held that the fifth proviso to Section 18A(6) does not apply to cases under Section 18A(8). The assessee's argument that the Income-tax Officer should have the discretion to reduce or waive interest under Section 18A(8) was rejected. The court agreed with the Bombay High Court's decision in Lata Mangeshkar v. Union of India, which similarly concluded that the fifth proviso to Section 18A(6) does not extend to Section 18A(8).

The question referred to the court was answered against the assessee, and the assessee was ordered to pay the costs of the department, with counsel's fee set at Rs. 250.