9911796707
TMI Blog1983 (9) TMI 125X X X X Extracts X X X X X X X X Extracts X X X X ..... liability for the income declared for that year. With regard to the assessment year 1976-77, he did not allow the income-tax liability as, according to him, there was no income-tax liability as per the income-tax return for that year. 4. The AAC noticed that the income-tax assessments for 1966-67 to 1969-70 were completed only on 5-3-1979, that the income-tax assessments for 1970-71 and 1971-72 were completed on 22-3-1978, that the income-tax assessment for 1973-74 was completed on 18-3-1977, that for 1974-75 was completed on 9-2-1977 and that the one for 1975-76 was completed on 5-3-1979. He also found that since these tax liabilities were not outstanding by issue of demand notices on the relevant valuation dates sub-clause (iii) of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pleted only subsequent to the valuation dates, the interest amounts cannot be treated as a liability. In support of the contention, it was pointed out by the learned departmental representative that with regard to the interest, the ITO had powers of reduction or waiver and that the liability will be crystallised only when the ITO demands the interest and not before. 7. In the present case, the income-tax liabilities were quantified subsequent to the relevant valuation dates. The demand for interest was made along with the demand for tax. The statement filed by the learned representative for the assessee shows that the interest demanded was under section 139(1) of the 1961 Act, proviso (iii) under section 217 of the 1961 Act and under sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... income-tax and that there is no charge for the interest does not seem to be correct. The 1961 Act does not create a charge upon any particular asset in the sense in which the expression 'creation of charge' is understood in the context of the Transfer of Property Act, 1882. As far as the 1961 Act and the Act are concerned, the word 'charge' appears to have been used in connection with tax only in the sense of levying or imposing the tax. If this be so, the provisions of the 1961 Act also levy interest if the events prescribed therefor have occurred. 8. The learned departmental representative placed much emphasis on the fact that the interest under the sections mentioned earlier could be reduced or waived by competent authorities. This, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s quantified later, the interest should have begun to run during a period prior to the valuation date. It is possible that interest may have begun to run only from a subsequent date by the application of the relevant provisions. In such cases, the same cannot be treated as a liability. In other words, the interest must actually relate to and should run for a period prior to the relevant valuation date. Similarly, only the interest amount that has accumulated up to the relevant valuation date and not for any subsequent period can be treated as the liability as on the relevant valuation date. As the necessary particulars for working out the interest liability on the above basis are not available, we would leave it to the WTO to work out the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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