9911796707
TMI Blog1959 (3) TMI 65X X X X Extracts X X X X X X X X Extracts X X X X ..... the said notice of demand. The respondents are a limited company registered under the Indian Companies Act, 1913. For the assessment year 1952-53, the respondents made an advance payment of tax amounting to ₹ 10,75,017-9-0 under section 18A(1) of the Indian Income-tax Act. On 30th August, 1952, the respondents were regularly assessed under sub-section (3) of section 23 of the Act, for the same assessment year. The total amount of tax assessed was ₹ 6,46,329-9-0. Under section 18A(5) of the Act, as it then stood, the respondents were entitled to interest at 2 per cent. on the amount deposited by them on account of advance payment of tax. Under this provision, ₹ 14,720-14-0 were due to the petitioners on account of interest ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... By this order, the respondents were assessed on the same amount of income on which they had been assessed in the original assessment order and the tax assessed was also the same. In the assessment order, the first appellant also stated that as section 18A(5) had been amended with effect from 1st April, 1952, the respondents were entitled to interest of a much smaller amount than what had been allowed to them during the original assessment, that excessive relief had been allowed to the respondents in the original assessment, and that he had taken action under section 34 in order to enable him to recover the excess interest paid to the respondents. He then issued a notice of demand, calling upon the respondents to pay a sum of ₹ 5,316. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of excessive relief under the Act. Section 18A(5) of the Act, as it stood at the material time, provided that "the Central Government shall pay on any amount paid under this section simple interest at 2% per annum." Under this provision, Government was, therefore, liable to pay simple interest at 2 per cent. on the amount paid as advance payment of tax under sub-section (1) of section 18A of the Act. This interest was paid by Government in order to compensate to some extent the assessee for what he might suffer on account of his having to deposit in advance an amount with Government on account of tax, which might ultimately be found to be due from him. The interest was also paid on the amount actually deposited by the assessee. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction." Action under this sub-section can, therefore, be taken only if the income, profits and gains chargeable to income-tax have been the subject of excessive relief under the Act. By paying interest under section 18A(5) of the Act, on the amount deposited by the assessee, the Government does not grant any relief to him in respect of the tax payable by him on his income, profits and gains. It has no bearing on, nor does it reduce, the burden which the assessee has to bear on account of tax assessed on him. The "relief" referred to in section 34(1) (b) can only be such relief as is granted to the assessee by reason of his income, profits and gains being chargeable to tax. It is, therefore, referable to the various kinds of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... w the net amount of tax payable. From this amount he has to deduct the interest payable to the assessee under section 18A(5) of the Act, and then determine the net amount payable by the assessee or refundable to him. In this form, therefore, interest payable to the assessee is not regarded as relief from the tax payable by him. The various provisions of the Act, such, for instance, as are contained in section 29 of the Act, draw a distinction between the three different items, tax, penalty and interest. Interest is, therefore, quite distinct from the tax leviable under the provisions of the Act. Mr. Joshi, on behalf of the appellants, has argued that the payment of interest to the assessee by Government is an integral part of the process ..... X X X X Extracts X X X X X X X X Extracts X X X X
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