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TMI Blog1986 (4) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... rest at 2 1/2% thereon by holding that the receipt was of capital nature ? " These relate to the assessment years 1965-66 and 1966-67. Besides the above, the following question in relation to the assessment year 1966-67 has also been referred to us: " 1. Whether, on the facts and in the circumstances of the case, interest under section 139(1) of the Act was leviable ? " The assessee filed his returns for the two years in question as that of a Hindu undivided family. The Income-tax Officer rejected his claim of being a Hindu undivided family and assessed him as an individual. The assessee is the great grandson of Maharaja Pratap Udai Nath Sahdeo commonly known as Maharaja of Ratu in Chhotanagpur. The assessee's father and grandfather had predeceased his great grandfather. Thus, consequent upon the death of his great grandfather, the assessee succeeded to his estate. The estate, it is not in controversy, was impartible and was governed by the rule of lineal primogeniture. The status of the assessee concerns the first question referred to us. In the matter of assessment of the assessee, controversy arose in regard to the nature of the ad interim compensation of Rs. 1,40,329 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... amount equal to the assessed tax as defined in section 215(5). Section 207 provides for payment of advance tax. The conditions of liability to pay advance tax are prescribed in section 208. Where an assessee falls in the category mentioned in section 208 and where he has been previously assessed by way of regular assessment, the Income-tax Officer may by order in writing require him to pay to the credit of the Central Government advance tax as determined in accordance with the provisions of sections 207 to 209 of the Act. Section 212 enjoins the assessee to make self-assessment. Sub-section (3) thereof provides that any person who has not been Previously assessed by way of regular assessment either under the 1961 Act or under the 1922 Act shall send to the Income-tax Officer an estimate of the current income and advance tax payable by him on the current income calculated in the manner laid down in section 209. He shall pay such amount of tax as accords with his estimate. Such estimate has to be sent if his current income is likely to exceed the amount specified in section 208(2). It is worthy of note that section 212(3) relates to persons who have not been previously assessed by wa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... category of an " individual ". I have, therefore, not the slightest hesitation in holding that the assessee was a new assessee and not a person who had been previously assessed. The fact that the person assessed was the same was inconsequential. What was relevant was the status of the assessee, viz., that previously he was an individual and from the years in question he was a member of a Hindu undivided family. That being so, the provisions of section 217 had to be enforced against the assessee. It must, therefore, be held that the Tribunal was not justified in holding that the provisions for levy of penal interest under section 217 of the Income-tax Act were not attracted. At this stage, before proceeding to answer the third question referred to us by the Tribunal, it would be convenient to consider and dispose of the question referred to us at the instance of the assessee. The question referred to us has been set out in paragraph 1, at page 2. It relates to deletion of interest leviable in terms of section 139(8) of the Act. The consistent finding is that the assessee did not submit his return within the time stipulated by section 139(1). It was obvious that there was delay. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pect of which expired after the 31st day of December of the year immediately preceding the assessment year, up to the 31st day of December of the assessment year without charging any interest ; and (iii) up to any period falling beyond the dates mentioned in clauses (i) and (ii), in which case, interest at six per cent. per annum shall be payable from the 1st day of October or the 1st day of January, as the case may be, of the assessment year to the date of the furnishing of the return (a) in the case of a registered firm or an unregistered firm which has been assessed under clause (b) of section 183, on the amount of tax which would have been payable if the firm had been assessed as an unregistered firm ; and (b) in any other case, on the amount of tax payable on the total income, reduced by the advance tax, if any, paid or by any tax deducted at source, as the case may be. " The rate of interest of " six per cent." mentioned in clause (iii) to the proviso was substituted by the Taxation Laws (Amendment) Act, 1967, to nine per cent. " It will be appreciated that clauses (i) and (ii) of the proviso provide that no interest shall be charged. Clause (iii) deals with cases ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , an assessee would be liable to pay penal interest. In my view, therefore, extension of time would not make any difference. The submission urged on behalf of the assessee is that since the proviso to section 139(1) provides for extension of time for furnishing the return of income, interest could not be levied, if extension of time has been prayed for and granted. This submission was advanced on the basis that grant of extension would wipe out the delinquency of the assessee. The delinquency having been wiped out, there would be no case for levy of penal interest. I regret, the submission is untenable. If this view of the law be accepted, the result would be that where a person has filed his return beyond time without any extension having been prayed for or granted, he would not be liable to pay interest, but where the assessee prays for time after the period for filing the return has expired and extension has been granted, he would be liable to pay interest. This is a rather incongruous situation. Where the assessee completely ignores the requirement of filing the return, he would not be liable to tax, but where he prays for extension and extension is granted, he would become l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... has extended the date for furnishing the return under sub-section (1) or sub-section (2)), the assessee shall be liable to pay simple interest at nine per cent. per annum, reckoned from the 1st day of October of the assessment year to the date of the furnishing of the return or, where no return has been furnished, the date of completion of the assessment under section 144, on the amount of the tax payable on the total income as determined on regular assessment, as reduced by the advance tax, if any, paid and any tax deducted at source: Provided that in the case of any person whose total income includes any income from business or profession, the previous year in respect of which expired after the 31st day of December of the year immediately preceding the assessment year, such interest shall be reckoned from the 1st day of the January instead of the 1st day of October of the assessment year: Provided further that the Income-tax Officer may, in such cases and under such circumstances as may be prescribed, reduce or waive the interest payable by any person under this sub-section. " It was contended that in 1970, Parliament laid down that penal interest would be leviable in any ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ath Sahdeo [1982] 133 ITR 658, where a Division Bench of this court held that ad interim payments to the assessee were capital receipts and were not liable to be added to the total income of the assessee. Mr. B. P. Rajgarhia endeavoured to persuade us to hold that the decision of the Division Bench required reconsideration. We have looked into this matter in depth and we are of the view that the earlier decision of this court requires no reconsideration. The decision of this court was based upon a decision of the Supreme Court in S. R. Y. Sivaram Prasad Bahadur v. CIT [1971] 82 ITR 527. Their Lordships of the Supreme Court, distinguishing the case of Chandroji Rao v. CIT [1970] 77 ITR 743 (SC), held that the ad interim payment to an ex-proprietor was a capital receipt. Learned senior standing counsel submitted that the present case would be governed by the decision of the Supreme Court in the case of Chandroji Rao v. CIT [1970] 77 ITR 743 rather than the case of S. R. Y. Sivaram Prasad Bahadur v. CIT [1971] 82 ITR 527 (SC). In the latter case, their Lordships considered and distinguished the case of Chandroji Rao [1970] 77 ITR 743 (SC). The reliance placed by Mr. Rajgarhia on t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act providing for payment of interest on the compensation payable as from the date of vesting." From the above, it will be seen that whereas under the Madras enactment (as applicable to Andhra Pradesh), there was no provision providing for payment of interest on the compensation payable as from the date of vesting, in the Madhya Bharat Abolition of Jagirs Act, interest became payable on the compensation from the date of vesting. The provisions of the Bihar Land Reforms Act are in pari materia with those of the Madras Act. In the case of S. R. Y. Sivaram Prasad Bahadur [1971] 82 ITR 527, their Lordships of the Supreme Court again observed as follows (at page 532): "Statutes which take away others' property, by and large, provide for payment of compensation as from the date of taking. In the generality of those statutes, if immediate payment is not made at the time of taking, provision is made for payment of interest on the compensation payable as from the date of taking. In the Act, there is no provision for payment of compensation at the time of the vesting of the estates in the Government. Nor is there any provision for payment of interest on the compensation payable, as from ..... X X X X Extracts X X X X X X X X Extracts X X X X
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