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Commissioner of Income-tax (Central) Vs. Jardine Henderson Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKolkata High Court
Decided On
Case NumberIncome-tax Reference No. 276 of 1968
Judge
Reported in[1978]112ITR802(Cal)
ActsIncome Tax Act, 1922 - Sections 18A(5), 30 and 66(1)
AppellantCommissioner of Income-tax (Central)
RespondentJardine Henderson Ltd.
Appellant AdvocateAjit Sengupta and ;P.K. Majumdar, Advs.
Respondent AdvocateDebi Pal and ;P.K. Pal, Advs.
Cases ReferredAbraham v. Income
Excerpt:
- .....1967, stated to be passed in continuation of its earlier order dated the 30th november, 1966, the tribunal held as follows :' 3. coming to the merits, in para. 5 of his order, the appellate assistant commissioner has referred to the ground regarding calculation of interest under section 18a(5). he has held that since no appeal lay under section 30 in respect of section 18a(5), the claim of the assessee could not be admitted. it was contended on the earlier occasion and also now that the view of the appellate assistant commissioner is wrong. reference is invited to the decision in mathuradas mohta v. commissioner of income-tax : [1965]56itr269(bom) . in that case, it has been held that though there was no right of appeal against an order imposing penal interest, an appeal against an.....
Judgment:

Dipak Kumar Sen, J.

1. The facts admitted and/or found out of which this reference arises may be shortly noted as follows :

2. Messrs. Jardine Henderson Ltd., Calcutta, the assessee, was assessed to income-tax for the assessment year 1958-59. The relevant previous year ended on the 31st March, 1958. The assessment was completed on the 30th December, 1961, and the total income was computed at Rs. 21,70,341. The assessee had paid advance tax of Rs. 9,10,250. The tax due under the assessment was Rs. 8,48,541*36, the amount paid in excess being Rs. 61,708-64.

3. On such excess, interest was allowable under Section 18A(5) of the Indian Income-tax Act, 1922, and was calculated to be Rs. 9,256.31,

4. An appeal against this assessment order was preferred before the Appellate Assistant Commissioner, where a number of grounds were urged and considered. It was noted that relief under Section 49D(2) had been allowed by the Income-tax Officer subsequent to the assessment on certificates filed by the appellant. A ground was taken objecting to the calculation of interest by the Income-tax Officer under Section 18A(5). The Appellate Assistant Commissioner held that since no appeal lay underSection 30 of the Act in respect of Section 18A(5) the claim of the appellant was inadmissible.

5. Being aggrieved, the assessee preferred a further appeal to the Income-tax Appellate Tribunal. The grounds urged before the Tribunal were, inter alia, that the assessee was entitled to a claim for deduction in respect of a bad or doubtful debt. This was allowed by the Tribunal. Another ground related to disallowance of a sum of Rs. 65,000 by the authorities below. This claim for allowance was upheld by the Tribunal. The relief under Section 49D of the Act granted by the Income-tax Officer subsequent to the assessment had been withdrawn by the Appellate Assistant Commissioner. This was restored by the Tribunal.

6. The Tribunal passed its order on the 30th November, 1966. Subsequent thereto the assessee filed a miscellaneous application before the Tribunal contending that the ground in respect of calculation of interest on the excess amount paid urged before the Tribunal had not been adverted to in the order dated 30th November, 1966, nor was this ground decided. The Tribunal accepted the contentions of the assessee and held that the omission was due to oversight. By an order dated the 9th March, 1967, stated to be passed in continuation of its earlier order dated the 30th November, 1966, the Tribunal held as follows :

' 3. Coming to the merits, in para. 5 of his order, the Appellate Assistant Commissioner has referred to the ground regarding calculation of interest under Section 18A(5). He has held that since no appeal lay under Section 30 in respect of Section 18A(5), the claim of the assessee could not be admitted. It was contended on the earlier occasion and also now that the view of the Appellate Assistant Commissioner is wrong. Reference is invited to the decision in Mathuradas Mohta v. Commissioner of Income-tax : [1965]56ITR269(Bom) . In that case, it has been held that though there was no right of appeal against an order imposing penal interest, an appeal against an order of assessment as a whole, one of the grounds of which related to the addition of penal interest, was competent. With respect, we follow this decision and hold that the Appellate Assistant Commissioner should have gone into the point on its merits. In order to enable him to do so, we set aside that portion of his order. He will dispose of this point in accordance with law.'

7. In his application under Section 66(1) of the Act the Commissioner of Income-tax sought to raise a question of law as follows :

' (1) Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that it was open to the assessee to challenge the order of the Income-tax Officer under Section 18A(5) of the Indian Income-tax Act, 1922, and in directing the Appellate Assistant Commis-sioner accordingly to deal with the merits of calculation of interest under the said provision '

8. Pursuant to this application the Tribunal has referred the following question :

'Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the appeal to the Appellate Assistant Commissioner against the calculation of interest under Section 18A(5) was competent '

9. Mr. A. Sengupta, learned counsel for the revenue, has contended before us that there is no appeal from the calculation of interest under Section 18A(5) of the Indian Income-tax Act, 1922. In support of his contention Mr. Sengupta cited and relied on a large number of decisions of various High Courts which are noted chronologically as follows :

(a) Bhagat Dunichand of Haripur v. Commissioner of Income-tax [1929] 4 ITC 33 ; AIR 1929 Lah 593 . It was held in this case that an appeal against an assessment under Section 23(4) of the Indian Income-tax Act, 1922, was barred by the proviso under Section 30(1) of the said Act if the assessment was genuine and not ostensible.

(b) Sri Gajalakshmi Ginning Factory Ltd. v. Commissioner of Income-tax : [1952]22ITR502(Mad) . In this case, the Madras High Court compared and contrasted the provisions relating to appeals as laid down by Section 31 of the Indian Income-tax Act, 1922, with those provided by the Civil Procedure Code. The Court held that the powers of the Appellate Assistant Commissioner under the said Section 31 was in some respects wider than the powers which could be exercised by an appellate court under the Civil Procedure Code.

(c) Pt. Deo Sharma v. Commissioner of Income-tax : [1953]23ITR226(All) . The facts in this case were that the assessee had paid advance tax under Section 18A which was less than eighty per cent. of the tax determined on regular assessment. He was held liable to pay simple interest at the rate of 6 per cent. per annum under Section 18A(6) of the Indian Income-tax Act, 1922. His appeals to the Appellate Assistant Commissioner and to the Appellate Tribunal were dismissed on the merits. In a reference under Section 66(1) of the Act, the Allahabad High Court held that as the order of the Income-tax Officer was not appealable, the reference was not competent. The Appellate Assistant Commissioner and the Appellate Tribunal having merely dismissed the appeals, the order of the Income-tax Officer survived.

(d) Boddu Seetharamaswamy v. Commissioner of Income-tax : [1955]28ITR156(AP) . In this case, the Andhra Pradesh High Court followed the case of Pt. Deo Sharma : [1953]23ITR226(All) and held that Section 30 of the Indian Income-tax Act, 1922, did not provide for an appeal to the AppellateAssistant Commissioner from an order imposing penal interest under Section 18A(6) of the Indian Income-tax Act, 1922. It was further held that imposition of such penal interest was not a part of the process of assessment of the income under Section 23. Merely because the tax and the penal interest were added together and collected in the same manner, did not make the order under Section 18A(6) appealable.

(e) North Deccan Transport Ltd. v. Commissioner of Income-tax : [1956]29ITR937(Bom) . The Bombay High Court held in this case that an order passed by the Income-tax Officer under Section 18A(9) of the Indian Income-tax Act, 1922, imposing a penalty on the assessee on the ground that the latter had furnished a false estimate of his income deliberately for the purpose of advance payment of tax was appealable and an appeal lay against such an order to the Appellate Assistant Commissioner and thereafter to the Tribunal.

(f) N. V. N. Nagappa Chettiar v. Income-tax Officer : [1958]34ITR583(Mad) . This is a Single Bench decision of the Madras High Court, where an observation was made that because the assessee had no right of appeal from an order charging interest, interest was not a part of the assessment.

(g) Keshardeo Srinivas Morarka v. Commissioner of Income-tax : [1963]48ITR404(Bom) . Here, a Division Bench of the Bombay High Court held that no appeal lies to the Appellate Assistant Commissioner against the levy of penal interest correctly computed in accordance with the provisions of Section 18A(6) of the Indian Income-tax Act, 1922. It was noted that the expression ' assessment ' had been used in that Act in different senses at different places and it could not be said that this expression should have the same meaning throughout the Act. The absence of a specific provision giving a right of appeal against an order imposing penal interest under the said Section 18A(6) or 18A(8) and the scheme and context of the other provisions of Section 30 clearly indicated that no right of appeal was intended to be conferred. Even if the expression ' liability to be assessed under the Act ' included the liability to pay a penalty, for the purposes of Section 30, the respective concepts of tax and penalty had to be kept distinct.

(h) Mandal Ginning & Pressing Co. Ltd. v. Commissioner of Income-tax : [1973]90ITR332(Guj) . In this case, the Gujarat High Court construed the expression 'assessed' in Section 30(1) of the Indian Income-tax Act, 1922. The court held that the expression should not be given a narrow meaning. In the section the words ' under this Act ' clearly showed that reference was being made to the entire procedure for imposition of liability. But proceedings under Section 35 of the Act would not be proceedings for assessment. There could be no right of appeal under Section 30of the Act against an order of rectification made under Section 35 of the Act.

(i) Vijaypat Singhania v. Commissioner of Income-tax : [1977]107ITR533(All) . In this case, the Allahabad High Court followed the decision in the case of PL Deo Sharma : [1953]23ITR226(All) and held that the courts could not stretch the language of the provisions of a section in order to spell out a right of appeal if such a right was not provided. As orders under Section 18A(6) and Section 18A(8) were not mentioned in Section 30 of the Indian Income-tax Act, 1922, there was no appeal against such orders. (j) Commissioner of Income-tax v. Sharma Construction Company : [1975]100ITR603(Guj) . In this case the Gujarat High Court considered the provisions for appeal under Section 246(c) of the Income-tax Act, 1961. The court held that inasmuch as orders under Section 139 or Section 270 charging penal interest were not specified in Section 246 of the Act, no appeal would lie against an order charging penal interest under tbe said sections. Bat the court also observed that when an appeal was filed against a regular assessment it would be open to the assessee to take all points which may legitimately not only reduce the taxable income or the tax to be paid but also reduce the quantum of penal interest,

(k) K. B. Stores v. Commissioner of Income-tax . In this case, the Gauhati High Court held that there was no appeal to the Appellate Assistant Commissioner from an order of the Income-tax Officer under Section 139(8) of the Income-tax Act, 1961, charging interest for delayed filing of return as Section 246(c) of the Act did not specifically provide for such an appeal.

10. Mr. Sengupta in fairness brought to our notice the following three decisions which cannot be said to support the case of the revenue.

(a) Commissioner of Income-tax v. Jagdish Prosad Ramnath : [1955]27ITR192(Bom) . In this case, Chagla C.J., sitting in a Division Bench of the Bombay High Court, held that an assessee was not entitled to appeal merely against an order imposing penal interest under Section 18A(8) of the Indian Income-tax Act, 1922. Bat he observed that there was an automatic adjustment of penal interest imposed under Sub-section (8) of the said section as also Sub-section (6) where there was a successful appeal against the regular assessment. In an appeal from a regular assessment it should be open to the assessee to take all points which may legitimately not only reduce the taxable income and the tax to be paid but may also reduce the quantum of penal interest. It was also held that an order of the Appellate Assistant Commissioner that an appeal from an order imposing penal interest was incompetent was an order made under Section 31 and an appeal lay therefrom to the Appellate Tribunal.

(b) Sarangpur Cotton . v. Commissioner of Income-tax : [1957]31ITR698(Bom) . In this case, Chagla C.J., sitting in a Division Bench of the Bombay High Court without deciding the point, raised a question whether an appeal lay from the order of the Income-tax Officer refusing to allow the assessee interest under Section 18A(5) for a period beyond the date of the assessment under Section 24.

(c) Mathuradas B. Mohta v. Commissioner of Income-tax : [1965]56ITR269(Bom) . In this case, a Division Bench of the Bombay High Court referring to the case of Jagdish Prasad : [1955]27ITR192(Bom) and applying the decisions of the Supreme Court in the cases of Abraham v. Income-tax Officer : [1961]41ITR425(SC) and Commissioner of Income-lax v. Bhikaji Dadabhai & Co. : [1961]42ITR123(SC) , held that the amount of interest determined under Section 18A(8) is a tax within the meaning of the Act. An assessee would have a right to file an appeal to the Appellate Assistant Commissioner against an order under Section 18A(8) because Section 30 contained the clause ' denying his liability to be assessed under this Act'.

11. Mr. Sengupta contended that the only question in this reference was calculation of interest under Section 18A(5). This interest was payable to and not by the assessee and, therefore, was a benefit conferred by the statute. In no circumstances it could be treated as a tax or could be said to be chargeable to the assessee. This calculation of a benefit to be conferred on the assessee could not be a subject-matter of appeal under Section 30 of the Act.

12. Dr. Debi Pal, learned counsel for the assessee, has on the other hand contended before us that the subsequent order of the Tribunal passed on the 9th March, 1967, was really an order of rectification and as such not appealable. He submitted that the reference was consequently incompetent. Looking at the two successive orders of the Tribunal it does not appear that the subsequent order was merely an order of rectification. This, however, is not a question before us and the assessee has not raised the question which it now seeks to agitate.

13. Dr. Pal urged next that the question which has been referred cannot be said to arise out of the order of the Tribunal. He submitted that the Tribunal following the decision in the case of Mathuradas Mohta : [1965]56ITR269(Bom) had held that the appeal in this case was an appeal against the order of assessment as a whole, one of the grounds wherein related to the calculation of interest. The Tribunal did not hold that an appeal to the Appellate Assistant Commissioner against calculation of interest under Section 18A(5) was competent. He submitted that, in the form in which the question was referred, there could be only one answer. He conceded that no appeal could lie only against an order of calculation of interest under the said Section 18A(5).

14. In reply, Mr. Sengupta has submitted that whether the appeal in this case was only against the calculation of interest or whether the question of interest was only a ground in the appeal, made no difference in the result. If no appeal was provided against calculation of interest the assessee could not circumvent this limitation nor stretch the language of the section by urging this ground in some other appeal.

15. We have carefully considered the respective submissions of the parties. It appears to us that in the instant case the authorities below proceeded under a misconception that there was an appeal before the Appellate Assistant Commissioner against calculation of interest under Section 18A(5). This is not borne out by the records and proceedings. It is clear from the records that the appeal which was preferred from the order of the Income-tax Officer was an appeal from the order of assessment and the calculation of interest was one of the grounds in that appeal. The question which the revenue seeks to urge in this reference is not before us and the law is well settled that the court will not spell out a new question or an additional question.

16. In this view of the matter, we hold that the question which has been referred is academic and calls for no answer. Accordingly, we decline to answer the same. In the facts and circumstances of the case, there will be no order as to costs.

Deb, J.

17. I agree.


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