TMI Blog1993 (10) TMI 120X X X X Extracts X X X X X X X X Extracts X X X X ..... (a), three different dates for three instalments have been specified, according to which instalments of advance surtax are to be paid on the 15th day of June, the 15th day of September and the 15th day of December. The assessee, however, paid a sum of Rs. 2,73,800 as advance surtax on 11-6-1981. An estimate was filed on 10-9-1981 showing surtax payable at Rs. 2,73,000. Revised estimate was filed in December 1981, showing surtax payable at Rs. 6,69,500. The assessee paid second instalment of surtax at Rs. 3,95,700 on 13-12-1981. In this way, total advance surtax paid by the assessee was to the tune of Rs. 6,69,500. The Assessing Officer, while framing the assessment, determined the surtax liability at Rs. 15,58,640. After determining the said surtax liability, interest was also charged u/ss 7C and 7D on the ground that advance surtax paid by the assessee was less than 83 1/3% of the assessed surtax. Section 7C(1) requires a company to pay advance surtax payable u/s 7A on the basis of its own estimate. It also requires the charging of simple interest @ 12% per annum, if the advance surtax paid by the assessee is less than 83 1/3 per cent of the assessed tax. Simple interest is to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case that the moment the assessee chooses to go to Commissioner for a reduction or waiver of penalty, he admits the position that penalty was imposable. If, on that basis, any order is passed, he cannot feel aggrieved by such an order. It appears that the question which came to be examined was whether an appeal lay against the order of the Commissioner relating to waiver or reduction of penalty. Here, the assessee is not in appeal against the order of the Commissioner passed u/s 17 but on the ground that interest u/s 7C is not chargeable at all. Therefore, the ratio of the judgment is on a different question. The ld. D.R. has also placed reliance on a decision of the Punjab and Haryana High Court in the case of Jaswant Singh v. CIT [1986] 160 ITR 949, where the Commissioner had rejected the application filed u/s 273A of the Income-tax Act for waiver of penalty imposed u/s 273 and interest charged u/s 139(8) and 217. It was held there that the order of the Commissioner was not sustainable inasmuch as the question of waiving the imposition of penalty was not decided on merits. We, therefore, find that the said decision is on different set of facts. Reliance has also been placed by t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... competent. He has argued that section 17 of the Act provided for filing of an application for revision. The period of limitation under sub-section (3) was one year from the date on which the order in question is communicated to the assessee. The A.O. had made the assessment order on 30-3-1985 and, therefore, application u/s 17 could be filed by 30-3-1986. Therefore, the assessee moved an application u/s 17, though the appeal before the Commissioner had already been moved but it was not decided. The appeal came to be decided much later, i.e., on 23-11-1987. It has been contended that by taking recourse to section 17, the assessee was not debarred to seek remedy on a different ground altogether. Reliance has been placed by the ld. counsel on a decision of the Supreme Court in the case of Central Provinces Manganese Ore Co. Ltd v. CIT [1986] 160 ITR 961. That was a case where interest u/ss 139(8) and 215 of the Income-tax Act had been charged. The assessee preferred an appeal u/s 246(c) raising objections to the total income assessed and to the interest charged u/ss 139 and 215. At the same time, the assessee also filed two revision petitions before the Commissioner u/s 264 - one obj ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealt with by the Commissioner in exercise of his revisional jurisdiction. The ld. D.R. has drawn strength from the observations of the Supreme Court in the aforesaid case and has contended that the said authority helps the Revenue, rather than the assessee. The ld. D. R. contended that the question of reduction or waiver of interest has been clearly held to be a subject of revision and, therefore, on the basis of this observation, the appeal should be held to be incompetent. The ld. counsel has, on the other hand, contended that he never raised the question of waiver or reduction in the appeal and his main ground is chargeability of interest. He has submitted that the Supreme Court has very clearly and in unambiguous terms observed that where the interest has been levied as part of assessment, the only inference would be that the assessee has been assessed. In that view the of the matter, the assessee has a right to challenge that part of the assessment by which interest has been charged. 6. Looking to the observations of the Supreme Court, we find that the question of chargeability can be raised by the assessee in appeal because order of interest has been passed in assessment p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le ground that the receipt of income on sale of import entitlement has been brought to tax by an amendment of law with retrospective effect. Before the amendment, there were divergent judicial pronouncements on this question. But after the amendment introduced by the Finance Act, 1990, the receipt from sale of import entitlement was made taxable with retrospective effect from 1-4-1962. Sections 2(24)(va) and 28(iiia) of the Income-tax Act were amended by the Finance Act, 1990. 10. The ld. counsel has submitted that the amendment made w.e.f. 1-4-1962, was a retrospective legislation and, therefore, since this amendment came on the statute book under the Finance Act, 1990, the assessee was not at all under the belief that such receipts could be subjected to tax by way of retrospective amendment. The question here relates to assessment year 1982-83. It has been submitted by the ld. counsel that at the relevant point of time, there was divergence of judicial opinion and the point was not very clear whether income from import entitlement was subject to tax or not. Our attention has been invited to certain judicial decisions in this respect. The decision of the Calcutta High Court in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be penalised for demanding exclusion of income, which was subject-matter of debate before different High Courts. It was only on that account that the Government ultimately brought an amendment in the Income-tax Act, 1961, as late as in the year 1990 and that too by way of retrospective amendment. Such a drastic measure was adopted only because different views were taken by different High Courts on the question. To put the controversy to rest, the Government brought an amendment treating the income as taxable by amending sections 2(24) and 28 w.e.f. 1-4-1962. Such a drastic retrospective amendment only suggested that it was supposed to be the only way out to end/conclude the controversy raised for the past many years. 11. The ld. counsel has also invited our attention to various other additions and deductions which were made by the A.O. as well as the first appellate authority. Apart from receipt on account of import entitlements, the assessee had also claimed certain expenses on rectification of goods exported and found defective. An amount of Rs. 8,99,041 was claimed as deduction for those expenses. It was, however, disallowed by the A.O. The matter ultimately came before the Tr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... allowed at Rs. 2,02,430 in ground No.7. Similarly, in ground No. 13, another weighted deduction to the tune of Rs. 8,77,201 was allowed at 75% and 50% of the expenditure by the Tribunal. This claim was in respect of salary, export exchange, telephone, telex, printing and stationery etc. Another disallowance of Rs. 67,202 was also allowed by the Tribunal under rule 6B in ground No. 16. Claim relating to expenditure on export promotion at Rs. 53,045 was partly allowed by the Tribunal in ground No. 19. The Tribunal gave certain more relief of the assessee while deciding grounds Nos. 20 to 25 in respect of multiple shift allowance, depreciation on tubewell, triple shift allowance on generator, disallowance u/s 80G, claim u/s 80K and terminal depreciation at Rs. 61,199. These claims having been allowed, indicate that the assessee's claim was not altogether baseless or totally incorrect. Only because certain claims were allowed in full and certain claims were rejected, would not go to prove that the returned income was based on any imaginative proposition. The ld. counsel has, therefore, argued that the assessee got certain relief from the first appellate authority and thereafter more r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 90. Therefore, we find that this is a case where the assessee could not be penalised for not filing a true statement of income and a correct estimate of advance surtax. We see a genuine claim of the assessee in the matter. We have also seen that certain claims relating to deductions and expenditures have been allowed by the Tribunal also. These reliefs also go to suggest that the assessed income was not acceptable by the assessee for certain legitimate reasons. On account of the reliefs given by the Tribunal, we again come to the conclusion that the returned income could not be said to be totally incorrect or unfounded. The assessee was given substantial relief regarding weighted deduction and depreciation. He did not press his claim for rectification charges, which involved substantial amount, because the assessee had received relief either in next assessment year or in case of another concern of the same group. Therefore, it again goes to establish that the assessee's claim was bona fide and based on sound footing. 15. The ld. counsel has also invited our attention to the order of the Commissioner passed in the case of penalty u/s 273(2)(aa) of the Income-tax Act, for assessmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue is deprived of the benefit of tax for the period during which it has remained unpaid. The very period for which the interest is levied under the relevant provision, points to the nature of the levy. If that is borne in mind, it will be apparent that the levy of interest is part of process of assessment. The Supreme Court has further observed that the expression 'penal interest' has acquired usage but is in fact an inaccurate description of the levy. The ld. counsel has, therefore, contended that it was a fit case where interest could be held to be not chargeable at all. The bona fides of the assessee's claims have been well-established and the returned income could not be held to be totally baseless or unreliable. The very fact, that many claims were allowed, goes to suggest that the computation of advance surtax made by the assessee by way of estimate was not unexpected. The peculiar circumstances of the case make out a case in favour of the assessee that interest could not be charged at all. 18. Looking to the entire facts of the case and keeping in view the peculiar circumstances concerning the entire matter, we are of the view that no interest is chargeable u/s 7C ..... X X X X Extracts X X X X X X X X Extracts X X X X
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