1984 (3) TMI 117 - AT - Income Tax

Summary

Issues:
Levy of interest under section 215 of the Income-tax Act, 1961 while giving effect to the appellate order.

Analysis:
The judgment involves a dispute regarding the levy of interest under section 215 of the Income-tax Act, 1961. The case began with the assessment for the year 1975-76, where the Income Tax Officer (ITO) disallowed depreciation on scientific assets claimed by the assessee and charged interest under section 215. The Commissioner (Appeals) allowed the claim for depreciation, leading to a reduction in the interest payable. Subsequently, the Tribunal set aside the Commissioner (Appeals)'s order for redeciding the issue. The ITO then passed another order to recompute the income and charged interest under section 215. The assessee contended that it was not a regular assessment and, therefore, the ITO could not charge interest. The Commissioner (Appeals) held that the levy of interest was proper and that the ITO could increase or decrease the interest while giving effect to appellate orders.

The main issue revolved around the interpretation of section 215(3) of the Income-tax Act, which requires the ITO to reduce the interest levied if the total income is reduced by the Commissioner (Appeals). The question arose whether the ITO could restore the interest if the income was subsequently increased by a higher figure due to further appeal. The judgment analyzed the statutory provisions authorizing the levy of interest under section 215 and considered the impact of appellate and revisionary orders on the interest calculation.

The judgment clarified that the expression 'reduced' in section 215(3) refers to the reduction as per the Tribunal's order modifying the order passed by the first appellate authority in case of a second appeal. It emphasized that the Tribunal has jurisdiction over interest calculations and can modify the interest levied based on the final income figure determined by the Tribunal's order. The judgment also referenced a decision by the Bombay High Court, which supported the interpretation that 'regular assessment' in section 215 refers to the first order of regular assessment and not subsequent orders passed to give effect to appellate or revisionary orders.

Ultimately, the Tribunal upheld the Commissioner (Appeals)'s decision, stating that there was no error in the order. The appeal against the levy of interest under section 215 was dismissed, affirming the correctness of the Commissioner (Appeals)'s finding.