TMI Blog2006 (1) TMI 213X X X X Extracts X X X X X X X X Extracts X X X X ..... bed. Thus, we do not find any merit in the appeals of the assessee. Accordingly, we confirm the order of the lower authorities on this issue. Levy of interest - Admittedly, the cheques were presented and deposited before the authorized banker within the due date for payment of advance tax. The cheques were admittedly encashed and the amounts were realised subsequently. It is not the case of the Revenue that the cheques were returned unpaid at any point of time. In those circumstances, as held by the Authority for Advance Rulings, the date of payment should be taken as date of presentation of the cheques. The Apex Court as well as Madras High Court have also taken similar view after interpreting sections 10 and 82 of the Negotiable Instruments Act, 1881. Therefore, in our opinion, the date of presentation should be taken as date of payment since admittedly, the cheques were honoured. By respectfully following the judgment of the Apex Court in the case of K. Saraswathy [ 1989 (5) TMI 318 - SUPREME COURT] and the judgment of the Madras High Court in the case of Kumudam Publications (P.) Ltd [ 1980 (9) TMI 77 - MADRAS HIGH COURT] and the decision rendered by the Authority for Advance R ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and until it was quantified or determined in the year in which it arose, it cannot be carried forward and set off in the subsequent years. Therefore, according to the learned D.R., the assessee is not entitled to carry forward and set off of the depreciation and business loss relating to assessment year 1987-88. The learned D.R. further submitted that it is not known what has happened after 1987-88 till the assessment year 1995-96. 4. We have considered the rival submissions on either side, and also perused the material available on record. Admittedly, for the assessment year 1987-88, the assessee filed the return belatedly, therefore, the Assessing Officer treated the return as non est. The assessee admitted the decision of the Assessing Officer to treat the return as non est. In other words, the order of the Assessing Officer treating the return as non est for the assessment year 1987-88 attained finality. The only case of the assessee is that irrespective of the quantification or filing of return, the assessee is entitled to carry forward and set off of depreciation and business loss. 5. We have carefully gone through the judgment of the Punjab Haryana High Court in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of the Madras High Court, therefore, this Bench of the Tribunal is bound by the judgment of the Madras High Court. In other words, this Tribunal is bound by the judgment of the jurisdictional High Court in the case of Sri Rajarathinam Transports (P.) Ltd. In view of the above, in our opinion, the judgment of the Punjab Haryana High Court in the case of Haryana Hotels Ltd. may not be helpful to the assessee. 7. We have also carefully gone through the decision of the Mumbai Bench of this Tribunal in the case of Bombay Gas Co. Ltd. The Mumbai Bench held that the fact that the assessee had not filed the return for the assessment years was of no consequence. The Mumbai Bench observed that the unabsorbed depreciation is to be carried forward to the following year even though no return was filed by the assessee. This decision of the Mumbai Bench of this Tribunal is also not helpful to the assessee in view of the judgment of the Madras High Court in the case of Sri Rajarathinam Transports (P.)Ltd. 8. We have also carefully gone through the judgment of the Supreme Court in the case of CIT v. Virmani Industries (P.) Ltd. [1995] 216 ITR 607. The assessee before the Supreme Court was engag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on 17-9-1995, 17-12-1995 and 20-3-1996. The Assessing Officer by taking the actual date of realization of cheques, levied interest under section 234C of the Income-tax Act. The CIT(A) confirmed the order of the Assessing Officer on the ground that though the assessee deposited the cheques within the due date, the funds had not come to the coffers of the Government or its banker by the due date since it was collected on the subsequent date. According to the learned representative, since the assessee has deposited the cheques with authorized banker, the date of payment always relates back to the date of presentation of the cheques with authorised bank. The learned representative for the assessee placed her reliance on the decision of this Tribunal in the case of Pentamedia Graphics Ltd. v. Deputy CIT [IT Appeal No. 85 (Mad.) of 2002 order dated 8-5-2002] and another decision of the Bangalore Bench of this Tribunal in the case of Asstt. CIT v. Molex (India) Ltd [IT Appeal No. 303 (Bang.) of 2003 order dated 2-8-2005]. The learned representative again placed her reliance in circular No. 261 dated 8-8-1979 issued by the CBDT and also the decision taken by the Directorate of Service T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tters aforesaid shall be regulated by law made by Parliament, and until provision in that behalf is so made, shall be regulated by rules made by the President." 13. In view of the above provision in the Constitution, the Consolidated Fund of India and Contingency Fund of India shall be regulated by law made by Parliament. Until a law was enacted by Parliament, the President of India was empowered to frame rules for regulation of funds. Both parties have not brought to our notice any law made by the Parliament for regulating the above Funds of the Government of India. However, it is brought to our notice that the Rule framed, namely. Central Government Account (Receipts and Payments) Rules, 1983. This rule would be in operation till the Parliament enacts a law for regulating the above Funds as provided in article 283(1) of the Constitution of D India. Rule 20 clause (1) of Central Government Account (Receipts and Payments) Rules, 1983 clearly says that where a cheque or draft is tendered to the bank, on the date on which it was cleared and entered in the receipt scroll shall be deemed to be the date of receipt of payment. Rule 1(3) clearly says that they will apply to all transactio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... legal consequence of payment by cheque or draft. 15. We find that cheque is a bill of exchange. The Parliament in order to define law relating to promissory note, bill of exchange and cheques enacted the Negotiable Instruments Act, 1881. Section 6 of the Negotiable Instruments Act, 1981 defines "cheque" as follows: "A "Cheque" is a bill of exchange drawn on a specified banker and not expressed to be payable otherwise on demand." This is the definition given by Parliament in the Negotiable Instruments Act, 1981. Sections 10 and 82 of the Negotiable Instruments Act, 1881 clearly say that once the cheque is encashed in the ordinary course, it will discharge the drawer from payment. The Supreme Court in the case of K. Saraswathy, while considering the provisions of sections 10 and 82 of the Negotiable Instruments Act, held that the payment by cheque should be taken to be due payment if the cheque is subsequently encashed in the ordinary course. Therefore, the Parliament in their wisdom enacted Negotiable Instruments Act, 1881 to regulate and manage the transactions through cheques. We further find that section 138 of the Negotiable Instruments Act, 1881 was amended by the Banking, Pub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en today the circular issued by the CBDT in Circular No. 261 dated 8-8-1979 holds the field. 17. Income-tax Act was a special enactment by the Parliament for the purpose of assessment, levy of tax and collection of tax. Therefore, the collection of income-tax shall be regulated by the provisions of Income-tax Act. The CBDT, who is authorised to issue circulars and clarification under section 119 of the Income-tax Act, issued a circular clarifying that if a cheque or draft is tendered, the date of payment would be the date of handing over the cheque to the Government banker provided the same was honoured on presentation. This circular issued by the CBDT in exercise of their statutory power under section 119 of the Income-tax Act would be binding on the income-tax authorities in preference to any other executive instruction issued by any other authorities. The Karnataka High Court in the case of Sahara Airlines Ltd. considered the scope of Central Government Account (Receipts and Payments) Rules, 1983 and made it clear that if the Government dues are paid by cheque, the date of payment shall be deemed to be the date on which date the cheque was handed over the Government's banker pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rved, this Rule was framed by the executive authorities in exercise of their power under Article 283(1) of the Constitution of India. Rule 20(1) of Central Government Account (Receipts and Payments) Rules, 1983 says that when the payment was made by cheque or draft, the payment shall be deemed to have been made on the date on which it was cleared and entered in the receipt scroll. Whereas, under the Negotiable Instruments Act, 1881, as interpreted by the Supreme Court in the case of K. Saraswathy, it is obvious that the date of payment relates back to the date of presentation of the cheque provided the cheque was honoured on its presentation. Therefore, there is an apparent conflict between the law enacted by Parliament, namely, the Negotiable Instruments Act, 1881 on one hand and the Rule framed by executive authorities in exercise of their power under Article 283(1) of the Constitution of India, on the other hand. 19. The question now arises for consideration is when there is a conflict between the rules framed by the executive authorities and the law enacted by the Parliament, which one will prevail? This question has been settled by the Apex Court in number of judgments. Whenev ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rulings, the date of payment should be taken as date of presentation of the cheques. The Apex Court as well as Madras High Court have also taken similar view after interpreting sections 10 and 82 of the Negotiable Instruments Act, 1881. Therefore, in our opinion, the date of presentation should be taken as date of payment since admittedly, the cheques were honoured. 22. In view of the above discussion, the decision of this Tribunal in the case of Duramettalic Sanmar Ltd. is distinguishable and therefore, it is not applicable to the facts of the case. Further, the decision of this Tribunal in the case of Pentamedia Graphics Ltd. was not considered in the case of Duramettalic Sanmar Ltd. Moreover, this Tribunal in the case of Duramettalic Sanmar Ltd has not considered the provisions of Negotiable Instruments Act and the judgment of the Apex Court. Therefore, the decision of this Tribunal would not be of any assistance to the revenue. By respectfully following the judgment of the Apex Court in the case of K. Saraswathy and the judgment of the Madras High Court in the case of Kumudam Publications (P.) Ltd and the decision rendered by the Authority for Advance Rulings, we set aside the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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