TMI Blog2006 (1) TMI 221X X X X Extracts X X X X X X X X Extracts X X X X ..... cer is required to serve upon the assessee a notice of demand in the prescribed form specifying the sum so payable. Two propositions clearly emerge from the provisions of section 156. First proposition is that the terms income-tax , interest , penalty and fine are neither inter-changeable nor overlap with each other in their meaning. Second proposition which emerges from section 156 is that the phrase sum so payable as used therein includes not only income-tax but also interest, penalty and fine or any other sum which is found to be payable in consequence of any order passed under the Income-tax Act. The provisions of section 156 clearly highlight the fact that income-tax, interest, penalty, and fine are distinct terms and that the term tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) ought to have held that book profits under section 115JA does not include interest on income-tax. 4. It may be declared that the book profits under section 115JA cannot be enhanced by including the amount of interest on income-tax by resorting to section 154 of the Income-tax Act, 1961. 5. The quantum of income and tax thereon be reduced accordingly...." 2. The assessee was engaged, during the previous year relevant to the assessment year under appeal, in the business of mining, processing and export of mineral ores. The assessee filed its return of income on 31-12-1999 based on the accounts audited under the Companies Act, 1956 together with the report under section 44AB of the Income-tax Act, declaring book profit at Rs. 24,47,610 under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the matter, he confirmed the order of the Assessing Officer passed under section 154 with the following observations: "It is important to note that the expression 'income-tax' has not been defined in the Income-tax Act. The word 'tax' has although been defined by section 2(43) of the Income-tax Act. It is, however, commonly been understood that income-tax includes interest on income-tax. When liability towards income tax is being considered interest on income-tax is always part of such liability. While computing the income any income-tax including interest on income-tax debited to P L A/c. is always added back for arriving at the income chargeable to tax. In my opinion there is no ambiguity or any possibility of debate on this matter. I ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sion made in that behalf. She submitted that the term "income-tax" used in the said Explanation did not include interest on income-tax. According to her, the distinction between income-tax, interest, penalty, fine, etc. was widely known. She contended that all the aforesaid terms were not interchangeable and did not have the same meaning. She argued that the term "income-tax" meant only income-tax and not interest on income-tax. The learned authorized representative took us through the provisions of sub-section (43) of section 2, which defines tax. She submitted that the aforesaid definition made it amply clear that the term 'tax' would mean only income-tax chargeable under the provisions of the Act. According to her the term "income-tax" u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ate or rates, income-tax at that rate or those rates shall be charged for that year in accordance with, and subject to the provisions including provisions for levy of additional income-tax of, this Act in respect of the total income of the previous year of every person". In pursuance of the aforesaid provisions, the Finance Acts are enacted year after year to provide for the rates at which income-tax is required to be charged in a given assessment year. The calculation and charge of income-tax is thus statutorily fixed by the Finance Act. The amount of "income-tax" so fixed by the Finance Act can neither be increased nor decreased by any other sum including interest, penalty, fine, etc. In other words, the amount of "income-tax" remains alw ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e-tax" is charged under section 4 of the Income-tax Act at the rates specified in the First Schedule to the Finance Act. Interest is charged, on the other hand, under the provisions of sections 201, 234A, 234B and 234C of the Income-tax Act. Thus, there are distinct provisions for charging income-tax and for charging interest. Secondly, while the rates of income-tax can fluctuate depending upon the provisions in the Finance Act enacted for each assessment year, the rate of interest continues to be fixed in terms of the provisions of sections 201, 234A, 234B and 234C of the Income-tax Act, 1961. Thirdly, the income-tax is charged on the income, whereas the interest is charged as compensation for depriving the State Exchequer of the taxes tha ..... X X X X Extracts X X X X X X X X Extracts X X X X
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