TMI Blog1962 (8) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... (6) and (8) is based. The result, therefore, is that these appeals are dismissed and the decision of the High Court answering the question framed is upheld. - C.A. 10 OF 1962 - - - Dated:- 31-8-1962 - JUDGMENT The judgment of the court was delivered by SARKAR-In certain assessment proceedings under the Indian Income Tax Act, 1922, the assessee was charged with interest under sub-section. (8) of section 18A of that Act. That sub-section provided that in the cases the mentioned interest calculated in the manner laid down in sub-section (6) of section 18A shall be added to the tax assessed. The Assessee contends that he could not be made liable to pay the interest as in his case it could not be calculated in the manner indicated. The only question that arises in this appeal is whether this contention is right. The assessee's contention was rejected by the Appellate Commissioner but not by the Appellate Tribunal. The respondent Commissioner thereupon obtained a reference of the following question to the High Court of Punjab for its decision : "Whether, on a true construction of sub-section (6), (8), and (9) of section 18A of the Indian Income-tax Act, the interest referred to in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basis of his own estimate, and the tax so paid is less than eighty percent. of the tax determined on the basis of the regular assessment,.... simple interest at the rate of six percent per annum from the first day of January in the financial year in which the tax was paid up to the date of the said regular assessment shall be payable by the assessee upon the amount by which the tax so paid falls short of the said eighty percent " It is designed to apply to cases where tax has been paid by the assessee according to his own estimate but that estimate is on regular assessment found to be deficient. Under this sub-section interest has to be calculated from January 1 in the financial year in which the tax mentioned was paid and such calculation has to be made on the shortfall between the amount paid and eighty percent of the tax which was found payable on the regular assessment. Sub-section(8) provides : "Where, on making the regular assessment, the Income-tax Officer finds that on payment of tax has been made in accordance with the foregoing provisions of this section, interest calculated in the manner laid down in sub-section (6) shall be added to the tax as determined on the basis of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of any effect", see Inland Revenue Commissioners v. Bladnoch Distillery Co. Ltd. The assessee, therefore, contends that on the plain words of sub-sections (8) and (6) he cannot be charged any interest and in fact in a like his, sub-section (8) has to be regarded as of no effect. Now it is well recognised that the rule of construction on which the assessee relies applies only to a taxing provision and has no application to all provisions in a taxing statute. It does not, for example, apply to a provision not creating a charge for the tax but laying down the machinery for its calculation or procedure for its collection. The provisions in a taxing statute dealing with machinery for assessment have to be construed by the ordinary rules of construction, that is to say, in accordance with the clear intention of the legislature which is to make a charge levied effective. Reference may be made to a few cases laying down this distinction. In Commissioner of Income-tax v. Mahaliram Ramjidas it was said : "The section, although it is part of a taxing Act, imposes on charge on the subject, and deals merely with the machinery of assessment. In interpreting provisions of this kind the rule is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rules affecting assessment and collection, and that if there is any difficulty in the precise applicability of the language of those sub-section, it should be interpreted largely and generously in order not to defeat the main object of liability laid down by Rule 1 of Schedule E." Dealing with the words "his emolument" occurring in the subsection, the learned Lord Justice said : "It is quite true that strictly speaking the emolument in question never become his in the sense that the quantitative amount of Pounds 10,000 become his property. It never become payable to him, because he died. But that it was his emolument under the agreement with the company in a broad sense seems to me to be obvious, and in order to prevent the Revenue's failure to get the tax which was intended by Rule 1 of (1) [1925] 10 Tax Cas. 88,110 (3) [1938] 22 Tax Cas. 15,26 (2) [1938] 22 Tax Cas. 15 (4) [1938] 22 Tax Cas. 15,27 Schedule E, it appears to me to be legitimate to treat the words in question as meaning "on the amount of the emoluments attaching to the office which he held'." On this interpretation of sub-section (5) tax was assessed in this case. Now it seems to us that we are dealing here with a p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... who did not pay tax (1) [1940] 8 I.T.R. 442(P.C.). at all would then be put in the same position substantially which is obviously fair and was clearly intended. Which is the precise financial year in any case would depend on its facts and this would make no difference in the construction of the provision. With regard to the others question about there being no shortfall between eighty percent. of the amount of tax found payable on the regular assessment and the amount of tax paid in a case where no tax was paid, it seems to us the position is much simpler. If no tax is paid the amount of such shortfall will naturally be the entire eighty percent. We also think that the case before us is very near to Allen's case. It remains now to refer to sub-section (9) of section 18A. That subsection provides for payment of penalty in terms of section 28 upon submission of estimates under sub-section (2) and (3) known or reasonably believed to be untrue or upon failure without reasonable cause to comply with the provisions of sub-section (3). We are unable to see that this provision in any way affects the construction of sub-section (6) or (8) or assists in the solution of the difficulty which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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