TMI Blog1997 (1) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... company is also a regular income-tax assessee under the Income-tax Act, 1961. The assessment year involved is 1988-89 corresponding to the accounting year ending on September 30, 1987. The respondent/writ petitioner company used to compute the income on "completed contract method" basis. The said method of computation of income was followed up to the assessment years 1987-88. The method of accounting followed by the said company had been accepted by the Income-tax Department up to the assessment year 1981-82. The Income-tax Department on and from the assessment years 1982-83 to 1987-88 started rejecting the said method of computation of income on "completed contract method" basis. In appeal against the disallowance for the assessment year 1982-83, the Commissioner of Income-tax (Appeals) accepted the claim of the writ petitioner and thereafter the Department did not go any higher up and accepted the said decision. As regards the assessment year 1983-84, the Assessing Officer in making the original assessment accepted the said method of computation of income. The Commissioner of Income-tax, however, under section 263 of the Act rejected the said method of computation of income. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eriod, the assessee-company already received certificates under section 203 of the Act from various customers of the assessee-company showing that a sum of Rs. 26,21,523 was already deducted at source by way of income-tax by the various customers of the assessee-company under section 194C of the Act. The assessee claimed that in view of the provisions of section 199 of the said Act, the said amount would be deemed to have been paid by the assessee by way of advance tax and as such there was no obligation on the part of the assessee to pay any further advance tax, and in that view of the matter, the assessee-company filed the return for the assessment year 1988-89 showing an income of Rs. 10,51,310 enclosing therewith certificates for the tax deducted at source for various periods. The assessee-company requested the Assessing Officer to make a provisional assessment under section 141A of the Act. By the letter dated December 27, 1988, the Assessing Officer, however, refused to make the provisional assessment since the date of deposit of the tax deducted at source did not appear from the certificate issued. Thereafter, the income-tax file of the assessee-company was transferred f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the excess amount of tax deducted at source. Learned counsel appearing on behalf of the Revenue submitted that the tax deducted at source cannot be treated as payment of advance tax and as such the provisions of section 214 are not applicable for the purpose of awarding interest in respect of such refund. The provisions of section 244A of the Act which were inserted on and from April 1, 1989, could not be made applicable in respect of the assessment years in question in view of the provisions of section 244A of the Income-tax Act. The assessment year involved in this case is the assessment year 1988-89, and under sub-section (4) of section 244A of the Income-tax Act, the provisions of section 244A of the said Act giving the right to get interest in respect of excess amount of the tax deducted at source has been made specifically applicable from the assessment year commencing on April 1, 1989, and subsequent assessment years. It was further submitted by learned counsel on behalf of the Revenue that the provisions of sections 192 and 206 of the Income-tax Act relate to tax deducted at source and the provisions of sections 207 and 219 relate to advance taxes and up to March 31, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tax at source. Section 202 of the Act provides that deduction was one of the modes of recovery of tax without prejudice to the other modes of recovery. Section 206 of the Act provides the duty on the persons deducting tax to furnish prescribed returns, whereas section 207 of the said Act provides liability for payment of advance taxes and the subsequent section 208 of the said Act provides the conditions of liability to pay such advance tax. Section 209 of the Act provides that the payment of advance tax should be made by the assessee on his own accord or in pursuance of the order of the Assessing Officer. Section 211 provides the instalments of advance tax and the due dates of such payments. The amount of tax deducted at source was Rs. 26,21,523. The provisions for deduction of tax at source were made as one of the procedures for recovery of taxes and such deduction is made by the seller of the goods on account of the buyer. Advance tax is a provision for recovery of the tax in advance, according to the estimates of the assessee. In both the cases taxes are paid before the actual assessment is made and after making actual assessment necessary adjustments of tax paid by way of a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eneral law of the land by virtue of the provisions of the Interest Act in the absence of any statutory provisions and/ or any contract to the contrary, nobody is entitled to interest as a matter of right and the Assessing Officer under the Income-tax Act cannot be called upon to pay interest in violation of the provisions of section 244A and/or section 214 of the Act (which stood repealed after incorporation of section 244A) the court could only direct the Assessing Officer to act in accordance with the law and/or to follow the provisions of law. In the absence of any law the court, in our view, cannot direct payment of interest in contravention of the provisions of law. Section 244A of the said Act has specifically been made effective from the assessment year 1989-90. Substantive law is that part of law which creates, defines and regulates rights as opposed to "adjective or remedial law" which prescribes the method of enforcing the rights and obtaining redress for their invasion. (see Black's Law Dictionary). Procedural law means the mode of procedure by which the legal rights are enforced as distinguished from the substantive law which gives or defines the rights. Accordi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act and this is dependent on the economic wisdom which is within the exclusive province of the Legislature. In Middleton v. Texas Power and Light Company [1918] 249 US 152, the American Supreme Court held that it must be presumed that the legislator understands and correctly appreciates the need of his people that its laws are directed to problems made manifest by experience and its discretion based upon adequate grounds. It is a well settled rule of law that all charges upon the subject must be imposed by clear and unambiguous language because in some degree they operate as penalties. The subject is not to be taxed unless the language of the statute clearly imposed an obligation and the language must not be strained in order to tax transactions which the legislator thought of it (sic) could have been covered by appropriate words. In this connection the observation of Rowlatt J. in Cape Brandy Syndicate v. IRC [1921] 1 KB 64, was "one has to look merely at what is clearly said. There is no room for any intendment. There is no equity about a tax. There is no presumption as to a tax. Nothing is to be read in, nothing is to be implied. One can only look fairly at the language used ..... X X X X Extracts X X X X X X X X Extracts X X X X
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