TMI Blog1994 (3) TMI 141X X X X Extracts X X X X X X X X Extracts X X X X ..... ce. 3. Briefly stated facts of the case are that the Assessing Officer (AO) has rectified the original assessment orders for the asst. yrs. 1984-85 and 1985-86 under s. 154 on the ground that both the returns of income for asst. yrs. 1984-85 and 1985-86 were filed on 31st July, 1984 and 31st July, 1985, while they were due on 30th June, 1984 and 30th June, 1985 respectively, interest under s. 139(8) was not charged inadvertently. As there occurred one completed month delay according to the AO in submitting both the returns, he issued notice of hearing to the assessee and the assessee objected to the proposed rectification under s. 154 on the ground and for the reason that the fraction of a month is to be ignored and the delay is not of a full month in terms of r. 119A of the IT Rules, 1962. The AO did not entertain the contention of the assessee as according to him the date of filing of return is also includible for the purpose of computing the period of default for which the interest is chargeable. He, therefore, rectified both the assessment orders and charged interest of Rs. 42,950 under s. 139(8) for the asst. yr. 1984-85 and of Rs. 36,611 for the asst. yr. 1985-86. 4. On ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ents the DR. contended that the CIT(A) has erred in deleting the interest charged under s. 139(8) and, therefore, his order deserves to be quashed. 6. The Authorised Representative of the assessee (AR)vehemently argued and strongly supported the order of the CIT(A). He reiterated all the same arguments which were put forth before the CIT(A) and placed reliance on Karnataka High Court decision in the case of B.V. Aswathaiah Bros. 7. We have carefully considered the rival submissions, relevant facts and materials placed on the record and we have also gone through the High Courts' decisions on which reliance has been placed by the assessee. In our opinion, the controversy involved in these legal issues is so debatable and important that it needs thorough consideration in details covering the arguments of both sides before arriving at the final conclusion. We find that Karnataka High Court in the case of B.V. Aswathaiah Bros. vs. ITO held that the construction placed by High Courts of Madras and Calcutta on the term 'month' which is in accordance with the term occurring in the General Clauses Act is correct and that s. 139(8) of the IT Act read with r. 119A of the IT Rules, 1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be correct. 9. In order to analyse and appreciate the contention of the DR it is necessary to find out the distinguishing features of penalty under s. 271(1)(a) and interest under s. 139(8). The main difference between the scheme of imposition of penalty under s. 271(1)(a) and scheme of levying interest under s. 139(8) for the same default, is that while penalty is imposed @2% of assessed tax per month, the interest is levied @15% per annum on amount of tax payable. Thus, there is nothing common between the scheme of penalty and the scheme of interest except the period of default which is reckoned from the day immediately following specified date to the date of furnishing of return or date of assessment under s. 144 with only exception in the case of penalty when the time is extended on the basis of application in Form No. 6. 10. In order to consider the period of default it is necessary to reproduce r. 119A which runs as under: "In calculating the interest payable by the assessee or the interest payable by the Central Govt. to the assessee under any provision of the Act,— (a) the period for which such interest is to be calculated shall be rounded off to a whole month ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ete as according to Karnataka High Court decision for the term "month" occurring in s. 3(35) of the General Clauses Act, the British calendar for the month of July, 1984 and July, 1985, would also include 31st July, 1984 and 31st July, 1985. But contrary to that, the DR's contention based on the instruction of the Board is that the date of furnishing of return i.e., 31st July is to be included and if 31st July in both the assessment years is included even calendar month of July is complete and the interest charged under s. 139(8) for one month is valid. Before putting this contention of the Department to the test we will examine Board's instruction as to whether it has sanction of law or not. The operative and the relevant part of the instruction runs as under: "The question has been examined by the Board in consultation with the Ministry of Law. The Board have been advised that the actual date of filing the return or of completion of the assessment under s. 144, as the case may be, should also be included in computing the period for which interest is chargeable under s. 139(8)." Here, we find that provisions of s. 139(8) themselves permit to include the date of filing of ret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mpliance and not of default. If this analogy is drawn to the case of B.V. Aswathaiah Bros. 31st Aug., 1976, is to be excluded from the period of default and if last day on which return is filed is excluded calendar month of August is not complete. So is the position with month July, 1984, and July, 1985, in the case of assessee. 17. Going back to the contention of the DR that Calcutta High Court has no occasion to discuss this matter in the context of interest chargeable under s. 139(8) we noticed that while taking the definition of 'month' as calendar month for the purpose of penalty under s. 271(1)(a) the Calcutta High Court has mentioned that this definition will apply to the term 'month' occurring in the IT Act, 1961, unless there is something in the context which will exclude such application. In the light of this observation the contention of the DR does not hold good as this definition of 'month' is applicable not only to both i.e., penalty under s. 271(1)(a) and interest under s. 139(8) but also to the term "month" occurring in the entire IT Act, 1961. 18. In the light of foregoing discussions it is evident that the language of provision of s. 139 r/w r. 119A of IT ..... X X X X Extracts X X X X X X X X Extracts X X X X
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