Commissioner of Income Tax vs Manojkumar Beriwal

F.I. Rebello, J.—Having heard the parties, the appeal is admitted on question (b) as framed in para 4 of the appeal memo which is as under:

Whether in the facts and circumstances of the case and in law, the Tribunal is right in holding that for the purposes of Section 249(4) of the Act, the deposit of tax, which is a condition precedent, does not include interest under Sections 234B and 234C of the Act?

The learned Tribunal while considering the issue relied upon decisions of the Tribunal and arrived at the conclusion that the word "tax" u/s 249(4) includes only tax and not interest. On behalf of the Revenue, the learned Counsel submits that tax would include interest and admittedly if both the components are considered the assessee had not deposited the entire amount and consequently Tribunal ought not to have entertained the appeal.

Section 249(4) is the provision whereby the remedy of the party is taken away, if there is non-compliance with that provision. It is well settled that when legislature seeks to make a law denying a remedy on failure to comply with deposit, the Courts would save the remedy, if possible by the interpretative process. Further, in taxing statute, if a view can be taken in favour of an assessee that view is ordinarily preferred.

On the literal reading of Section 249(4) of the Act, the language used by the legislature is "has paid tax dues". The expression tax has been defined in Section 2(43) of the IT Act. Tax as per the definition does not include interest which has been independently referred to u/s 2(28A) of the IT Act. When the legislature itself has used two different expressions and defined them separately, then whilst considering the language of a section, the Courts are bound to look at the definitions in the legislation for the purpose of interpreting and construing the expressions and words under the Act. The object being to avoid conflict and have a harmonious interpretation, unless the context otherwise requires. In these circumstances, in our opinion the expression "tax" does not include interest for the purpose of Section 249(4) of the IT Act.

On behalf of the assessee, the learned Counsel also brought to our attention the judgment of the Supreme Court in Harshad Shantilal Mehta Vs. Custodian and Ors, . This was also under the provisions of the IT Act. The issue for consideration in terms of question 5, framed by the Supreme Court was whether the tax u/s 11(2)(a) would include interest and penalty as well. After considering the different concepts under the IT Act, the learned Court was pleased to hold that the penalty and interest under the IT Act are different concepts and that definition of tax u/s 2(43) does not include penalty or interest. In our opinion, the view taken by us finds support in these observations of the Supreme Court in the case of Harshad Mehta (supra). Considering the above, in our opinion, the Tribunal was right in the view taken. We accordingly confirm the view taken by the Tribunal.

The Department had framed question (b). In our opinion, considering the fact that the said question has been remanded back to the CIT(A), we refuse to frame that question of law.

The appeal disposed of accordingly.