Commissioner of Income Tax vs Sonali Bank

Suhas Chandra Sen, J.—The following question of law has been referred by the Tribunal to this Court u/s 256(1) of the income tax Act, 1961 (''the Act''):

Whether, on the facts and in the circumstances of the case, the Tribunal was correct in holding that the term ''otherwise'' in section 215(2) of the income tax Act, 1961 includes advance tax paid by the assessee ?

The assessment year involved is 1980-81 for which the relevant accounting period is the calendar year ended on 31-12-1979.

The facts found by the Tribunal are as under:

The assessee is a foreign bank controlled by the Government of Bangladesh and operating in India and other countries. The Inspecting Assistant Commissioner (Assessment) found that the assessee did not furnish a statement in Form No. 28A which was due on or before 15-6-1979 in accordance with the provisions of section 209(1)(a) of the income tax Act, 1961. A notice u/s 210 of the Act for the payment of advance tax of Rs. 42,237 was served on the assessee on 3-11-1979 and an estimate of advance tax of Rs. 3,75,936 in Form No. 29 was filed by the assessee on 12-12-1979. The Inspecting Assistant Commissioner (Assessment) held that since the required ''statement'' was not filed, the assessee was liable to pay interest u/s 217(1)(a). He further held that the amount of advance tax paid by the assessee as per estimate could not be considered as tax for the purpose of computation of interest u/s 217(1)(a), as, according to him, the word ''otherwise'' in section 215(2) of the Act ''does not include advance tax''. The Inspecting Assistant Commissioner (Assessment), therefore, charged interest u/s 217(1)(a) at Rs. 1,74,774 without taking into account the advance tax paid.

On appeal, the Commissioner (Appeals) held that the question of charging interest u/s 217(1)(a) did not arise on the facts and circumstances of the case. He was also of the opinion that it was totally inappropriate to consider charging of interest on the gross amount of tax without giving benefit of advance-tax and other taxes already paid or accounted for. As such, he directed the Inspecting Assistant Commissioner (Assessment) to delete the entire interest. Being aggrieved, the department preferred an appeal before the Tribunal.

The Tribunal, however, disagreed with the Commissioner (Appeals) and held that the assessee was bound to file a statement of advance-tax by 15-6-1979 in accordance with the provisions of section 209(1)(a) of the Act and that for its failure to do so it was also liable to pay interest at the rate of 12 per cent u/s 217(1)(a) of the Act. It, however, did not agree with the Inspecting Assistant Commissioner (Assessment) that the word ''otherwise'' in section 215(2) did not include advance tax. As such, the Tribunal was of the opinion that tax was to be calculated on the balance amount of tax due, i.e., Rs. 1,23,418 and not on the amount of Rs, 4,99,354 as done by him and directed the Inspecting Assistant Commissioner (Assessment) to recompute the interest accordingly.

The controversy is whether the assessee, on the facts and circumstances of the case, is liable to pay advance tax. If so, to what extent? Section 215(2) of the Act, on which reliance has been placed, provides as under:

Interest payable by assessee. - (1) ****

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(2) Where before the date of completion of a regular assessment, tax is paid by the assessee u/s 140A or otherwise,-

(i) interest shall be calculated in accordance with the foregoing provision up to the date on which the advance is so paid, and

(ii) thereafter, interest shall be calculated at the rate aforesaid on the amount by which the tax as so paid (insofar as it relates to income subject to advance tax) falls short of the assessed tax.

There is no dispute that the assessee had made payment of tax. There is also no dispute that such payment was not made u/s 140A of the Act. We see no reason to differ from the view taken by the Tribunal. The word ''otherwise'' is broad enough to include any other mode of making payment although it is to be seen before levying tax as to how much tax has been paid by the assessee or on account of the assessee. The assessee must get credit of the total amount of the tax which is paid.

We are of the view that the Tribunal has taken the correct view of the matter. The question, therefore, is answered in the affirmative and in favour of the assessee. There will be no order as to costs.

Banerjee, J. -

I agree.