Commissioner of Income Tax vs Travancore Cements Ltd.

T.L. Viswanatha Iyer, J.—The assessment year concerned is 1983-84 and the assessment is one under the Companies (Profits) Surtax Act, 1964, The Surtax Officer levied interest on the total amount of surtax payable by the assessee for the year without deducting the advance amount of surtax paid by the asses see. The assessee filed a statement of advance tax on July 28, 1982, though the statement was due on June 15, 1982, and paid the advance surtax of Rs. 24,00,529. The assessing authority completed the assessment with a demand for Rs. 73,831 which included an amount of Rs. 35,972 by way of interest u/s 7C(2), accepting the payment of Rs. 24,00,529 as payment of advance tax. Subsequently, while implementing the appellate order modifying the assessment, the Surtax Officer enhanced the interest payable u/s 7C(2) to Rs. 14,91,208. Though the basis of this enhancement was not stated, it was clear that he had declined to treat the payment of Rs. 24,00,529 as payment of advance tax, as it had been made only a month after the due date. On appeal, the Commissioner of Income Tax (Appeals) held that though the payment was made with a delay of about a month after the due date, still it partook of the nature of advance tax, as the payment had been made within the financial year and, therefore, interest was not leviable on the said amount. He relied on the decision of this court in Santha S. Shenoy, A.S. Suresh, A.S. Sasidhara Shenoy, A.S. Narayana Shenoy, Sobhana V. Shenoy, A.V. Gopalakrishna Shenoy and A. Sethumadhavan Vs. Union of India (UOI) and Others, On appeal, the Income Tax Appellate Tribunal affirmed the decision of the Commissioner, holding that the amount having been paid within the financial year, it has to be treated as advance tax, and, as such, there was no scope for applying Section 7C(2) and levying interest on that amount.

The Revenue having lost its application for reference, has filed this petition seeking to compel the Tribunal to state a case and refer certain questions of law. Counsel for the Revenue refers to Sub-section (7) of Section 7C, which defines the expression "assessed surtax" as meaning the surtax determined on the basis of the regular assessment without making any deduction therefrom. Interest under the section is, therefore, leviable on the entire amount of assessed surtax without, making deduction of any amount paid by way of advance surtax. We are unable to agree. What Section 7C which deals with levy of interest provides is for levy of interest at the rate mentioned in cases of default in payment of advance surtax. If as held by the Commissioner of Income Tax (Appeals) the amount of advance tax paid, though belatedly, but within the financial year, partook of the nature of advance tax, the amount so paid is liable to be deducted from the assessed surtax for the purpose of computing the amount on which interest is payable. If the contention of the Revenue is to be accepted, the position will be that interest will be payable on the entire amount of assessed surtax as under the assessment without making any deduction of advance surtax paid even if it had been paid in time. We do not think such an interpretation is possible. Interest is made leviable for the purpose of compensating the Revenue for the loss caused to it by the non-payment of the amount due by way of advance tax during the financial year. We do not find any substance in this petition seeking reference.

It is, accordingly, dismissed.