Case Law Details
RELEVANT PARAGRAPH
9. We have given our due consideration to the aforesaid submissions of the counsel on the either side. The important fact which is to be borne in mind in the present case is that no advance tax was paid by the assessee at all in the assessment year in question on the plea that such tax was not payable as the assessee had set off the interest income earned by it against the interest paid. This move of the assessee was held to be not a proper course of action while passing the assessment order. It was held that the interest earned by the assessee during the period of construction is to be treated as income under the head “Income from other sources “.This assessment is not ITA No. 119 of 2002 challenged. Therefore, we have to proceed on the basis that there was income earned by the assessee in the relevant year in the form of interest under the head “Income from other sources “,which was liable to tax and on this, advance tax was also payable. Another material fact which is to be borne in mind is that while passing the assessment order, the Assessing Officer proceeded to charge the interest, inter alia, under Section 234B of the Act in the computation sheet. The assessment order and computation sheet are of the same date and both are under Section 143(3) of the Act.
10. In this background, when the interest is calculated as per the provisions of Section 234B of the Act on the same, non-mentioning of the provisions of Section 234B of the Act specifically, would not make any difference. Admittedly, the specific direction was given to “charge interest ” and then simultaneously on the same date, in computation sheet, interest under Section 234B is added. Reading the two documents together, it can safely be inferred that the Assessing Officer meant that such interest is to be charged under Section 234B of the Act. Not mentioning this Section in particular in the assessment order, therefore, would not be of much consequence.
11. Further as no advance tax was paid at all by the assessee during the assessment year in question, argument that the Assessing Officer was required to determine various aspects before charging the interest under Section 234B, as pointed out by the learned counsel, would not be applicable in the instant case.
14. From the facts already narrated above, it cannot be disputed that it ultimately turned out that tax was payable on the interest income earned by the assessee and thus, the assessee was liable to pay advance tax as well under Section 208 of the Act, inasmuch as the tax payable on the said income earned was more than ten thousand rupees. In normal course, therefore, he was to compute the said advance tax and pay the same in the manner stipulated in Section 209 and 210 of the Act. Thus, we have to hold that there is a default in payment of advance tax. This leaves us with the question as to whether an assessee would be absolved of payment of such interest if the default was bona fide. For this purpose one will have to go into the character of interest payable under this provision. This was precisely the scope of discussion by the Constitution Bench of the Supreme Court in Anjum M.H. Ghawswala (supra). No doubt, the Supreme Court was concerned with the powers of Settlement Commission in granting waiver of interest. However, answer to this depended upon the character of interest payable under the provisions of Section 234A, 234B and 234C. The Court, in no uncertain terms, held that the interest payable under those provisions is compensatory in nature. The Court read the provisions as mandatory in character holding that after the amendment in the provisions in the Finance Act, 1987 with the us e of the expression “shall ” therein,the Legislature clearly indicated that its intention was to make the collection of statutory interest mandatory. It is for this purpose the Court proceeded to decide that even the Settlement Commission, which was vested with the vast power, had no power to waive the interest payable under these provisions. Going by this interpretation to the provisions of Section 234A, 234B and 234C, as given by the Constitution Bench of the apex court, it is clear that interest is payable in case advance tax is not paid by stipulated dates and there is a „default .. It would be immaterial whether such a default is intentional or bona fide because of the reason that the provision is compensatory in nature inasmuch as the Revenue is deprived of such payment which should have been made on an earlier dated and therefore, becomes entitled to charge the interest, backed by the aforesaid statutory provision for the period of delay in receiving the payment of tax. The plea of bona fide default, therefore, would be totally alien. We, thus, answer the question posed in favour of the Revenue and against the assessee. Accordingly, the orders of the Tribunal in both these appeals are set aside. There shall, however, be no orders as to costs.
