INCOME-TAX OFFICER & ANOTHER, BOMBAY vs. THE SIMPLEX MILLS LTD., BOMBAY

CIVIL APPEAL No. 165/1962Supreme Court1962 INSC 32715 November 1962Bench: 5 JudgesAuthor: S.K. DAS, J.L. KAPUR, A.K. SARKAR, M. HIDAYATULLAH, RAGHUBAR DAYAL7 pages
AI SummaryDismissed

What were the facts?

The assessee, Simplex Mills Ltd., paid advance tax for assessment year 1952-53. On August 30, 1952, regular assessment found a portion refundable. The assessee was paid Rs. 14,720-14-0 as interest on the refundable amount on September 11, 1952. Section 18A(5) of the Indian Income-tax Act, 1922, was amended retrospectively from April 1, 1952, effective May 24, 1953. Under the amended law, the assessee was entitled to Rs. 9,404-5-0 interest. The Income-tax Officer issued a notice under Section 34(1)(b) to recover the excess interest paid, citing under-assessment and excessive relief. An order was passed to recover the excess. The assessee challenged this order in the High Court, which set it aside. The Income-tax Officer appealed to the Supreme Court.

What did the Supreme Court hold?

The Supreme Court held that Section 34 of the Indian Income-tax Act, 1922, had no application to the present case as none of its conditions were fulfilled. The court reasoned that the situation was not one of under-assessment but rather an over-assessment of tax paid in advance. The interest paid by the government to the assessee on the refundable amount was not a grant of relief to the assessee; it was a statutory liability calculated according to the law in force at the time of payment. The retrospective amendment of Section 18A(5) did not retroactively render the earlier computation of interest as excessive relief that could be reopened under Section 34. The court found the revenue's arguments regarding the form of the demand notice and sub-sections (8) and (11) of Section 18A to be fallacious, as these dealt with interest payable by an assessee, not by the government. The case of M. Chockalingam was distinguished as it concerned penal interest, not interest payable by the government. The court refused leave to contend that the order could be supported under Section 35, as this point was not raised below and action was expressly taken under Section 34. Therefore, the appeal was dismissed.

What were the issues?

1. Whether Section 34 of the Indian Income-tax Act, 1922, was applicable for recovering excess interest paid to the assessee, considering the retrospective amendment of Section 18A(5) and the grounds of under-assessment or excessive relief. Assessee's contentions (as inferred from the judgment's reasoning): The case was not one of under-assessment but over-assessment of tax paid in advance. The interest paid by the government was not a grant of relief but a statutory liability calculated under the law in force at the time of payment. The retrospective amendment of Section 18A(5) should not allow reopening of a computation made under the then-existing law via Section 34. The form of the demand notice and sub-sections (8) and (11) of Section 18A do not treat government-paid interest as part of the tax paid by the assessee. Revenue's contentions (as inferred from the judgment's reasoning): The excess interest paid constituted excessive relief granted to the assessee, making Section 34 applicable. The interest paid was part of the tax, as suggested by the form of the demand notice and provisions of Section 18A(8) and (11). Reliance was placed on the case of M. Chockalingam v. Commissioner of Income-tax, Madras.

Which sections of the Income-tax Act were involved?

Section 34,Section 18A(1),Section 18A(5),Section 18A(8),Section 18A(11),Section 22,Section 23(3),Section 35

AI-generated summary — verify with the full judgment below

1962 M,,.,. 81111 l!/t<lriril.'I s-d v. s .. 1.i.r. w • .u.., c.11 .. (// Si/I; MU/s LU. HU/ay•lwlW., I. J9fl Nootmln, J 5. 162 SUPREME COURT REPORTS [1963] SUPP. such tem1s and conditions as the Board may from time to time fix having regard to the nature and geographical position of the supply and for purposes for which it is required without showing undue pre- ference to any person. Mr. Vishwanath Sastri contended that a dispute might arise if the Board unreasonably refused to supply electricity to a pri- vate consumer or showed undue preference to some- one else and such a dispute might be taken to arbitra- tion under s.

76.

I do not wish to pronounce any opinion upon this matter because the present dispute is not a dispute of this character. For these reasons I am of opinion that the Additional District Judge, Bangalore, was right in granting the declaration sought by the appellants. I would, therefore, set aside the order of the High Court and restore that of the Additional District Judge, Bangalore, with costs on the respondents throughout. One hearing fee. Appeals allowed. INCOME-TAX OFFICER & ANOTHER, BOMBAY fl. THE SIMPLEX MILLS LTD., BOMBAY

The order continues below.

Read the full judgment

A free account opens 10 full judgments a month. Re-reading one you have already opened does not count again.

Create a free accountSign in

See plans and prices

The summary, the parties, the sections and the citations above are open to everyone and always will be. Only the text of the order and the PDF are metered.

More judgments on Section 34

All 275 judgments and leading authorities on Section 34 →

Recent GST High Court judgments

Search GST case law →