COMMISSIONER OF INCOME-TAX vs. BELUR INVESTMENTS PVT LTD

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ITR/3/1991HC GujaratGJHC24013240199116 October 2001Author: HONOURABLE MR. JUSTICE MOHIT S. SHAH,HONOURABLE MR. JUSTICE D.A.MEHTA3 pages
AI SummaryAllowed

What did the High Court hold?

The High Court held that the Tribunal was correct in its decision. The Court referred to its own prior judgment in CIT vs. Ranoli Investment P. Ltd. and others (1999) 235 ITR 433. The Court noted that the phrase 'reduced by the amount of tax deductible' in Section 215(5) is also present in Section 209(1)(a) concerning advance tax computation. The Court reasoned that 'tax deductible' refers to the tax required to be deducted at the time of credit or payment to the payee under Section 194A. Therefore, tax deductible at source should be reduced from the tax determined in the regular assessment, and thereafter, the liability for interest under Section 215 should be calculated. The revenue's counsel conceded that the cited decision covered the present references. Consequently, the question referred was answered in the affirmative, in favour of the assessee.

What were the facts?

These are Income Tax References filed by the revenue (Commissioner of Income-tax) against the assessee, Belur Investments Pvt Ltd. The references pertain to assessment years 1984-85 and 1983-84. The core issue revolves around the calculation of interest under Section 215 of the Income Tax Act, 1961, specifically whether tax deductible at source should be deducted before or after calculating interest. The Tribunal had ruled in favour of the assessee, holding that tax deductible at source should be deducted first. The revenue has challenged this decision. The High Court agreed to hear these references despite a potential conflict of interest for one of its judges, as the matter was pending for a long time and had been directly decided by the Court in other cases.

What were the issues?

1. Whether, the Tribunal is right in law and on facts in holding that tax deductible at source should be deducted and thereafter interest should be calculated? Assessee's Contention: The judgment does not explicitly record the assessee's arguments. However, it is implied that the assessee supported the Tribunal's decision. Revenue's Contention: The revenue, by filing these references, challenges the Tribunal's finding that tax deductible at source should be deducted before calculating interest. The revenue implicitly argues that the interest calculation should not be reduced by the tax deductible at source in the manner held by the Tribunal.

Which sections of the Income-tax Act were involved?

Section 215,Section 209(1)(a),Section 194A

AI-generated summary — verify with the full judgment below

IN THE HIGH COURT OF GUJARAT AT AHMEDABAD

INCOME TAX REFERENCE No 3 of 1991

with INCOME TAX REFERENCE Nos 7, 8 and 24 of 1991

For Approval and Signature:

Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE D.A.MEHTA

============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements?

2.

To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement?

4.

Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder?

5.

Whether it is to be circulated to the Civil Judge? : NO -------------------------------------------------------------- COMMISSIONER OF INCOME-TAX Versus BELUR INVESTMENTS PVT LTD -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 3 of 1991 MR BB NAIK with MR MANISH R BHATT for Petitioner No. 1 MR RK PATEL for Respondent No. 1

--------------------------------------------------------------

CORAM : MR.JUSTICE M.S.SHAH and MR.JUSTICE D.A.MEHTA

Date of decision: 16/10/2001

COMMON ORAL JUDGEMENT (Per : MR.JUSTICE M.S.SHAH) Mr BB Naik learned counsel for the revenue makes a specific request that since these references are pending for the last about 10 years and more particularly, since the controversy raised in these references is concluded by a direct decision of this Court, this Bench may take up this reference for final disposal, notwithstanding the fact that one of us (Mr. D.A. Mehta,J) had appeared for the respondent-assessee at the hearing of the reference applications before the Income Tax Appellate Tribunal.

In view of the above request, we take up these references for final disposal.

2.

In these references at the instance of the revenue, the following question is referred for our opinion in respect of assessment years 1984-85 (ITR No. 3/91) and 1983-84, (ITR Nos.7,8 and 24 of 1991):-

"Whether, the Tribunal is right in law and on facts in holding that tax deductible at source should be deducted and thereafter interest should be calculated ?"

3.

We have heard Mr BB Naik learned counsel for the revenue and Mr RK Patel learned counsel for the assessee.

4.

For taking the aforesaid view that tax deductible at source should be deducted and thereafter interest should be calculated, the Tribunal relied on its decision in Kanchanjanga Investment P. Ltd. (ITA No.2037/Ahd/86 dt. 7-6-1988). The decision of the Tribunal in the words "reduced by the amount of tax deductible" which appear in sub-section (5) of section 215 also occur in clause (iii) of section 209(1)(a) dealing with computation of advance tax. The amount of tax deductible in accordance with section 194A would obviously mean the tax as was required to be deducted in respect of the interest income at the time of credit to the account of the payee or payment whichever is earlier and concluded that the Tribunal was right in holding that tax deductible at source should be reduced from the tax determined on the basis of regular assessment and thereafter, the liability to pay interest should be calculated under section 215 of the Income-tax Act, 1961. 5. The learned counsel for the revenue agrees that the aforesaid decision would cover the question referred in these references. Hence, following the aforesaid decision, we are of the view that the Tribunal was right in holding that tax deductible at source should be deducted and thereafter interest should be calculated. Accordingly, our answer to the question referred to us is in the affirmative i.e. in favour of the assessee and against the revenue.

6.

The References accordingly stand disposed of with no order as to costs.

(M.S. Shah,J)

(D.A. Mehta,J) zgs/-

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