DALMIA DAIRY INDUSTRIES LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The question fur decision is whether an order in the nature of writ of prohibition can and should be issued by us in favour of the assessee-petitioner against the Income-tax Authorities respondents, restraining them from acting upon rule 115 of the Income-tax Rules, 1962, as it stood prior to its amendment made on 1-11-1977, in the assessment proceedings which are pending with the respondents against the petitioner.

(2.) The pendency of the assessment proceedings has been alleged by the petitioner for the assessment-year 1977-78 and has not been I denied by the respondents. The petitioner has also subsequently produced belore us the notice under section 143(3) of the Income-tax Act, 1961, dated 9th August, 1979, addressed to the petitioner by the Income-tax Officer informing the petitioner that the said Officer proposes to tax the interest income accrued in the accounting year ending 30-9-1976 and that he proposes to tax the said income on accrual basis and also that he would value the said income in Indian currency by applying rule 115 of the Income-tax Rules, 1962, as it then stood, equating 1 to Rs. 18.00. Since these facts have not been traversed, the intention of the respondents to assess the alleged income of petitioner by recourse to rule 115 of the Income-tax Rules cannot be doubted.

(3.) The assessment relates to the interest granted to the petitioner by the judgement of Mr. Justice Kerr of the High Court of Judicature in London on 14-4-1976. That judgment granted this rtlief to the petitioner on the ground that the respondent in that case was liable to pay interest by way of damages to the petitioner for having failed to comply with the award given by the International Chambers of Commerce, arbitrator between those parties in favour of the petitioner. The possible causes of action for the accrual of interest arise from the year 1964-65 onwards and the view could be taken that interest was accruing from year to year since then till the satisfaction of petitioner by the receipt of the whole amount including interest.