COMMISSIONER OF INCOME TAX Vs. CONTINENTAL DEVICE INDIA

JUDGEMENT

(1.) AT the instance of the Revenue, the following question has been referred for opinion of this Court under S. 256(1) of the IT Act, 1961 ('the Act') by the Tribunal, Delhi Bench 'D' :

(2.) FACTUAL position, which is almost undisputed, is essentially as follows : For the assessment year in question previous year ended on 30th June, 1977. The assessee, a company, was assessed under S. 143(3) r/w S. 144B of the Act. For the assessment year as question the assessee filed its return covering a period of 18 months since the assessee was allowed to change the previous year by the ITO by order dt. 7th April, 1977. The assessee deposited a sum of Rs. 82,500 with Industrial Development Bank of India ('IDBI') in lieu of surcharge on income tax in terms of S. 2(6) and (8) of the Finance Act, 1976 (the 'Finance Act') read with Company's Deposit (Surcharge on Income tax) Scheme, 1976 ('the scheme') dt. 28th Aug., 1976. The assessee made the deposit on 13th Dec., 1976. The ITO did not allow the claimed credit to the assessee. Matter was carried in appeal before the CIT(A). The authority held that under the provisions of the Finance Act and the Scheme in a case where the amount of deposit so made is equal to or exceeded the amount of surcharge on income tax, then the surcharge on income tax payable by the company, for the relevant assessment year shall be nil. In the assessee's case, the gross demand as surcharge was Rs. 67,787 as against which deposit of Rs. 82,500 was made. The ITO was, therefore, directed to treat the demand on surcharge as nil. Against the relief granted the Revenue filed an appeal before the Tribunal. The Tribunal noticed that the accounting period relevant to the assessment year under appeal was comprised of 18 months and the assessee was allowed to change the previous year. Period comprised in the accounting period relevant to the assessment year, thus, worked out as 1st Jan., 1976 to 30th June, 1977. Undisputedly, the assessee had deposited Rs. 82,500 with IDBI in lieu of surcharge in terms of the provisions referred to above. As the accounting period comprised of 18 months and change in the previous year was permitted, there was no assessment for the asst. year 1977 78. Accordingly, the assessee had claimed relief as credit under the Scheme. The being the position, it was held that the assessee's claim was allowable. On being moved for reference, question as stated above was referred for opinion of this Court.

(3.) IN order to appreciate the correct position, it would be necessary to deal with the relevant clauses. Clause (3) of the scheme reads as follows :