COMMISSIONER OF INCOME TAX Vs. CLITTRES

JUDGEMENT

(1.) The assessees in these cases are shipping companies of Norway, whose ships carry goods from the Port of Cochin to various places. The ships concerned are by names Fernbrook, Fernwave, Fernmoor, Ferngate and Ferndale. Fernbrook called at the Cochin Port during the previous years relating to the assessment years 1967-68 and 1969-70; Ferndale tailed at the Cochin Port during the year relating to the assessment year 1967-68 and the other ships. Fernwave, Fernmoor, and Ferngate called at the Cochin Port during, the year relating to the assessment year 1969-70. Assessments were made by the Income Tax Officer, Mattancherry, as per S.172(4) of the Income Tax Act hereinafter referred to as the Act under which summary powers are vested in the Income Tax Officer to make a rough and ready assessment on the freight earnings of tramp ships. The tax assessed was duly paid by the respective owners of the ships concerned. Later, the owners of the ships demanded a regular assessment under S.172 Clause (7) of the Income Tax Act, after filing returns of income during the accounting years. The Income Tax Officer thereupon passed orders making regular assessment and on such assessment it was found that the tax paid on the basis of the summary assessment was in excess of the tax due on regular assessment under S.172(7) of the Act and that the assessees are entitled to a refund of the excess amount paid. There was however, no order for payment of interest on the amounts to be refunded to the assessees The assessees objected to the assessment and appealed to the Appellate Assistant Commissioner of Income Tax, Ernakulam. In appeal, the Assessees claimed also interest under S.214 of the Act on the excess amount paid on summary assessment under S.172(4) of the Act. The Appellate Assistant Commissioner reduced the total assessable income in all these cases and gave a direction to the Income Tax Officer to consider the Assessees' claim for the benefit of 50% deduction of the tax payable in accordance with Art.6 of the Agreement between the Government of India and the Norwegian Government. The assessee's claim for interest on the excess amount paid on summary assessment under S.172 Clause (4) was rejected on the ground that there is no provision in the Act for interest on such payments. In further appeal to the Income Tax Appellate Tribunal, Cochin Bench, the Appellate Tribunal directed payment of interest to the Assessees under S.214 of the Act. The Tribunal has referred the following question to this Court under S.256(2) of the Act

(2.) S.172 of the Act provides for "the levy and recovery of tax in the case of any ship, belonging to or chartered by a non resident, which carries passengers, livestock, mail or goods shipped at a port in India". Sub-s.(2) of the Section as it stood at the relevant time provides that one sixth of the amount paid or payable on account of such carriage to the owner or the charterer or to any person on his behalf shall be deemed to be income accruing in India to the owner or charterer on account of such carriage. Sub-s.(3) provides for a return to be submitted by the master of the ship to the Income Tax Officer concerned. Sub-s.(4) is as follows:

(3.) In these cases, the tax paid on summary assessment under S.172(4) of the Act is found to be in excess of the amount of tax payable on regular assessment as provided for in sub-s.(7) of S.172. The payment so made in excess according to sub-s.(7) "shall be treated as a payment in advance of the tax leviable for that assessment year". Sub-s.(1) of S.214 as it stood at the relevant time is as follows: