G KRISHNAN Vs. ASSISTANT CONTROLLER OF ESTATE DUTY

JUDGEMENT

(1.) PETITIONER 's father, one Govinda Menon died on 18th Oct., 1981 leaving behind immovable properties of a value which made the estate liable for payment of duty under the Estate Duty Act, 1953 (the Act). The Asstt. CED, Ernakulam completed assessment on the petitioner on 29th July, 1983 determining the principal value of the estate liable for duty, at Rs. 6,40,580. Demand was made for Rs. 82,174 as the balance of estate duty payable after crediting the provisional duty of Rs. 25,000 paid by the petitioner. The petitioner paid a further sum of Rs. 10,272 and sought the facility of paying the balance amount in instalments under s. 70(2) of the Act, which was allowed by the proceedings Ext. P1 and the petitioner was permitted to pay the amount in eight half yearly instalments from 6th Feb., 1984, inclusive of interest. The petitioner simultaneously challenged the assessment in appeal which was partly allowed by the Appellate Controller on 23rd Nov., 1984, reducing the principal value by Rs. 1,85,000. The order was implemented by the Asstt. CED by his proceedings Ext. P2 dt. 5th Jan., 1985 fixing the duty payable at Rs. 53,845. Deducting the amounts already paid provisionally and in instalments, demand was made for a further amount of Rs. 445 which was paid by the petitioner on 22nd Feb., 1985. By this payment no further amounts remained to be paid by way of estate duty under the assessment as modified in appeal.

(2.) THE Revenue challenged the appellate order in appeal before the Tribunal. The appeal was successful in part and the principal value became Rs. 5,68,580 and the estate duty payable thereon Rs. 85,574. The order of the Tribunal is dt. 29th Sept., 1989. The balance duty payable was Rs. 32,328 for which demand was made along with an amount of Rs. 8,848 by way of interest under s. 70 (vide Ext. P3 dt. 6th Dec., 1989). Petitioner paid the balance amount of duty and sought waiver of the interest demanded by his petition Ext. P5. The request was, however, rejected by the Asstt. Controller by his proceedings Ext. P6 dt. 17th July, 1990 on the ground that the petitioner had opted for payment of the duty in instalments and, therefore, interest was payable under s. 70 of the Act. The petitioner's subsequent request to the CIT did not meet with any success, being rejected by the proceedings Ext. P8.

(3.) I have already noted that the balance demand got reduced to a mere Rs. 445 by virtue of this order which the petitioner promptly paid. It is also seen from the pleadings that the petitioner had paid the instalments (inclusive of interest) properly in accordance with the tenor of Ext. P1, so that at the time the order was passed by the Appellate Controller, the amount due under the assessment was being discharged as permitted by the order under s. 70. In that event, the decision of the Division Bench in ITO vs. A.V. Thomas & Co. 1984 KLT 803 must come into play and interest does not run during the period the liability ceased to exist during the operation of the Appellate Controller's order till it was set aside in part by the Tribunal. In A.V. Thomas & Co., the assessee had paid the amount demanded as per the order of assessment and, therefore, it was held that there was no liability on his part to pay interest during the period the first appellate order granting relief to the assessee was in force. No doubt, the case was one under s. 220(2) of the IT Act, 1961. But the principle of the decision can be applied here. The petitioner had complied with the demand as per the order of assessment and had paid the instalments due as permitted by Ext. P1. The small further amount of Rs. 445 which became payable under the Appellate Controller's order was also paid. Interest is payable only because of s. 70 of the Act and when there was no amount payable towards duty, the question of paying interest under s. 70 during the period of operation of the Appellate Controller's order does not arise, as there was no further amount payable as per the order Ext. P1. The assessee paid the small further amount due as soon as it was demanded after the Appellate Controller's order. I am, therefore, of the view that no interest could run during the period the order of the Appellate Controller was in force. The demand for interest made on the petitioner by the revised order Ext. P3 requires modification to this limited extent. The original petition is, therefore, allowed in part. I direct the first respondent to modify the order Ext. P3 in so far as it claims interest from the petitioner, by deleting that part of the interest which relates to the period when the Appellate Controller's order was in force, upto 29th Sept., 1989, and confining it only to the rest of the period. There will be no order as to costs.