COMMISSIONER OF INCOME TAX Vs. ENGINE VALVES LIMITED

JUDGEMENT

(1.) THE questions referred to us at the instance of the Revenue are :

(2.) WHETHER, the Appellate Tribunal's view that the order passed by the Income-tax Officer for the assessment year 1979-80 when there is no previous year is valid in law and that the assessee is entitled to interest under Section 214 of the Income-tax Act is sustainable in law, having regard to the provisions of Sections 3(1) and 4 of the Income-tax Act, 1961 ?"

(3.) THE facts referred to by us earlier clearly show that for the assessment year 1979-80, there was no obligation on the part of the assessee to file a return much less an obligation to pay advance tax, as at the request of the assessee itself, the accounting year was allowed to be altered to a period of 15 months from April 1, 1978 to June 30, 1979. THE assessment of the income for that period was to be made for the assessment year 1980-81. THE amount that had been deposited by the assessee as advance tax therefore was not the amount which was "payable" under Sections 207 to 213 of the Act in respect of which, interest under Section 214 could be claimed. It is no doubt true that as on the date the advance tax was paid, the assessee was required to pay that amount but the assessee having subsequently voluntarily altered the accounting year, the amount paid earlier as advance tax lost their character as advance tax at least in so far as section 214 of the Act is concerned. While the assessee was entitled to take back the amount so deposited, they were not the amounts which could be regarded as advance tax which were payable during the financial year relevant to the assessment year 1980-81 by the assessee by reason of the change in the accounting year. THE assessee was not required to have its income assessed for that year as the entire 12 month period from April 1, 1978 to June 30, 1979, being a part of the 15 month period from April 1, 1978 to June 30, 1979, constituted the financial year relevant to the assessment year 1980-81. THE amount that had been paid earlier while being refundable to the assessee, the assessee had not acquired any right to claim interest on these amounts under Section 214 of the Act. Interest under that provision is allowable only in respect of the amount paid as advance tax during any financial year in which "they are payable under Sections 207 to 213" of the Act, if the amount so paid exceeds the amount of assessed tax. After having obtained permission from the Income-tax Officer to offer income for a 15 month period for the assessment year 1980-81, the assessee cannot contend that the assessed tax for the assessment year 1979-80 is "O" that the entire amount paid as advance tax between April 1, 1978 to March 31, 1979, is an amount which is in excess of the amount assessed to tax and claim interest thereon under Section 214. THE Tribunal has found fault with the Income-tax Officer for not stipulating a condition while allowing the change in the accounting year to the effect that the amount paid as advance tax by the assessee will be treated only as non-interest bearing amount. It was wholly unnecessary for the Income-tax Officer to stipulate any such condition. It was at the request of the assessee the accounting year had been altered. THE assessee cannot take advantage of such alteration to claim interest on the amounts, which by its own showing were amounts which were not required to be paid in that financial year though they had been paid. THE assessee could only take refund of the amount and the Department was not required to pay any interest on that amount. THE Commissioner of Income-tax was perfectly right in revising the order of the Income-tax Officer and in holding that the assessee was not entitled to the interest that had been allowed by the Income-tax Officer.