Case Note & Summary
This is a reference under Section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue, arising from the order of the Income Tax Appellate Tribunal (ITAT) dated 10th August 1988 for the Assessment Year 1980-81. The respondent-assessee, M/s Aesthetic Builders Pvt. Ltd., had its assessment for A.Y. 1978-79 completed on a total income of Rs.16,79,938 after 15th June 1979. The core issue was whether interest under Section 217 of the Act was leviable for failure to revise the statement of advance tax under Section 209A(4). The Revenue argued that the assessee was required to file a statement under Section 209A(1) if current income was likely to exceed Rs.2500 in company cases, as per Section 208(2), and failure to revise attracted interest. The assessee contended that since its current income did not exceed Rs.2500, no initial statement was required, and thus no obligation to revise arose. The court analyzed the provisions and held that the obligation to revise under Section 209A(4) arises only if a statement under Section 209A(1) was required. Since the assessee's current income was below the threshold, no statement was required, and consequently, no interest under Section 217 was leviable. The court answered the question in the affirmative, in favor of the assessee and against the Revenue.
Headnote
A) Income Tax - Advance Tax - Interest under Section 217 - Levy of interest for failure to revise statement under Section 209A(4) - The question was whether interest under Section 217 is leviable for failure to revise the statement of advance tax under Section 209A(4) when the assessee had not filed an initial statement under Section 209A(1) because its current income did not exceed Rs.2500. The court held that since no statement was required under Section 209A(1), there was no obligation to revise under Section 209A(4), and interest under Section 217 was not leviable. (Paras 1-2)
Issue of Consideration
Whether the Tribunal was right in law in holding that interest under Section 217 was not leviable for failure to revise the statement of income under Section 209A(4), ignoring the clear provisions of Section 209A(1) to the effect that statement of advance tax is required to be sent if the current income is likely to exceed Rs.2500 in company cases, as per Section 208(2)?
Final Decision
The court answered the question in the affirmative, holding that the Tribunal was right in law in holding that interest under Section 217 was not leviable for failure to revise the statement of income under Section 209A(4). The reference was disposed of accordingly.
Law Points
- Interest under Section 217 is not leviable for failure to revise statement of advance tax under Section 209A(4) if the assessee was not required to file a statement under Section 209A(1) because current income did not exceed Rs.2500 in company cases as per Section 208(2)
Case Details
2005 LawText (BOM) (10) 47
Income Tax Reference No. 3 of 1991
Shri Ashok Kotangale for the applicant, Ms. Shobha Jagtiani with Prashant Uchol i/b D.M. Harish for the respondent
The Commissioner of Income-tax, Bombay City-III, Bombay
M/s Aesthetic Builders Pvt. Ltd.
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Nature of Litigation
Income Tax Reference under Section 256(1) of the Income-tax Act, 1961
Remedy Sought
The Revenue sought an opinion from the High Court on whether the Tribunal was right in holding that interest under Section 217 was not leviable for failure to revise the statement of income under Section 209A(4).
Filing Reason
The Revenue was aggrieved by the Tribunal's order dated 10th August 1988 which held that interest under Section 217 was not leviable.
Previous Decisions
The CIT (A) and ITAT had found that the assessee's assessment for A.Y. 1978-79 was completed on total income of Rs.16,79,938 after 15th June 1979.
Issues
Whether interest under Section 217 is leviable for failure to revise the statement of advance tax under Section 209A(4) when the assessee was not required to file an initial statement under Section 209A(1) because its current income did not exceed Rs.2500 as per Section 208(2).
Submissions/Arguments
The Revenue argued that the clear provisions of Section 209A(1) require a statement of advance tax to be sent if the current income is likely to exceed Rs.2500 in company cases, and failure to revise under Section 209A(4) attracts interest under Section 217.
The assessee contended that since its current income did not exceed Rs.2500, no statement under Section 209A(1) was required, and therefore no obligation to revise under Section 209A(4) arose, making interest under Section 217 not leviable.
Ratio Decidendi
Interest under Section 217 is not leviable for failure to revise the statement of advance tax under Section 209A(4) if the assessee was not required to file a statement under Section 209A(1) because its current income did not exceed the threshold of Rs.2500 in company cases as per Section 208(2). The obligation to revise arises only if an initial statement was required.
Judgment Excerpts
Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in holding that interest u/s 217 was not leviable for failure to revise the statement of income u/s 209A(4), ignoring the clear provisions of sec. 209A(1) to the effect that statement of advance tax is required to be sent if the current income is likely to exceed Rs.2500/- in company cases, as per sec. 208(2)?
Procedural History
The assessment for A.Y. 1978-79 was completed on total income of Rs.16,79,938 after 15th June 1979. The CIT (A) and ITAT found that interest under Section 217 was not leviable. The Revenue filed a reference under Section 256(1) to the High Court, which was registered as Income Tax Reference No. 3 of 1991. The High Court heard the matter and delivered judgment on 7th October 2005.
Acts & Sections
- Income-tax Act, 1961: Section 208(2), Section 209A(1), Section 209A(4), Section 217, Section 256(1)
