High Court Of Delhi
CIT vs. Televista Electronics (P) Ltd.
Section 209, 209A, 217
Madan B. Lokur & Dr. S. Muralidhar, JJ.
IT Ref. No. 228 of 1985
24th September, 2007
Counsel Appeared
Ms. P.L. Bansal, for the Petitioner : Satyen Sethi, for the Respondent
JUDGMENT
Dr. S. Muralidhar, J. :
In this reference under s. 256(1) of the IT Act, 1961 (‘Act’), relevant to the asst. yr. 1979-80, the following question has been referred for our opinion by the Income-tax Appellate Tribunal (‘Tribunal’) :
“Whether on the facts and in the circumstances of the case, the Tribunal was correct in law in holding that no interest under s. 217 was chargeable in this case despite the fact that the assessee company did not file statement of income/estimate of income as required under s. 209A of the IT Act for the asst. yr. 1979-80 ?”
2. The assessee, which is engaged in the manufacturing of electronic goods such as television sets, video cassette recorders and the like, was assessed to a loss of Rs. 5,91,110 for the asst. yr. 197677. For the next two asst. yrs. 1977-78 and 1978-79 the assessee filed returns showing loss of Rs.2,28,100 and Rs.9,828 respectively. For the asst. yr. 1979-80 the assessee filed a return declaring an income of Rs. 3,82,484. By the assessment order dt. 27th March, 1982 the AO assessed the total income at Rs. 6,58,140 and charged interest under s. 139(8) and s. 217 of the Act since the assessee had not filed the statement of income or estimate of income for the said assessment year i.e. 1979-80 under s. 209A of the Act.
The assessee’s appeal was disposed of by the Commissioner of Income-tax (Appeals) [‘CIT(A)’] by an order dt. 31st Dec., 1982 in which the CIT(A) held that no estimate was called for under s. 209A. The CIT(A) noted that despite this objection having been raised before the AO, no findings had been given. Therefore, the said issue was restored to the file of the AO for a fresh decision.
The assessee filed an application under s. 154 of the Act before the AO pointing out, inter alia, that interest in the sum of Rs. 85,110 had been charged under s. 217 although it was not so chargeable. By an order dt. 9th June, 1983, the AO rejected this application.
The assessee again approached the CIT(A). By an order dt. 24th April, 1984 the appeal was dismissed holding that the assessee was required to pay interest on the advance tax in terms of s. 217 of the Act.
The appeal filed by the assessee before the Tribunal came to be allowed by it by an order dt. 25th Oct., 1984. The Tribunal held that there was no case for charging of interest under s. 217. That is how the above question has been referred to us for our opinion. Ms. Prem Lata Bansal learned senior standing counsel for the Revenue sought to contend that there are two distinct aspects to the requirement under s. 209A of the Act which was inserted by the Finance Act, 1978, w.e.f. 1st June, 1978. The first was the liability to file a statement of advance tax which was to be computed in terms of s. 209(1)(a). She submits that the requirement to file a statement whenever the current income was a positive one would get attracted in terms of s. 209A(4). She contends that notwithstanding the fact that the regular assessment for the year 1976-77 was a loss and the next two returns filed by the assessee for the years 1977-78 and 1978-79 were also a loss, the first instalment of advance tax in terms of s. 211 had to be paid before the 15th of June of the assessment year in question. The assessee was first required to determine its current income which it could reasonably estimate by that time. If that current income was greater than the income assessed or declared for the previous year, then the advance tax would have to be computed in the manner laid down under s. 209 on the current income. She laid particular emphasis on s. 209(1)(c) which requires the estimated current income to be substituted in s. 209(1)(a) for the total income for the purposes of computation of advance tax. She accordingly submits that the assessee cannot escape the payment of interest under s. 217 for failure to file the statement and pay the advance tax as required by s. 209A r/w s. 217. Mr. Satyen Sethi, learned counsel for the assessee on the other hand submitted that the CBDT in a circular [reported in (1979) 10 CTR (TLT) 1 : (1979) 117 ITR (St) 17] clarified that the statement of advance tax would be required to be filed by an assessee only when there was a positive income. He points out that where the regular assessment was at a loss for the year 197677 and in the immediate following years also the assessee filed a loss return, the question of computation of advance tax in terms of s. 209(1) of the Act did not arise. If there was no liability to pay advance tax, the assessee was not required to file a statement as required by s. 209A. He further pointed out that s. 209A(4) would get attracted only if the assessee is in the first place liable to pay advance tax under sub-s. (1) or sub-s. (2) of s. 209A as the case may be. He sought to place reliance on the decision of the Bombay High Court in Patel Aluminium (P) Ltd. vs. K.H. Tawadia, ITO & Anr. (1986) 51 CTR (Bom) 322 : (1987) 165 ITR 99 (Bom) of the Calcutta High Court in CIT vs. Indian Molasses Co. (P) Ltd. (1993) 200 ITR 149 (Cal) and of the Gujarat High Court in CIT vs. Gujarat Alkalies & Chemicals Ltd. (2005) 197 CTR (Guj) 495 : (2005) 276 ITR 535 (Guj).
The relevant provisions of the Act applicable for the period read as under :
“208. Condition of liability to pay advance tax.—(1) Advance tax shall be payable during the financial year(a) where the total income, exclusive of capital gains and income referred to in sub-cl. (ix) of cl. (24) of s. 2, of the assessee, referred to in sub-cl. (i) of cl. (a) of sub-s. (1) of s. 209, exceeds the amount specified in sub-s. (2), or (b) where it is payable by virtue of the provisions of s. 209A. (2) …………………. 209. Computation of advance tax.—(1) The amount of advance tax payable by an assessee in the financial year shall, subject to the provisions of sub-sections (2) and (3), be computed as follows : (a) (i) his total income of the latest previous year in respect of which he has been assessed by way of regular assessment shall first be ascertained; (ii) the amount of capital gains and income referred to in sub-cl. (ix) of cl. (24) of s. 2, if any, included in such total income shall be deducted therefrom, and on the balance income-tax shall be calculated at the rates in force in the financial year : (iii) the income-tax so calculated shall be reduced by the amount of income-tax which would be deductible during the said financial year in accordance with the provisions of ss. 192 to 194, s. 194A, s. 194C, s. 194D and s. 195 on any income (as computed before allowing any deductions admissible under this Act) on which tax is required to be deducted under the said sections and which has been taken into account in computing the said total income); (iv) the net amount of income-tax calculated in accordance with sub-cl. (iii) shall, subject to the provisions of cls. (c) and (d), be the advance tax payable; (b) ………………. (c) in cases where an estimate (including a revised estimate) is sent by the assessee under s. 209A or s. 212, the total income so estimated shall, for the purposes of calculation of tax under this section, be substituted for the total income referred to in cl. (a); (d) in cases where- (i) the total income of the latest previous year being a year later than the previous year referred to in cl. (a) on the basis of which tax has been paid by the assessee under s. 140A exceeds the total income referred to in cl. (a), or (ii) the ITO makes an amended order referred to in sub-s. (3) of s. 210 on the basis of the total income on which tax has been paid by the assessee under s. 140A, the total income referred to in cl. (a) shall be substituted,(1) in a case falling under sub-cl. (i), by the total income on the basis of which tax has been paid under s. 140A, and (2) in a case falling under sub-cl. (ii), by the total income on the basis of which the amended order under sub-s. (3) of s. 210 is made.Explanation : If the assessee is a partner of a registered firm and an assessment of the firm has been completed for a previous year later than the latest previous year for which the assessee’s assessment has been completed; his share in the income of the firm shall, for the purposes of cl. (a), be included in his total income on the basis of the said assessment of the firm. (2) ……………… (3) ……………… 209A. Computation and payment of advance tax by assessee.
—(1) Every person shall, in each financial year, on or before the date on which the first instalment, or where he has not previously been assessed by way of regular assessment under this Act, on or before the date on which the last instalment, of advance tax is due in his case under sub-s. (1) of s. 211, if his current income is likely to exceed the amount specified in sub-s.
(2) of s. 208, send to the ITO. (a) where he has been previously assessed by way of regular assessment under this Act, a statement of advance tax payable by him computed in the manner laid down in cl. (a) or, as the case may be, sub-cl. (i) of cl. (d) of sub-s. (1) of s. 209, or (b) where he has not previously been assessed by way of regular assessment under this Act, an estimate of— (i) the current income, and (ii) the advance tax payable by him on the current income calculated in the manner laid down in s. 209, and shall pay such amount of advance tax, (I) in a case falling under cl. (a), as accords with the statement in equal instalments on the dates applicable in his case under s. 211; and (II) in a case falling under cl. (b), as accords with the estimate in equal instalments on such of the dates applicable in his case as have not expired, or in one sum if only the last of such dates has not expired. (2) Where an assessee who is required to send a statement under cl. (a) of sub-s. (1) estimates on or before the date on which the first instalment of advance tax is due in his case under sub-s. (1) of s. 211 that, by reason of his current income being likely to be less than the income on which advance tax is payable by him under sub-s. (1) or for any other reason, the amount of advance tax computed in the manner laid down in s. 209 on the current income would be less than the amount of advance tax payable by him under sub-s. (1), he may send to the ITO, in lieu of such statement, an estimate of— (i) the current income, and (ii) the advance tax payable by him on the current income calculated in the manner laid down in s. 209, and shall pay such amount of advance tax as accords with his estimate in equal instalments on the dates applicable in his case under s. 211.
(3) ………………
(4) In the case of any assessee who is liable to pay advance tax under sub-s. (1) or sub-s. (2) or, as the case may be, sub-s. (3), if, by reason of the current income being likely to be greater than the income on which the advance tax so payable by him has been computed or for any other reason, the amount of advance tax computed in the manner laid down in s. 209 on the current income (which shall be estimated by the assessee) exceeds the amount of advance tax so payable by him by more than 33.50 per cent of the latter amount, he shall on or before the date on which the last instalment of advance tax is payable by him, send to the ITO an estimate of— (i) the current income, and (ii) the advance tax payable by him on the current income calculated in the manner laid down in s. 209, and shall pay such amount of advance tax as accords with his estimate on such of the dates applicable in his case under s. 211 as have not expired, by instalments which may be revised according to sub-s. (5) : Provided that in a case where the CIT is satisfied that, having regard to the nature of the business carried on by the assessee and the date of expiry of the previous year in respect of such business, it will be difficult for the assessee to furnish the estimate required to be furnished by him in accordance with the provisions of this sub-section on or before the date on which the last instalment of advance tax is due in his case, he may, if the assessee pays the advance tax which he is liable to pay under sub-s. (1) or sub-s. (2) or, as the case may be, sub-s. (3) on or before such date, extend the date for furnishing such estimate upto a period of thirty days immediately following the last date of the previous year in respect of that business and, where the date is so extended, the assessee shall pay, on or before the date as so extended, the amount by which the advance tax already paid by him falls short of the advance tax payable in accordance with his estimate : Provided further that in the case of an assessee, being a company, the provisions of this subsection shall have effect as if for the figures and words “33.50 per cent”, the figures and words “20 per cent” had been substituted. (5) The assessee may send a revised estimate of the advance tax payable by him on or before any of the dates specified in s. 211 and adjust any excess or deficiency in respect of any instalment already paid in a subsequent instalment or in subsequent instalments. (6) Every statement or estimate under this section shall be sent in the prescribed form and verified in the prescribed manner.” 211. Instalments of advance tax.—(1) Subject to the provisions of this section and of ss. 209A and 212, advance tax shall be payable in three equal instalments on the following dates during the financial year, namely : (i) the 15th day of June, the 15th day of September and the 15th day of December, in the case of an assessee whose total income to the extent of per cent thereof or more is derived from a source or sources for which the previous year (relevant to the assessment year next following the financial year aforesaid) ends on or before the 31st day of December; (ii) the 15th day of September, the 15th day of December and the 15th day of March, in any other case :217. Interest payable by assessee when no estimate made. (1) Where, on making the regular assessment, the AO finds- (a) that any such person as is referred to in cl. (a) of sub-s. (1) of s. 209A has not sent the statement referred to in that clause or the estimate in lieu of such statement referred to in sub-s. (2) of that section ; or (b) that any such person as is referred to in cl. (b) of sub-s. (1) of s. 209A has not sent the estimate referred to in that clause, s. (2) upto the date of the regular assessment shall be payable by the assessee upon the amount equal to the assessed tax as defined in sub-s. (5) of s. 215. (1A) ……………. (2) …………….” simple interest at the rate of fifteen per cent per annum from the 1st day of April next following the financial year in which the advance tax was payable in accordance with the said sub-s. (1) or sub
10. A reading of the provision in 209A (1) no doubt casts an obligation on an assessee who is in the relevant previous year assessed to a positive income to file a statement of advance tax and also to pay the advance tax. Sec. 209A(1)(a) requires that the advance tax payable should be computed in the manner laid down in s. 209(1) or as the case may be s. 209(1)(d). In terms of s. 209(1)(a) the total income of the “latest previous year in respect of which the assessee has been assessed by way of regular assessment shall first be ascertained”, is the starting point for the computation. This in the present case is clearly a loss. A second option exists under s. 209(1)(d)(i) where “the total income of the latest previous year” being a year later than the previous year in cl. (a) forms the basis on which the advance tax has to be computed. In the present case this would be 1977-78 for which year again the assessee filed a loss return. Therefore the question of the applicability of s. 209(1)(d)(i) also does not arise. No other method of computation is indicated as far as s. 209A is concerned. Since no advance tax was in fact payable in terms of computation under s. 209(1)(a) or s. 209 (1)(d)(i) of the Act, the second limb of the requirement under s. 209A namely, payment of advance tax, was not capable of being fulfilled and could not in fact be fulfilled. Since advance tax was not payable in terms of this computation, the assessee was not required to file the statement of advance tax in terms of s. 209A(1)(a).
The above position has been made explicit in the judgment of the Bombay High Court in Patel Aluminium (P) Ltd. (supra) where in similar circumstances it was held as under : “Under s. 209A(1)(a), the obligation of an assessee who has been previously regularly assessed to tax is to compute the advance tax payable by him in the manner provided by s. 209(1)(a), to send a statement of such computation to the ITO and to pay the amount so computed. The statement that the assessee is obliged to send is a statement of the computation of the advance tax payable by him, such computation to be made as provided by s. 209(1)(a). If upon such computation being made, no advance tax is found to be payable, there is no “advance tax payable”. There being no “advance tax payable”, there is no obligation to send to the ITO a statement of such computation.
It would appear that the object of sending the statement is to make known to the ITO, the computation upon which the figure of advance tax has been arrived at. Where no advance tax payment is to be made, there is no purpose in sending to the ITO the statement of its computation.” This has been reiterated in Indian Molasses Co. (supra) as well as in Gujarat Alkalies & Chemicals Ltd. (supra).
It was urged by Ms. Bansal that the above decisions do not account for s. 209(1)(c) under which the current income computed in terms of s. 209A(4) can be substituted for the total income under s. 209(1)(a) of the Act and the advance tax worked out on that basis would have to be deposited by the assessee along with the statement under s. 209A(1)(a) of the Act. As pointed out by Mr. Sethi, a similar contention raised before the Calcutta High Court was rejected by it in the decision in Indian Molasses Co. The relevant portion in that regard reads as under (ITR, p.152) : “Mr. Bagchi has raised another contention. According to him, the provisions of sub-s. (4) of s. 209A will be attracted to the facts of this case. Sub-s. (4) applies in the case of an assessee who is liable to pay advance tax under sub-s. (1) or sub-s. (2) or, as the case may be, sub-s. (3). It is obligatory on a taxpayer to pay a higher amount of advance tax if the advance tax computed on his estimated current income is likely to exceed the amount of advance tax payable according to the statement or estimate by more than thirty three and one by three per cent of the latter by making such higher estimate of advance tax before the date on which the last instalment of advance tax is payable in his case. The Finance Act, 1979, has amended s. 209A to provide that such revised estimates of advance tax can be furnished on or before the date on which the last instalment of advance tax is payable by the taxpayer. Thus, sub-s. (4) will only be attracted if an assessee is liable to pay advance tax under s. (1), but as we have already indicated in the instant case, on the basis of the facts prevailing in the financial year relevant to the assessment year of the assessee, the assessee had no obligation to furnish a statement of advance tax under s. 209A(1)(a) and as such sub-s. (4) of s. 209A cannot be pressed into service.”
The above decision is a complete answer to the contention of the Revenue. It is plain that s. 209A(4) would be attracted only in a case where the assessee is liable to pay advance tax in terms of sub-s. (1) or sub-s. (2) of s. 209A. As already held by us, the assessee here is not liable to pay advance tax for the assessment year in question.
For the aforementioned reasons, we answer the question referred to us in the affirmative, that is, in favour of the assessee and against the Revenue. The reference stands disposed of.
[Citation : 298 ITR 172]
