Calculation date for interest fixed by initial assessment date, not altered by subsequent events. Department's appeal upheld.

SARANGPUR COTTON MANUFACTURING CO. LTD. Versus COMMISSIONER OF INCOME-TAX, BOMBAY NORTH

SARANGPUR COTTON MANUFACTURING CO. LTD. Versus COMMISSIONER OF INCOME-TAX, BOMBAY NORTH - [1957] 31 ITR 698 (Bom) Issues:
1. Interpretation of 'regular assessment' under section 18A(5) of the Income-tax Act.
2. Validity of the order passed by the Tribunal.
3. Appealability of the order passed by the Appellate Assistant Commissioner under section 31 of the Income-tax Act.

Analysis:

1. The case involved a limited liability company that paid advance tax under section 18A of the Income-tax Act. The Income-tax Officer initially assessed the company's total income and tax liability for the assessment year 1947-48 on 30th March 1948. Subsequently, the Appellate Assistant Commissioner set aside this assessment and directed a fresh assessment, which was completed on 25th January 1954. The dispute arose regarding the entitlement of the assessee to interest on the advance payment under section 18A. The Tribunal had to determine the meaning of 'the date of the assessment' in section 18A(5) concerning the calculation of interest. The Tribunal rejected the assessee's claim for interest up to 25th January 1954, holding that the valid assessment date was 30th March 1948.

2. The Tribunal's decision was challenged, and the Commissioner of Income-tax raised a question regarding the validity of the Tribunal's order. The assessee objected to this question, citing a procedural issue with the Commissioner's application timeline. However, the Tribunal found the raised question to be a valid legal issue arising from its order and decided to refer it to the High Court.

3. Another issue involved the appealability of the order passed by the Appellate Assistant Commissioner under section 31 of the Income-tax Act. The Departmental Representative contended that no appeal lay to the Tribunal from this order. Contrary to this view, the Tribunal held that the order was under section 31 and thus appealable. The Tribunal referred to a previous case to support its interpretation. The order of the Appellate Assistant Commissioner dated 30th September 1954 was considered part of the case record.

In the judgment, the Court analyzed the interpretation of 'the date of the assessment' under section 18A and concluded that the valid assessment date was 30th March 1948, not 25th January 1954. The Court emphasized that the legislative intent was to fix two termini for interest calculation, and this determination could not be altered by subsequent events like setting aside an assessment order. Additionally, the Court discussed the appealability of the Appellate Assistant Commissioner's order under section 31, ultimately deciding in favor of the Department's position. Consequently, the Court answered the first question in the reference as 'Up to the 30th of March 1948,' while determining that the second question did not arise. The Court directed the assessee to pay the costs, concluding the reference accordingly.