Double income-tax relief must be deducted before computing interest on assessed tax shortfall under section 18A(6).

For computing interest under section 18A(6) of the Indian Income-tax Act, 1922, the tax determined on regular assessment had to be taken after giving credit for double income-tax relief under section 49D. Because the relief reduced the Indian income-tax actually payable, interest was chargeable only on the shortfall calculated with reference to the reduced tax figure. The timing of the rectification order did not change that position, since the controlling amount remained the correct tax determined on regular assessment. The referred question was answered in favour of the assessee.

---

---

Issues: Whether, for the purpose of calculating interest under section 18A(6) of the Indian Income-tax Act, 1922, the tax determined on regular assessment had to be taken before or after deducting double income-tax relief.

Analysis: The relevant expression was construed with reference to the tax actually payable on regular assessment. Since double income-tax relief under section 49D reduced the Indian income-tax payable, the amount of tax determined on regular assessment had to be taken after giving credit for such relief. Interest under section 18A(6) was therefore chargeable only on the shortfall computed with reference to the reduced tax figure. The timing of the rectification order did not alter the legal position, because the relevant amount remained the correct tax determined on regular assessment.

Conclusion: The interest payable under section 18A(6) had to be calculated after deducting the double income-tax relief admissible to the assessee, and the answer to the referred question was in the affirmative, in favour of the assessee and against the Revenue.

---