2008 (3) TMI 749 - HC - Income Tax

Court affirms Tribunal's decision on post-dated cheques in tax case under Income Tax Act.

The Court upheld the Tribunal's decision in a tax case involving the treatment of post-dated cheques under the Income Tax Act, 1961. It ruled that the ... - Issues involved: Interpretation of Sections 13(2)(b), (d), and (h) of the Income Tax Act, 1961 regarding treatment of post-dated cheques as income or investment.Interpretation of Section 13(2)(b): The Revenue challenged the treatment of a post-dated cheque received by the Assessee as falling foul of Section 13(2)(b) of the Income Tax Act, 1961. The Tribunal held that since the cheque was not available for the use of the drawer at the time of receipt, Section 13(2)(b) did not apply. The Court agreed with this interpretation, stating that the cheque being post-dated did not constitute an amount available for immediate use, thus rejecting the Revenue's contention.Interpretation of Section 13(2)(d): The Revenue also argued that the Assessee's services were available to the drawer of the cheque, invoking Section 13(2)(d) of the Act. However, the Tribunal found no evidence of such service being provided. Consequently, the Court concurred with the Tribunal's decision, affirming that Section 13(2)(d) did not apply in this case due to the absence of service provided by the Assessee to the drawer of the cheque.Interpretation of Section 13(2)(h): Regarding Section 13(2)(h) of the Act, the Revenue contended that the cheque amount could be considered an investment made by the Assessee without receiving any compensation. The Court rejected this argument, deeming it too broad. The Court reasoned that accepting the Revenue's stance would categorize any post-dated cheque as an investment, which was not the legislative intent. Therefore, the Tribunal's decision to dismiss the Revenue's claim under Section 13(2)(h) was upheld by the Court.Conclusion: The Court found no error in the Tribunal's decision, stating that there was no substantial question of law arising from the case. Consequently, the appeal by the Revenue was dismissed.