TaxTMI 
TaxTMI 
1997 (4) TMI 3
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....ate and Ferndale. Fernbrook called at Cochin Port during the previous years relating to the assessment years 1967-68 and 1969-70 ; Ferndale called at Cochin Port during the year relating to the assessment year 1967-68 and the other ships, Fernwave, Fernmoor and Ferngate called at Cochin Port during the year relating to the assessment year 1969-70. In respect of the freight earnings, assessments were made on the shippers under section 172(4) of the Income-tax Act, 1961 (hereinafter referred to as "the Act"). The said provision enables the Income-tax Officer to make "ad hoc" assessment on the tram-ships. The assessees paid tax so assessed under section 172(4) of the Act. Thereafter the assessees exercised the right conferred on them under sec....
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.... entitled to interest under section 214 of the Act. The Appellate Tribunal directed the Income-tax Officer to allow the interest claimed by the assessees. As directed by the High Court, the Income-tax Appellate Tribunal referred the following question of law in all the cases for the decision of the High Court : "Whether the amount directed under section 172, clause (7), of the Income-tax Act, to be treated as a payment in advance of the tax leviable for the assessment year in question, would carry interest as the amount of advance tax would under section 214 if the same is payable under sections 207 to 213 of the Act ?" The High Court of Kerala, by a common judgment, delivered in all the references took the view that the tax paid under s....
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....e ship thereat : Provided that where the Assessing Officer is satisfied that it is not possible for the master of the ship to furnish the return required by this sub-section before the departure of the ship from the port and provided the master of the ship has made satisfactory arrangements for the filing of the return and payment of the tax by any other person on his behalf, the Assessing Officer may, if the return is filed within thirty days of the departure of the ship, deem the filing of the return by the person so authorised by the master as sufficient compliance with this sub-section. (4) On receipt of the return, the Assessing Officer shall assess the income referred to in sub-section (2) and determine the sum payable as tax there....
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....s follows :-- "2. Definitions.--In this Act, unless the context otherwise requires,-- (1) 'advance tax' means the advance tax payable in accordance with the provisions of Chapter XVII-C ;" The above clause was inserted in the Act by Direct Tax Laws (Amendment) Act, 1987, with effect from April 1, 1989. We are concerned in this case relating to the periods before the said Amendment Act. The scheme of section 172 of the Act appears to be this : Section 172(1) of the Act gives a right to the Income-tax Officer to levy and recover tax in the case of any ship belonging to a non-resident, in a summary manner (ad hoc assessment) notwithstanding anything contained in the other provisions of the Act. It is an absolute right conferred on the asse....
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....determination of the tax liability including the ancillary or incidental or consequential matters pertaining to it are necessarily attracted. Section 172(7) of the Act provides that payment made under the section shall be treated as a payment in advance of the tax leviable for that assessment year. It only means that such payment would be treated as advance of the tax leviable. Such payments are treated on par with advance income-tax payments. It is implicit from the tenor and phraseology employed in section 172(7) of the Act to the effect, "payment made under the section . . . . shall be treated as a payment in advance of the tax leviable for that assessment year," that in substance, a legal fiction is created by which the payments have b....
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.... the Act is not a payment of advance tax within the meaning of the Act, as the tax paid under section 172(4) of the Act is a payment on assessment and not a payment of advance tax under the Act. We are afraid that the High Court has failed to give due effect to the language employed in section 172(7) of the Act and the scope of the legal fiction enshrined therein. The reasoning of the High Court is rather strained as the distinction drawn is without any substance or difference. Section 172(7) of the Act provides for a regular assessment, wherein all the provisions of the Act will apply. It is not a mere provision for adjustment. The High Court was swayed by the title used in the corresponding provision of the predecessor Act (Indian Income-....