TaxTMI 
TaxTMI 
1984 (1) TMI 92
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....advance tax paid as per law, ignoring the fact that no appeal lies against provisions of section 214 of the Act. The assessee is following mercantile system of accounting and closes the books of account on 30th June. During the accounting period ending 30-6-1978, the assessee made a provision of Rs. 1,42,139 for payment of bonus to the workers at 20 per cent of their salary and wages. The ITO observed that during the previous year, the company had suffered loss and there was no allocable surplus available from which the bonus at the rate of 20 per cent on salaries and wages could be paid. Under the Bonus Act, since there was no allocable surplus, the liability of the company was only in respect of minimum bonus to the extent of 8.33 per cent of salaries and wages. Any excess bonus over the minimum payable was not admissible as deduction under section 36(1)(ii) of the Act and, therefore, he disallowed this excess sum of Rs. 81,914. The submission of the assessee that 20 per cent bonus was provided on the basis of an agreement entered into with the workers was rejected. 2. On appeal, on behalf of the assessee, reliance was placed on the decision of the Tribunal in IT Appeal No.....
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....ect of the remuneration under section 40(c) or section 40A(5), it was submitted that the department wanted to keep the issue alive as the decision of the Special Bench was not accepted by the department. 7.3 In respect of the interest under section 214, it was submitted that the payments of advance tax were made as under : Date Amount Rs. (i) 10-1-1979 &nbs....
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....he Act was charged. Support was also drawn from the Special Bench of the Tribunal in the case of ITO v. India Tyre & Rubber Co. (I.) (P.) Ltd. [1983] 3 SOT 52 (Bom.). Basically, no appeal lies for interest under section 214 as was decided in that case. Therefore, the Commissioner (Appeals) was in error in directing the ITO to allow interest under section 214. 8.1 The learned counsel for the assessee made the submissions as under: 8.2 In respect of the first ground, he submitted a copy of the agreement entered into between the assessee and the workers on 26-9-1978 and a copy of decision in IT Appeal No. 3274 (Bom.) of 1980 for the assessment year 1976-77 decided on 30-4-1982. It was the plea of the counsel that there already existed a liability to pay the bonus to the workers and the settlement arrived at in 1978 was only quantification of the amount payable by the assessee. In fact, 20 per cent bonus was also paid in previous two years and in the earlier assessments, the same was allowed. 8.3 In respect of the second ground, he submitted that the issue involved was already covered by the Special Bench decision in Geoffrey Manners & Co. Ltd. v. ITO [1983] 3 SOT 40 (Bom.). ....
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....reement, i.e., 26-9-1978. Therefore, the revenue was fully justified in claiming that liability for making the payment to the extent of 20 per cent did not exist at all before the end of the previous year. If at all liability existed, it was only to the extent of 8.33 per cent as provided under the Payment of Bonus Act. The revenue has also correctly relied upon the decision in IT Appeal Nos. 1545 to 1547 (Bom.) of 1983. On going through the said decision, we find that the facts under consideration were similar to the facts under that appeal and it was held that merely because the liability related to the accounting periods under consideration, the assessee was not entitled to deduction thereof. The assessee was maintaining its books of account on mercantile system, as is the case here, the claim would be admissible when the liability actually accrued and crystallised. Both these events were after the end of the accounting year as is the case under appeal. Therefore, we set aside the order of the Commissioner (Appeals) on this point and restore the order of the ITO. 11. In respect of the second ground, the issue is covered by the Special Bench decision of the Tribunal in the cas....
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....d advance tax Rs. 1,28,416 adjusted during March 1978." Therefore, it is clear that refund of Rs. 1,28,416 was adjusted as advance tax in the records of the revenue by an order of the ITO. Therefore, the refund of the earlier year acquired the same characteristic of the advance tax. We also do not find anything wrong in this because otherwise for delayed refund the revenue is required to pay interest to the assessee. Therefore, if the refund is adjusted as advance tax payment and treated as such, there should not be anything objectionable. 12.3 We shall now touch upon the cases relied upon by the revenue in respect of non-granting of interest under section 214. In the case of A. Sethu Madhavan, it was held that the liability of the Central Government to pay interest under section 214 arose only when the instalments of advance tax were paid as required by the Act on the dates on which they were payable as per section 211 of the Act. While deciding the case their Lordships had followed the decision of the Andhra Pradesh High Court in the case of Kangundi Industrial Works (P.) Ltd. and had distinguished the case of the Bombay High Court in the case of Traub India (P.) Ltd. while....