| Case ID |
51347370-e02f-461c-b2cd-93485f3c6c95 |
| Body |
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| Case Number |
IT REFERENCE No. 50 OF 1956 |
| Decision Date |
Feb 08, 1957 |
| Hearing Date |
|
| Decision |
The case revolved around the interpretation of section 18A of the Income-tax Act concerning the payment of interest on advance tax. The assessee contended that they were entitled to interest from the date of advance tax payment until the completion of the fresh assessment made on January 25, 1954. However, the tribunal ruled that interest was only payable up to March 30, 1948, when the initial assessment order was made. The court upheld the tribunal's decision, emphasizing that the date of assessment as defined in the legislation was the factual date and not contingent on the validity of subsequent assessments. The ruling clarified that once an assessment order is made, the liability to pay arises, and the department is not obligated to pay interest on amounts recovered as tax under the original assessment order, even if that order is later set aside. |
| Summary |
In this significant case adjudicated by the Bombay High Court, the interpretation of the Income-tax Act, specifically section 18A, was scrutinized. The case highlighted the complexities surrounding the payment of advance tax and the associated interest obligations of the government. The Sarangpur Cotton Manufacturing Co. Ltd. contested the interest payment timeline, asserting a right to interest from the initial advance payment until the conclusion of a later assessment. However, the court determined that the effective assessment date was March 30, 1948, establishing that interest would only accrue until that date. This case serves as a crucial reference for tax law practitioners and underscores the importance of understanding statutory language regarding tax liabilities and interest entitlements. The ruling reinforces the principle that the assessment date is pivotal in determining interest eligibility, regardless of subsequent assessment modifications or appeals. Keywords such as 'Income-tax Act', 'advance tax', 'interest payable', and 'legal interpretation' are essential for legal professionals navigating similar cases. |
| Court |
Bombay High Court
|
| Entities Involved |
|
| Judges |
Chagla, C.J.,
Tendolkar, J.
|
| Lawyers |
N.A. Palkhivala,
Kaka,
G.N. Joshi
|
| Petitioners |
Sarangpur Cotton Manufacturing Co. Ltd.
|
| Respondents |
Commissioner of Income tax
|
| Citations |
1957 SLD 128 = (1957) 31 ITR 698
|
| Other Citations |
Not available
|
| Laws Involved |
Income-tax Act, 1961
|
| Sections |
214,
18A(5)
|