COMMISSIONER OF INCOME-TAX V. DELWADA INVESTMENTS PVT LTD

ITR/5/1991

AI Insights

The case involves the Commissioner of Income-Tax contesting against Delwada Investments Pvt Ltd regarding the computation of interest under section 215 of the Income-tax Act for the assessment years 1982-83 and 1983-84. The primary legal question was whether the Appellate Tribunal was correct in law and on facts in holding that credit for Tax Deducted at Source (T.D.S.) should be given in the computation of interest. The Tribunal's decision relied on a previous ruling in Kanchanjanga Investment P. Ltd, which was supported by the High Court's decision in CIT vs. Ranoli Investment P. Ltd. The High Court upheld the Tribunal's decision, agreeing that T.D.S. should be deducted before calculating interest.

• Counselvise Citation: [2001] 140 COUNSELVISE.COM (IT) 734174 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 16-10-2001
• Assessment Year: misc
• Other Referred Cases: CIT vs. Ranoli Investment P. Ltd and others, Kanchanjanga Investment P. Ltd.
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: R K PATEL
• Assessee Lawyers: B B NAIK; MANISH BHATT
• Keywords: Appellate Tribunal; Income Tax; Interest computation; T.D.S.
• Section: 194A; 215; 209(1)(a)

Judgement Text

" IN THE HIGH COURT OF GUJARAT AT AHMEDABAD INCOME TAX REFERENCE No 5 of 1991 with INCOME TAX REFERENCE Nos 336 and 341 of 1993 For Approval and Signature: Hon'ble MR.JUSTICE M.S.SHAH and Hon'ble MR.JUSTICE D.A.MEHTA ============================================================ 1. Whether Reporters of Local Papers may be allowed : NO to see the judgements? 2. To be referred to the Reporter or not? : NO 3. Whether Their Lordships wish to see the fair copy : NO of the judgement? 4. Whether this case involves a substantial question : NO of law as to the interpretation of the Constitution of India, 1950 of any Order made thereunder? 5. Whether it is to be circulated to the Civil Judge? : NO -------------------------------------------------------------- COMMISSIONER OF INCOME-TAX Versus DELWADA INVESTMENTS PVT LTD -------------------------------------------------------------- Appearance: 1. INCOME TAX REFERENCE No. 5 of 1991 MR BB NAIK with MR MANISH R BHATT for Petitioner No. 1 MR RK PATEL for Respondent No. 1 -------------------------------------------------------------- CORAM : MR.JUSTICE M.S.SHAH and MR.JUSTICE D.A.MEHTA Date of decision: 16/10/2001 ORAL JUDGEMENT (Per : MR.JUSTICE M.S.SHAH) In these references at the instance of the revenue, the following question is referred for our opinion in respect of assessment years 1982-83 (ITR No. 5/91) and 1983-84 (ITR Nos.336 and 341 of 1993):- \"Whether, the Appellate Tribunal is right in law and on facts in holding that credit for T.D.S. should be given in the computation of interest under section 215 of the Income-tax Act ?\" 2. We have heard Mr BB Naik learned counsel for the revenue and Mr RK Patel learned counsel for the assessee. 3. For taking the aforesaid view that tax deductible at source should be deducted and thereafter interest should be calculated, the Tribunal relied on its decision in Kanchanjanga Investment P. Ltd. (ITA No.2037/Ahd/86 dt. 7-6-1988). The decision of the Tribunal in the aforesaid case in Kanchanjanga Investment P. Ltd and other cases came up for consideration of this Court in CIT vs. Ranoli Investment P. Ltd and others (1999) 235 ITR 433. After considering all the relevant provisions of the Income Tax Act, 1961, this Court held that the words \"reduced by the amount of tax deductible\" which appear in sub-section (5) of section 215 also occur in clause (iii) of section 209(1)(a) dealing with computation of advance tax. The amount of tax deductible in accordance with section 194A would obviously mean the tax as was required to be deducted in respect of the interest income at the time of credit to the account of the payee or payment whichever is earlier and concluded that the Tribunal was right in holding that tax deductible at source should be reduced from the tax determined on the basis of regular assessment and thereafter, the liability to pay interest should be calculated under section 215 of the Income-tax Act, 1961. 4. The learned counsel for the revenue agrees that the aforesaid decision would cover the question referred in these references. Hence, following the aforesaid decision, we are of the view that the Tribunal was right in holding that tax deductible at source should be deducted and thereafter interest should be calculated. Accordingly, our answer to the question referred to us is in the affirmative i.e. in favour of the assessee and against the revenue. 6. The References accordingly stand disposed of with no order as to costs. (M.S. Shah,J) (D.A. Mehta,J) zgs/- "