Law: Income Tax Act, 1922

Section: 45,45A,2(14)

[Income Tax Act, 1922 (XI of 1922)].....Sections 45A, 2(14)-Additional tax-Provisions of Section 45.4, whether become applicable when an assessee "fails to pay the tax due from him"-Held yes-Whether a tax on income simpliciter-Held no Whether recompense for delayed payment'-Held yes whether partakes nature of penalty-Held yes Word 'tax' in Section 45A, whether more appropriately in the nature of interest or penalty Held yes; Only that amount can be recovered as tax as has been specified in Section 45. Even Section 45A by its very terms becomes applicable when an assessee "fails to pay the tax due from him". it consequently assumes that tax has already been determined and, therefore, any amount demanded under Section 45A is not tax simpliciter but what has been termed by 45A itself an "additional" tax. Although the expression 'tax' has been retained for the purposes of this section but it has been qualified by the prefix "additional" so as to leave no doubt that the amount being demanded under this section in not tax simpliciter. The amount under section is not to be demanded as a tax on the income of an individual but, by its very nature, as a recompense for delayed payment. The method of computation has also been detailed under Section 45A(b) as 8 per cent per annum of the amount of tax mentioned in the section, Frankly speaking it partakes ofthe nature of interest and the concept of payment of interest by the assessee on delayed payment and by the Government on advance payment is not alien to the Act. In fact Section 2 sub-section (14) makes it clear that the word "tax" wherever used in the Income Tax Act includes any "penalty, interest, fee or other charge leviable under this Act." The use of the word "tax" in Section 45A for an amount which is more appropriately in the nature of a penalty or interest has, therefore, the authority of the interpretation clause of the Act itself, which authorises the use of the word "lax" for such a purpose. B. Income Tax Act, 1922 (XI of 1922)--Section 45A--Vires of Section 45A-Provisions, whether warranted by law-Held yes- Whether Legislature had authority to enact the section-Held yes -Whether covered by item 49 of Schedule…

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