Law: Income Tax Act, 1922

Section: 18,18A(6)

Income tax Act (XI of 1922)---S. 18A(6) Penal interest Computation of Assessee's first year of business Such interest to be calculated under S.18 A from first day of July of year in which tax was assessable Third proviso to subsection (6) of S.18 A, held, showed that when business, profession or vocation was recently set up and was assessable on income, profits and gains of its first previous year in the year following that in which it was set up, additional tax for not paying the advance tax as provided in S. 18 A(1) was to be calculated from first day of July of the year in which tax was assessable. 1965 P T D (Trib) 27 distinguished. JUDGMENT NAIMUDDIN, J. By this reference under section 66(1) of the Income tax Act, 1922, the following question of law arising out of the order of the Income tax Tribunal, has been referred to this Court for answer. "Whether on the facts and in the circumstances of the case the finding of the learned Tribunal that the date for calculation of penal interest in the case of the respondent, who was a new assessee, could not be fixed and penal interest charged, is contrary to the provisions of subsection (6) of s9etion 18 A of the Income tax Act?" The facts giving rise to the question are that the respondent is an association of persons and it is a supplier of articles specially used by the Defence Forces such as snow shoes, boxes, tools, etc. On finalizing the assessment for the assessment year 1967 68, under section 23(3) of the Income tax Act, the Assessing Officer charged penal interest under section 18 A of the Income tax Act, 1922, from 1 4 1967 to 28 6 1972 in the sum of Rs.9,215. Aggrieved by the order the respondent filed an appeal before the Income tax Appellate Tribunal and contented the levy of penal interest and also claimed certain allowances, which were disallowed. It was submitted on behalf of the assessee that it was the first year of business of the assessee and it had to pay tax under section 18 A, according to its own estimate and that the respondent did not pay the advance tax as according to it, the date from which interest could have been charged was indeterminable. It was contended before the Tribunal that…

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