Panaji, Goa v. M/S. Zuari Agro Chemicals Ltd.jai Kishan Bhavan, Zuarinagar, Goa

1 IN THE HIGH COURT OF BOMBAY AT GOA TAX APPEAL NO. 29 OF 2002. The Commissioner of Income Tax, having office atAayakar Bhavan Pattol, Panaji, Goa. .... Appellant. VERSUS M/s. Zuari Agro Chemicals Ltd.Jai Kishan Bhavan, Zuarinagar, Goa. .... Respondent. Shri S. R. Rivonkar, Advocate for the Appellant. Shri P.J. Pardiwalla with Shri S.D. Bhobe, Advocates for the Respondent. CORAM: R.M. LODHA & N.A. BRITTO, JJ. 22nd AUGUST, 2005. DATE: ORAL JUDGMENT:(PER R. M. LODHA, J.) Heard Shri S.R. Rivonkar, learned counsel for the Revenueand Shri P. J. Pardiwalla, the learned counsel for the Assessee. 2.This Tax Appeal was admitted on 24[th] June, 2002 on the followingsubstantial question of law :­ “ Whether on the facts andin the circumstances of the case,by filing a statement under section 209A, the assessee hasunderestimated the advance taxpayable by him thereby reducingthe amount payable in either ofthe first two instalments andhence liable to pay interest underSection 216 of IT Act ? ” 3.The aforesaid substantial question of law arises in the facts andcircumstances that may be briefly noticed first. On 13.6.1986 the Assessee filed a statement of advance taxpayable under Section 209A(1) of the Income Tax Act in Form No.28A forthe assessment year 1987­88. The said statement was filed by the assesseeon the basis of the total income returned by the assessee in the return ofthe income for the assessment year 1985­86 as it was higher than assessedincome. On 15.6.1986 the assessee paid first instalment of advance taxamounting to Rs.1,33,66,600/­. The second instalment of advance tax inthe sum of Rs.1,33,66,600/­ was also paid on 15.9.1986 by the assessee.On 13.2.1986 the assessee filed a revised estimate of advance tax and paidthe enhanced amount of advance tax before 15.12.1986. The first andsecond instalments of advance tax were computed on the basis of incomeof Rs.8,08,88,420/­. By the revised estimate the advance tax was paid bythe assessee on the estimated income of Rs.10,27,56,000/­. The AssessingOfficer by his Order dated 25[th] March, 1991 held that the assessee under­estimated the advance tax and accordingly imposed interest under Section216 of the Income Tax Act. The amount of interest was computed at Rs.4,18,772/­. Aggrieved by the order of the Assessing Officer, theRevenue preferred appeal before the Commissioner of Income Tax(Appeals) Central 1, Mumbai. The appellate authority set aside the orderof the Assessing Officer and deleted the interest by his Order dated9.8.1991. Upset by the order of the appellate authority, the Revenuepreferred further appeal before the Income Tax Appellate Tribunal. TheIncome Tax Appellate Tribunal, by its Order dated 31[st] July, 2001maintained the order of the first appellate authority. Hence this appeal under Section 260A by the Revenue. 4. Section 209A of the Income Tax Act, 1961 as was existing at therelevant time reads thus:­ “ 209A. Computation andpayment of advance tax by assessee. ­(1) Every person shall, in eachfinancial year, on or before the date onwhich the first instalment, or where hehas not previously been assessed byway of regular assessment under thisAct, on or before the date on which thelast instalment of advance tax is due inhis case under sub­section (1) ofsection 211, if his current income islikely to exceed the amount specifiedin sub­section (2) of section 208, sendto the Income­tax Officer ­ (a) where he has been previouslyassessed by way of regular assessmentunder this Act, a statement of advancetax payable by him computed in themanner laid down in clause(a) or, asthe case may be, sub­clause (i) of clause (d) of sub­section (1) of section209, or (b) where he has not previouslybeen assessed by way of regularassessment under this Act, an estimateof ­ (a) where he has been previouslyassessed by way of regular assessmentunder this Act, a statement of advancetax payable by him computed in themanner laid down in clause(a) or, asthe case may be, sub­clause (i) of clause (d) of sub­section (1) of section209, or (b) where he has not previouslybeen assessed by way of regularassessment under this Act, an estimateof ­ (i)the current income, and (ii)the advance tax payable by him on the current incomecalculated in the manner laiddown in section 209, and shall pay such amount ofadvance tax, ­ (I) in a case falling underclause (a), as accords with thestatement in equal instalmentson the dates applicable in hiscase under section 211; and (II) in a case falling underclause (b), as accords with theestimate in equal instalmentson such of the dates applicablein his case as have not expired,or in one sum if only the last ofsuch dates has not expired. (2) Where an assessee who isrequired to send a statementunder clause (a) of sub­section(1) estimates on or before thedate on which the firstinstalment of advance tax isdue in his case under sub­section (1) of section 211 that,by reason of his current incomebeing likely to be less than theincome on which advance tax ispayable by him under sub­section (1) or for any otherreason, the amount of advancetax computed in the mannerlaid down in section 209 on the current income would be lessthan the amount of advance taxpayable by him under sub­section (1), he may send to theIncome­tax Officer, in lieu ofsuch statement, an estimate of ­ (i) the current income, and (ii) the advance tax payableby him on the current incomecalculated in the manner laiddown in section 209, and shall pay such amountof advance tax as accords withhisestimateinequalinstalments on the datesapplicable in his case undersection 211. (3) Where an assessee whohas sent a statement underclause (a) of sub­section (1)estimates on or before the dateon which the last instalment ofadvance tax is due in his casethat, by reason of his currentincome being likely to be lessthan the income on whichadvance tax is payable by himunder sub­section (1) or for anyother reason, the amount ofadvance tax computed in themanner laid down in section209 on the current incomewould be less than the amountof advance tax payable by himunder sub­section (1), he may,at his option, send to theIncome­tax Officer an estimateof ­ (i) the current income, and (ii) the advance tax payable byhim on the current incomecalculated in the manner laid down in section 209, and shall pay such amount ofadvance tax as accords with hisestimate in equal instalmentson such of the dates applicablein his case under section 211 ashave not expired, or in one sumif only the last of such dates hasnot expired. (4) In the case of anyassessee who is liable to payadvance tax under sub­section(1) or sub­section (2) or, as thecase may be, sub­section (3), if,by reason of the current incomebeing likely to be greater thanthe income on which theadvance tax so payable by himhas been computed or for anyother reason, the amount ofadvance tax computed in themanner laid down in section209 on the current income(which shall be estimated bythe assessee) exceeds theamount of advance tax sopayable by him by more than33­1/3 per cent of the latteramount, he shall, on or beforethe date on which the lastinstalment of advance tax ispayable by him, send to theIncome­tax Officer an estimateof ­ (i) the current income, and (ii) the advance tax payableby him on the current incomecalculated in the manner laiddown in section 209. and shall pay such amount ofadvance tax as accords with hisestimate on such of the datesapplicable in his case under section 211 as have not expiredby instalments which may berevised according to sub­section(5): (i) the current income, and (ii) the advance tax payableby him on the current incomecalculated in the manner laiddown in section 209. and shall pay such amount ofadvance tax as accords with hisestimate on such of the datesapplicable in his case under section 211 as have not expiredby instalments which may berevised according to sub­section(5): Provided that in a casewhere the Commissioner issatisfied that, having regard tothe nature of the businesscarried on by the assessee andthe date of expiry of theprevious year in respect of suchbusiness, it will be difficult forthe assessee to furnish theestimate required to befurnished by him in accordancewith the provisions of this sub­section on or before the date onwhich the last instalment ofadvance tax is due in his case,he may, if the assessee pays theadvance tax which he is liableto pay under sub­section (1) orsub­section (2) or, as the casemay be, sub­section (3) on orbefore such date, extend thedate for furnishing suchestimate up to a period of thirtydays immediately following thelast date of the previous year inrespect of that business and,where the date is so extended,the assessee shall pay, on orbefore the date as so extended,the amount by which theadvance tax already paid byhim falls short of the advancetax payable in accordance withhis estimate : Provided further that in thecase of an assessee, being acompany, the provisions of thissub­section shall have effect asif for the figures and words“33­1/3 percent”, the figures and words “20 per cent.” hadbeen substituted. (5)The assessee may send arevised estimate of theadvance tax payable byhim on or before any oneof the dates specified insection 211 and adjust anyexcess or deficiency inrespect of any instalmentalready paid in asubsequent instalment orin subsequent instalments.revised estimate of theadvance tax payable byhim on or before any oneof the dates specified insection 211 and adjust anyexcess or deficiency inrespect of any instalmentalready paid in asubsequent instalment orin subsequent instalments.(6) Every statement orestimate under this sectionshall be send in theprescribed form andverified in the prescribedmanner. Explanation.­ For theestimate under this sectionshall be send in theprescribed form andverified in the prescribedmanner. Explanation.­ For thepurposes of this sectionand section 212, “currentincome”, in relation to theadvance tax payable by anassessee during anyfinancial year, means thetotal income of theassessee (exclusive ofcapital gains and incomereferred to in sub­clause(ix) of clause (24) ofsection 2, if any) of theperiod which would be theprevious year for theassessmentyearimmediately following thatfinancial year. ”and section 212, “currentincome”, in relation to theadvance tax payable by anassessee during anyfinancial year, means thetotal income of theassessee (exclusive ofcapital gains and incomereferred to in sub­clause(ix) of clause (24) ofsection 2, if any) of theperiod which would be theprevious year for theassessmentyearimmediately following thatfinancial year. ” 5.It is not in dispute that the assessee was previously assessed by way of regular assessment under the Income Tax Act. It is also not indispute that under Section 209A(1)(a) the assessee forwarded a statement of advance tax payable by him based on its previous year'stotal income returned in the return of income as it was higher thanassessed income. It is also not in dispute that the assessee before thelast instalment of the advance tax was payable estimated high incomeand as the advance tax payable by him exceeded 33.33%, sent theestimate of the current income and paid the advance tax payable byhim on the current income calculated in the manner laid down inSection 209. In the background of these facts, the question ariseswhether the assessee was liable to pay interest under Section 216 ofthe Income Tax Act. way of regular assessment under the Income Tax Act. It is also not indispute that under Section 209A(1)(a) the assessee forwarded a statement of advance tax payable by him based on its previous year'stotal income returned in the return of income as it was higher thanassessed income. It is also not in dispute that the assessee before thelast instalment of the advance tax was payable estimated high incomeand as the advance tax payable by him exceeded 33.33%, sent theestimate of the current income and paid the advance tax payable byhim on the current income calculated in the manner laid down inSection 209. In the background of these facts, the question ariseswhether the assessee was liable to pay interest under Section 216 ofthe Income Tax Act. 6. Section 216 of the Income Tax Act reads thus :­ “ 216. Interest payable by assessee in case of under­estimate, etc. ­ Where, onmaking the regular assessment,the Assessing Officer finds thatany assessee has ­ (a) [under section 209Aor section 212] under­estimated the advance taxpayable by him and therebyreduced the amount payable ineither of the first twoinstalments; or(b) under section 213wrongly deferred the paymentof advance tax on a part of hisincome, he may direct that theassessee shall pay simpleinterest at fifteen per cent per annum ­ ” 7.The question that has been posed before us was under directconsideration before the Calcutta High Court in the case of Commissionerof Income­Tax v. Indian Tube Co. Ltd. reported in 1992 (Vol. 197) I.T.R.Page 522. The Calcutta High Court held thus :­ “ The statement which ismade under section 209(1)(a) ofthe Act is different from theestimate which is required to besubmitted under section 209A(4)or under the various otherprovisions of the Act. TheLegislature has made a distinctionbetween a statement which isrequired to be filed under section209A(1)(a) and the estimatewhich is to be filed either undersection 209A(4) or under thevarious other provisions of theAct. The interest under section216 of the Act is attracted only ina case where an estimate is filedin respect of the first twoinstalments and such estimate issubsequently found to be anunderestimate in comparison withthe subsequent estimate which isfiled before the last instalment.This will be evident from areading of the various provisionsof the Act. To illustrate, section209A(2) of the Act lays downthat, where an assessee who isrequired to send a statement under section 209(1)(a) on orbefore the date on which the firstinstalment of advance tax is duehe may send to the Income­taxOfficer, in lieu of such statement,an estimate of his current incomecalculated in the manner laiddown in section 209 of the Act. Itwill be apparent that, where astatement is filed under section209A(1)(a) of the Act, theassessee is not required toestimate his current income. Hehas to comply only with thestatutory requirement of section209(1)(a) and (d)(i) and prepareastatementaccordingly.Therefore, when the statute doesnot require him to make anestimate, the question ofunderestimating his income doesnot arise when the statement ismade under section 209A(1)(a)of the Act in accordance with theprovisions of the section. Thatthe legislature has made adistinction between a statementof advance tax required to befurnished under section 209A(1)(a) and an estimate of advancetax will also be apparent from thefact that the statement undersection 209A of the Act is to befurnished in Form NO.28A andthe estimate advance tax isrequired to be submitted in FormNo.29. Reference may also bemade in this connection to section217 of the Act which refers to astatement which is required to befurnished under section 209A(1)(a) and an estimate which may befiled in lieu of such statementreferred to in section 209A(2) of the Act. Similarly, section 218(1)(a) makes a specific distinctionbetween a statement required tobe filed under section 209A(1)and an estimate filed undersection 209A of the Act. Suchdistinction also is to be found insection 273 of the Act. Section273(1) gives power to theIncome­tax Officer to levy penaltywhen no statement under section209A(1)(a) of the Act is filed orsuch statement is untrue. Section273(2) of the Act deals withimposition of penalty in a casewhere the estimate of advance taxis not filed or such estimate isfound to be wrong or untrueunder section 209A of the Act. It is, therefore, evidentthat the Legislature has made aclear distinction between astatement which is required to befiled under section 209A(1)(a)and an estimate which is requiredto be filed either under section209A(2) which is to be made inlieu of the statement to be madeunder section 209A(1)(a) or anestimate which is required to befiled under section 209A(3) or(4) of the Act. Further, when anassessee is required to file astatement under section 209A(1)(a), he is not to estimate hiscurrent income. He has tocomply with the provisions byfurnishing a statement inaccordance with section 209(1)(a) or (d)(i) of the Act. Tocomply with the aforesaidprovision, no estimate of thecurrent income is required to be made by the assessee. He merelycalculates his advance tax on thebasis of his total income of thelatest regular assessment or onon the basis of the total incomeon the basis of the returnsubsequently filed where there isa payment under section 140A ofthe Act, whichever is higher.Hence, the interest which islevied under section 216 of theAct cannot be attracted to a casewhere the assessee is required tofile a statement under section209A(1) of the Act. But section216 of the Act is attracted only ina case where the assessee has toestimate his current income andsuchestimateisfoundsubsequentlytobeanunderestimate compared to thelater estimate filed by him in thelast instalment. Where anassessee is not required to file anestimate of his income, thequestion of underestimating thesame cannot and does not ariseand the provisions of section 216of the Act cannot be attracted insuch a case. The court has tointerpret a provision according tothe plain meaning of the sectionand cannot read more into thelanguage of a provision than whatis warranted by the expressprovisions of the section. Wherethe Legislature uses two differentwords in the same provision, it isnot permissible to equate thescope and meaning of the twowords which, on their plainlanguage, are different. It is awell settled rule that, when twointerpretations are possible, in other words, where the provisionis capable of two alternativemeanings, the one favouring thetaxpayer is to be adopted,particularly when such aprovision purports to imposepenal interest. ” other words, where the provisionis capable of two alternativemeanings, the one favouring thetaxpayer is to be adopted,particularly when such aprovision purports to imposepenal interest. ” 8.We find ourselves in agreement with the view taken by the CalcuttaHigh Court. A careful reading of Section 209A(1)(a) of the Income Tax Actwould clearly show that the Legislature has used the expression 'statement'therein while in Section 209A(2), 209A(3) and 209A(4) the Legislature hasemployed the expression ' estimate '. The Legislature thereby made a cleardistinction between the statement which is required to be filed underSection 209A(1)(a) and the estimate that is required to be filed underSection 209A(4). When an assessee files a statement u/s 209A(1)(a), hedoes not nor is he required to estimate his current income. On the basis ofthe total income returned by the assessee in the return of income or theassessed income whichever is higher, he calculates the advance tax.However when the current income is likely to be greater than the incomeon which tax payable by him is being computed and the amount of advancetax so payable by him is to exceed 33.33%, such assessee is required tosend to the Income Tax Officer an estimate of the current income and theadvance tax payable by him on the current income before the lastinstalment of advance tax is paid under Section 209A(4). Section 216 ofthe Income Tax Act that provides for interest payable by assessee in case of under­estimate cannot be invoked where the assessee has acted inconformity with Section 209A(4) and sent the estimate to the assessingofficer of the current income and paid the advance tax on the currentincome calculated in the manner laid out in section 209. Section 216 isattracted only in a case where the assessee is required to estimate hiscurrent income and such estimate is found subsequently to be an under­estimate compared to the later estimate for filing the last instalment.Where the assessee is not required, as in a case like this, to furnish anestimate for the first and second instalments, as it was already assessedpreviously, and rather the assessee is required to file statement underSection 209A(1)(a), the question of under­estimate for the two instalmentsunder Section 216 would not arise. 9.The view of the Tribunal, thus, is in conformity with the legalposition. The substantial question of law is answered in the negative and infavour of the assessee. 10.Appeal is dismissed with no order as to costs. R. M. LODHA, J. N. A. BRITTO, J. sl.