# M/s Buland Motor and Land Finance P. Ltd v. A. C., Income Tax & others

- **Citation:** (2001) 1 ILRA 271
- **Court:** High Court of Judicature at Allahabad
- **Decided:** 2001
- **Source:** https://unisonlegal.in/judgment/allahabad-high-court/m-s-buland-motor-and-land-finance-p-ltd-v-a-c-income-tax-others-39613
- **Pages:** 5

## Text

1All] M/s Buland Motor and Land Finance P. Ltd. V. A. C., Income Tax & others
271
of creation of post of Lecturer Urdu.
There is not material on record that the
management had applied to the Director
for creation of the post. The petitioner is a
teacher and he has no locus-standi to seek
a direction from this court for creation of
the post of Lecturer Urdu by the Director.
If the management makes an application
for creation of the post the Director may
consider it. It is open to the petitioner to
claim salary from the management for the
period he has worked from the funds
other than government.

8. Subject to the observations made
above this writ petition dismissed.

9. Parties shall bear their own costs.
Petition Dismissed.

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By the Court

1. This writ petition has been filed
praying for quashing of the order dated
7.9.98 (Annexure -7 to the petition) and
the
demand
notice
dated
30.3.95
(Annexure-4 to the petition) in respect of
interest under section 234-A and 234-B of
the Income Tax Act, and for a mandamus
restraining the respondents from realising
interest under those Sections. It has
further been prayed that the petitioners
Appeal No. Nil of 1995 be disposed of
within a reasonable time.

2. Heard Sri V.B. Upadhyaya and
Sri R.N. Singh learned counsels for the
petitioners, as well as learned counsel for
the Department.

3. The petitioner is a Company
registered under the Indian Companies
Act.
It
is
a
non-Banking
Finance
Company controlled by Reserve Bank of
India. Its business is akin to that of a
Commercial Bank and it accepts deposits,
and interests the funds in hire purchase
business. For the Assessment Year 1989-
INDIAN LAW REPORTS ALLAHABAD SERIES [2001
272
90 it filed a return showing loss of Rs.
62,510/- including Set off of earlier lesses
of Rs.49,113/-. The Assessment for that
year was completed on 18.2.92 under
section 143(3) on a net loss of Rs.7,133/-.
A true copy of the Assessment order has
been annexed as Annexure-1 to the
petition. For the Assessment Year 199091 it showed a total loss of Rs.46,940/-
and the assessment was completed on
25.2.93.
The
Assessing
Officer
determined the income of the assessee on
income of Rs.6,74,930/- after making
addition of Rs.7,08,616/- and allowed
absorbed loss of the previous Assessment
Year at Rs.49,113/- creating a demand of
Rs.5,11,713/- consisting of income of
Rs.4,37,355/- plus Interest of a sum of
Rs.43,740/- under section 234 A and
Rs.30,618/- under section 234-B. A true
copy of the Assessment Order dated
25.2.93 is annexed as Annexure-2 to the
petition.

4. The Assessing Officer filed an
appeal against the assessment order dated
25.2.93 before the CIT (Appeals) which
was partly allowed vide order dated
15.3.95 granting relief of Rs.29,216/- and
directing the Assessing Officer to verify
the facts of additions of Rs.29, 178/- on
account of accrued interest on FD Rs. of
Bank. True copy of the order of the CIT
(Appeals) dated 15.3.95 is annexed as
Annexure-2 to the petition. In compliance
of the order dated 15.3.95 the Assessing
Officer by the order dated 30.3.95 granted
relief of Rs.58,533/- and assessed taxable
income on Rs.6,16,400/-. True copy of the
order dated 30.3.95 is annexed as
Anneure-3 to the petition. The Assessing
Officer then issued demand notice under
section 156 alongwith interest under
section 220(2). The details of the same are
given in paragraph 9 of the petition. A
true copy of the demand notice 30.3.95 is
annexed as Annexure4 to the petition. The
Assessing Company filed an appeal
against the order of the CIT (Appeal)
dated 15.3.95 before the Commissioner
Income Tax Tribunal vide Annexure-5 to
the petition and this appeal is still pending
before the Tribunal at New Delhi.

5. The Assessee Company also
moved an application under section 154
before the Assessing Officer on 22.12.97
for
rectification
of
the
mistake,
particularly in respect of the interest on
advance tax under section 234 A and 234
B and also regarding interest of advance
tax or changing the amount which was
shown in the earlier order without giving
opportunity to the petitioner. True copy of
the said application is annexed as
Anneure-6
to
the
petition.
This
application was rejected on 7.9.98 vide
Anneure-7 to the petition.

6. It is alleged in paragraph 19 of the
petition that the Assessee Company had
filed return showing loss, and hence in
view of Clause (a) of explanation I to
section 234 B the provisions of section
234 B were inapplicable and the interest
charged was arbitrary and illegal.

7. In paragraph 20 of the petition it
is alleged that since loss return was filed
for assessment year 1990-91 there was no
liability of the assessee to pay selfassessment tax or advance tax. The
Assessing Officer had also not been of the
opinion during the Assessment year 199091 that the Assessing Company was liable
to pay advance tax, and no order in
writing or notice of demand under section
156 was issued to the assessee under
section 210 (3) of (4) during the previous
year relevant to Assessment Year 1990-
1All] M/s Buland Motor and Land Finance P. Ltd. V. A. C., Income Tax & others
273
91. Hence it is alleged that the Asessee
Company was not in default in payment
of advance tax and was not liable to pay
interest under section 234 B.

8. In paragraph 23 of the petition it
is alleged that interest under section 234
and 234 B of the Act cannot be levied on
the petitioner assessee in view of the fact
that the assessee had filed return showing
assessment year 1990-91, and the return
submitted for assessment year 1989-90
showing loss was accepted by the
Assessing Officer.

9. In paragraph 24 of the petition it
is alleged that the Assessing Officer
wrongly
rejected
the
petitioner's
application dated 22.12.97.

10. In paragraph 26 of the petition it
is alleged that the Assessing Officer while
passing the order dated 30.3.95 had not
passed any specific order regarding levy
of interest under section 234 A and 234 B
and thus interest cannot be levied through
notice of demand under section 156. The
Assessing Officer in his order dated
30.3.95 only ordered in the last paragraph
"Revised accordingly. Issue fresh challan
after taking into account the payment
made so far. Also charge interest as per
rules."

11. In paragraph 27 of the petition it
is alleged that the notice of demand is like
a decree of a civil court which must
follow the order. Since the assessment
order does not mention the specific
amount to be charged the demand notice
cannot contain such amount as it will be
going beyond the assessment order. It is
contended that the expression "charge
interest as per rules" cannot be read to
mean that the Assessing Officer has
passed an order regarding charging of
interest under section 234 and 234 B. A
rue copy of the demand notice dated
25.2.93 under section 156 is Annexure-8
to the petition. The Assessing Officer sent
notice under section 221(1) dated 9.12.94
on which interest payable under section
234 A was shown to be Rs.43,740/- and
interest under section 234 B was shown to
be Rs.30,618/-. A true copy of notice
dated 9.12.94 is annexed as Annexure-9
to the petition.

12. In paragraph 30 of the petition it
is alleged that in the demand notice dated
30.3.95 the amount of interest is shown to
be Rs.2,79,580/-. The Assessing Officer
has rectified the interest under section 234
b in purported exercise of power under
section 154, but the Assessing Officer did
not provide any opportunity to the
petitioner before rectification of the said
mistake,
which
was
a
mandatory
requirement under section 154(3) and
hence it is illegal.

13. In paragraph 38 of the petition it
is alleged that the order is respect of
interest under section 234 A and 234 B is
not applicable and hence it can only be
challenged in writ jurisdiction in this
Court.

14. A counter affidavit has been
filed.

15. In paragraph 4 of the same it is
admitted that the assessment for the year
1989-90 was completed at a net loss of
Rs.7,133/-.

16. In paragraph 5 of the same it is
alleged that the return for the assessment
year 1990-91 was belated. In paragraph
10 of the same it is stated that rectification
INDIAN LAW REPORTS ALLAHABAD SERIES [2001
274
under section 154 was made on 7.9.98 as
there was a mistake. While revising the
assessment. In paragraph 13 it is stated
that the assessment year 1990-91 the
assessee
filed
loss
return
but
his
assessment was made on total income of
Rs.6,74,930/-, the details of which have
been given in paragraph 13. In paragraph
14 of the same it is stated that since the
return was filed on 7.5.91 belatedly the
action in charging the interest was correct.
In paragraph 22 of the same it is stated
that the Assessing Officer rightly charged
interest under section 234 A and 234 B.

17. A rejoinder affidavit has also
been filed and we have perused the same.

18.

Learned counsel for the
petitioner has relied on the decision of the
Supreme Court in CIT vs. N.D. George
Polous 231 ITR 504 in which it has been
held that an assessee is not under
obligation to file an estimate of advance
tax for assessment year 1967-68 and
1968-69 as it had been previously
assessed at nil assessment for Assessment
year 1965-66. He has also relied on the
decision of the Patna High Court in
Ranchal Club Ltd Vs. CIT 217 ITR 72. In
that decision it was held that explanation
4 to section 234 A makes it clear that
interest is leviable on the tax on the total
income as declared in the return and not
on the total income as determined. In
Director of Income Tax v. Shri Sita Ram
Public Charitable Trust, 207 ITR 1087
the Calcutta High Court held that where
the returned income and assessed income
of the latest previous year is nil there is no
obligation
on
the
assessee
to
file
statement of advance tax and no liability
to pay interest. The same view has been
taken by the Calcutta High Court in CIT
v. Indian Molassess Co. Ltd., 200 ITR
149.
19. In our opinion the above
decisions squarely apply to the facts of
the present case as admittedly the income
assessed for the assessment year 1989-90
was a loss. Hence these was no liability of
the assessee to pay advance tax on the
basis of his estimate of his current income
for assessment year 1990-91.

20. Moreover, there was no order of
the Assessing Officer under section
210(3). Hence no interest was payable
under section 234 B.

21. Shri Prakash Krishna then
submitted that since the assessee filed
returns belatedly he is liable to pay
interest under section 234 A. In our
opinion since the return was that of loss
hence there was no liability to pay interest
as held by the Patna High Court in Ranchi
Club case (supra).

22. In view of the above the writ
petition is allowed.

23. The impugned order dated
7.9.98 and Demand Notice dated 30.3.95
in respect of interest under section 234 A
and 234 B are quashed.

No orders as to costs.
1All] Siya Devi and another V. State of U.P. & others
275
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By the Court

1. Heard learned counsel for the
parties.

2. In the instant writ petition, the
petitioner is aggrieved by further calling
of the meeting of the members of Board
of Directors by the District Magistrate.
According to the petitioner further calling
of the meeting within three months is
contrary to Rule 464 of the U.P. Cooperative Societies Act, 1965 (hereinafter
referred to as the Act) which provides as
follows :

"464. If the motion for no confidence
fails for want of quorum or lack of
requisite majority at the meeting, no
subsequent meeting for considering
the motion of no-confidence shall be
held within six months of the date of
the previous meeting."

3. It appears on proper interpretation
of Rule 464 of the Act that if the motion
for no confidence fails either for want of
quorum or lack of requisite majority,
there is no scope for calling any
subsequent
meeting
for
considering
motion of no confidence again within six
months from the date of the previous
meeting. In view of the specific bar
provided in the aforesaid Rule 464 of the
Act, District Magistrate has no power to
call another meeting within a period of six
months if the meeting fails either for want
of quorum or lack of requisite. In the
instant case a meeting admittedly took
place
on
25thSeptember,
2000. The
District Magistrate has again called a
meeting on 7thDecember, 2000. It appears
that at the said meeting vote of confidence
could not be passed against the petitioner.
Admittedly, six months period has not
expired. In that view of the matter calling
of the said meeting by the District
Magistrate is without jurisdiction and
contrary to Rule 464 of the said Act.

4. Accordingly, we allow the writ
petition and set aside the order-dated