Year of assessment – whether relevant when the tax rates are same – frivolous appeal?
In a decision rendered about 50 years ago, the Bombay High Court, speaking through Chief Justice Tendolkar in Commissioner of Income Tax, Delhi, Ajmer, Rajasthan and Madhya Pradesh vs. Nagri Mills Co. Ltd, observed as follows:-
We have often wondered why the Income tax authorities, in a matter such as this where the deduction is obviously a permissible deduction under the Income tax Act, raise disputes as to the year in which the deduction should be allowed.
The question as to the year in which a deduction is allowable may be material when the rate of tax chargeable on the assessee in two different years is different; but in the case of income of a company, tax is attracted at a uniform rate, and whether the deduction in respect of bonus was granted in the assessment year 1952-53 or in the assessment year corresponding to the accounting year 1952, that is in the assessment year 1953-54, should be a matter of no consequence to the Department; and one should have thought that the Department would not fritter away its energies in fighting matters of this kind. But, obviously, judging from the references that come up to us every now and then, the Department appears to delight in raising points of this character which do not affect the taxability of the assessee or the tax that the Department is likely to collect from him whether in one year or the other.
A similar issue came up recently before the Delhi High Court with a question of Law, Whether, on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was right in holding that the assessee had correctly charged to its Profit and Loss account for the assessment year 1982-83, the expenditure on account enhanced rate of purchase of gas for the period 1.7.79 to 15.9.80.
The High Court observed (),
The situation does not seem to have changed over the last fifty years and the Revenue continues to agitate the question whether tax is leviable in a particular year or in some other year. This is hardly a question that should require us to exercise our minds particularly since there is no doubt that the tax has been paid and the rate of tax remains the same for both the assessment years.
Does the Revenue Departments exist for the sole purpose of promoting the profession of lawyers?