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| DATE: | January 10, 2013 (Date of publication) |
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| Click here to download the judgement (ronaq_post_dated_cheque.pdf) |
Payment by post-dated cheque relates back to date of handing over of cheque
In the year ended 31.3.2002, the assessee, a charitable trust eligible for exemption u/s 11, received a post-dated cheque dated 22.4.2002 from Apollo Tyres Ltd for which it issued a receipt. The AO held that the post-dated cheque had been accepted by the assessee to do undue favour to Apollo Tyres, whose directors were trustees of the assessee and that there was a violation of s. 13(2)(d)(h), and that s. 11 exemption had to be denied. This was reversed by the Tribunal and the High Court on the ground that as the post dated cheque was given before 31.3.2002 and was duly honoured in April, 2002 when it was presented before the bank, the date of payment of the cheque should be treated as the date on which the cheque was received by the assessee. On appeal by the department to the Supreme Court, HELD dismissing the appeal:
Though the assessee trust issued a receipt in March 2002 when it received the cheque dated 22.4.2002, it was clearly stated in its record that the amount of donation was receivable in future and it was shown as donation receivable in the balance sheet as on 31.3.2002. Also Apollo Tyres Ltd did not avail any advantage of the said donation during the FY 2001-2002. When a post-dated cheque is issued, it will have to be presumed that the amount was paid on the date on which the cheque was given to the assessee and, therefore, it cannot be said that any undue favour was done by the assessee to Apollo Tyres Ltd. A cheque, unless dishonoured, is payment (Ogale Glass Works 25 ITR 529 (SC) followed)
SC is right. Revenue seems always work on back foot. True revenue need to generate revenue that does not mean it has to work irrationally, after all post dated cheque is encashed is no longer post dated but just current, after all in business, there cannot always be cash in bank unless realized from markets, but allocations of future funds is a norm normal in any business, is it not.
if one holds you shall have cash always, then why cheques at all needed to be given by a bank to an account holder is another pertinent question.
Again when revenue talks about always cheques and no cash it allows more than a specified amount to deposit in bank or draw from bank, what does it mean?
Revenue says no cash transactions more than specified amount does it not mean, revenue relies on cheques?
there is no sense in a preposterous law when no mercantile or for that matter in any other case if you cannot work on future funds!
Even economic developments work on future as always resources are scarce . Hence work on future is the need, when so and probabilities of future when realizations not as expected are possible yet one needs to work on future, as employees work anywhere expecting a remuneration in a future date, and if the employer does not have money on salary payment date, he gives a post dated cheque as his commitment to pay salary to employee, how you can say the employer cannot give a post dated cheque, when post dated cheque is a kind of promissory note enacashable after a particular future date that way promise gets fulfilled besides trust gets filled in any one.
in every angle SC judgement is a prudent and wise judgement. Revenue also need to be wise, so discretion is better than valor, is my view too, if i were a judge in supreme court or in a small court too!.regards.