The charging of interest under Sec.217 of the Income-tax Act, 1961, is appealable when it forms a composite part of the assessment order and the quantum of the assessed tax is under challenge.

S.K.Jha, J.

1. These two cases were taken up together as parties and the questions involved in them are common. They were primarily referred to a Full Bench in view of the two inconsistent decisions in the case of CIT V/s. Daimler Benz (A.G.) [1977] 108 ITR 961, a judgment of the Full Bench of the Bombay High Court, and the case of CIT V/s. Geeta Ram Kali Ram [1980] 121 ITR 708, a judgment of the Full Bench of the Allahabad High Court.

2. Before 1 embark upon the question of correctness of either of these two decisions, it is worthwhile to mention the facts as borne out by the statement of case which, again, is common in both the cases. These are references under Sec.256(1) of the I.T. Act, 1961 (hereinafter to be referred to as "the Act"), by the Income-tax Appellate Tribunal, A Bench, Patna (hereinafter to be called " the Tribunal "), and the following questions of law have been framed for the opinion of this court :

" 1. Whether, on the facts and in the circumstances of the case, the Tribunal was right in law in refusing to admit the additional ground claiming that the assessees income for the assessment years 1963-64 and 1964-65 was exempt under Sec.11 of the Income-tax Act, 1961 ?

2. Whether, on the facts and in the circumstances of the case, the Tribunal was justified in holding that there was no appeal provided against the charging of interest under Sec.217 of the Act and in declining to adjudicate upon the correctness of charging of interest under that section ? "

3. The relevant facts may be extracted from the statement of the cases. These are two reference applications made under Sec.256(1) of the Act by the assessee-Corporation and common questions of law for the assessment years 1963-64 and 1964-65 arise out of the Tribunals consolidated order dated September 15, 1973. The assesses, as has already been stated above, is the Bihar State Road Transport Corporation. In respect of both the years, the original grounds of appeal were only in relation to the charging of interest tinder Sec.217 of the Act. Subsequently, however, additional grounds of appeal were filed by the assessee at the time of hearing of the appeals themselves, out of which question No. 1, as pointed out above, arises.

4. It was contended on behalf of the Revenue opposing the admission of the additional grounds that they did not arise out of the order of the AAC and they were not questions of law and could not be decided without ascertaining certain basic facts. It was also submitted that the assessee had come at a very late stage of the appeal before the Tribunal to file the additional grounds in question for which there was no justification.

5. The Tribunal held that the additional grounds in question did not arise out of the orders of the ITO or the AAC, and in this connection some cases were referred to by the Tribunal. It further found that a ground could be raised before the Tribunal only if it was a pure question of law going to the root of the matter and did not involve any investigation into facts. In this connection the Tribunal relied upon a decision of the Supreme Court in the case of Moti Ram V/s. CIT [1958] 34 ITR 646. The Tribunal was of the view that in deciding the issue involved in the additional grounds it was necessary to find several facts regarding the objects of the Corporation and the business actually carried on, the position of accounts, application of income, etc. The Tribunal referred to the provisions of Sec.11 of the Act, whereunder exemption is granted to certain nature of income to the extent to which such income is applied to charitable purposes in India. It further held that whether a trust is charitable or not could be determined only on the basis of evidence before the court. Such questions are, therefore, questions of fact and law and the first step for deciding such questions is to have the facts of the case in detail. The Tribunal* further found that new grounds had been raised for the first time before th