1979 (3) TMI 27 - HC - Income Tax

Summary

Issues involved: Determination of whether interest is payable to the assessee on excess amounts paid during the financial year on dates subsequent to the dates fixed for payment of instalments u/s 211 of the Income Tax Act.

Summary:

The judgment of the High Court of Andhra Pradesh addressed the issue of whether interest is payable to the assessee on excess amounts paid during the financial year after the due dates fixed under section 211 of the Income Tax Act. The petitioner, an income-tax assessee, had paid the entire advance tax for the financial year 1974-75 but had not paid the second and third instalments on the due dates. The regular assessment was completed, and a refund was issued to the petitioner. The petitioner claimed interest on the excess amount paid, which was denied by the revenue.

The court considered the arguments presented by both counsels and concluded that interest under section 214 of the Income Tax Act is only claimable if the assessee has complied with the requirements specified under section 211. Emphasizing that instalments must be paid before the due dates, the court highlighted that failure to do so results in the assessee being deemed in default, risking penalties under section 221. The court rejected the petitioner's claim for interest, stating that once default in payment occurs, interest on excess tax paid is not applicable.

Additionally, the petitioner claimed interest under section 243 of the Income Tax Act, contending that it amounts to a refund. The court dismissed this claim, clarifying that interest under section 214 does not constitute a refund of tax paid. The court also noted that the respondent's communication denying the interest claim was not an order subject to revision by the CIT, allowing the court to dismiss the writ petition.

Ultimately, the High Court dismissed the writ petition, directing each party to bear their respective costs based on the circumstances of the case.