TMI Blog1988 (12) TMI 113X X X X Extracts X X X X X X X X Extracts X X X X ..... urities held by it and dividends payable to the petitioner on shares and paid to the Central Government under the provisions of the Act by the persons authorised by the Act to deduct the tax at source during the previous years relating to the aforesaid assessment years. During all such previous years, the tax deducted at source exceeded the tax finally determined in respect of the said assessment years and the refund allowed to the petitioner ranged between Rs. 28,000 odd and Rs. 1,98,138 as stated hereunder : Assessment Amount refunded year Rs. 1975-76 28,002 1976-77 55,597 1977-78 1,57,445 1978-79 1,98,138 1979-80 1,40,289 Exhibit P-1 statement gives the details of the total tax deducted at source, the gross amount of tax finally determined and the amount ordered to be refunded to the petitioner in respect of each of the years. The first respondent, in directing refund of the excess amount collected, did not provide for the payment of interest to the petitioner. The petitioner presented petitions under section 154 of the Act for rectification of the assessment orders praying for amendment of the assessment by providing for payment of interest to the petitio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot the case with advance tax. The tax is paid on income which is estimated on the previous year's income when that income has not actually been earned and is not actually received. The only characteristic common to advance tax and tax deducted at source is that they are paid or collected prior to the assessment. The substantial difference between the two is that the former is levied and collected on anticipated income yet to be earned, while the latter is paid on ascertained income already earned in the past. These significant distinguishing features militate against treating the tax deducted at source and advance tax on the same footing for purposes of payment of interest on refund. There is no enabling provision in the Act to direct payment of interest on the tax deducted at source, understandably because the specified rate of tax is applied to income already earned, subject to application of the appropriate rate at the time of finalising the assessment. Section 4 of the Act which is the charging section maintains in subsection (2) thereof the two-fold distinction between income-tax deductible at source and income-tax paid in advance. The charging section provides that income-t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued at the time of credit for payment of the sum. Under section 199, the deduction made and paid to the Government is treated as payment on behalf of the person who earned the income. It could be thus seen that Chapter XVII of the Income-tax Act empowers the collection of tax on income earned at the time of the receipt itself, whereas the provisions contained under sections 202 to 213 are for paying the tax in advance before the income is actually received and during the year the income is accruing. This payment in advance is on estimate. To safeguard the collection of the amounts that would be due and to avoid excess collection, provision has been made in section 214 for payment of interest on whatever excess is collected. That provision also provides safeguards to the assessee while inspiring the assessee to pay the tax in advance without default. These provisions do not specifically state that interest could be collected on the excess paid by the process of deduction at source. The assessee is not directly involved in such deduction which is being made by the person making the payment. The act of such person, though to the benefit and in discharge of the obligation of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d not be treated as payment in advance of the tax leviable for the relevant accounting years and would not carry interest as a payment of advance tax under section 214 of the Act. Murthy Match Works v. Assistant Collector of Central Excise, AIR 1974 SC 497, in dealing, with the question of discrimination in taxation enunciated the principle thus (headnote) : "Bare equality of treatment regardless of the inequality of realities is neither justice nor homage to the constitutional principle. Another proposition which is equally settled is that merely because there is room for classification, it does not follow that legislation without classification is always unconstitutional. The court cannot strike down a law because it has not made the classification which commends to the court as proper. Nor can the legislative power be said to have been unconstitutionally exercised because, within the class, a sub-classification was reasonable but has not been made. The modern State, in exercising its sovereign power of taxation, has to deal with complex factors relating to the objects to be taxed, the quantum to be levied, the conditions subject to which the levy has to be made, the social and ..... X X X X Extracts X X X X X X X X Extracts X X X X
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