TMI Blog1982 (1) TMI 56X X X X Extracts X X X X X X X X Extracts X X X X ..... ed the petitioner's claim for interest under s. 214 of the Act on the ground that the instalment of advance tax payable by the petitioner on or before 15th March of the relevant financial year was paid only subsequently though during the course of the same financial year, that is, before the 1st of April of the next financial year. The assessment year, which is the subject-matter, is 1976-77. The petitioner was required to pay advance tax in terms of s. 210 of the I.T. Act in three equal instalments at the rate of Rs. 6,600 on the due dates, namely, 15th September, 15th December and 15th March. Admittedly, the first two instalments were paid on due dates. On March 13, 1976, the petitioner forwarded an estimate of his income together with a demand draft for Rs. 55,760, being the balance advance tax payable by him on the basis of such estimate. Evidently this was because, according to the assessee, the income estimated for the assessment year 1976-77 was much in excess of that corresponding to the tax demanded by the notice under s. 210 and, therefore, he was making an estimate of such higher income voluntarily and paying advance tax in accordance with such estimate. That had to be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ITO in time on the 15th. Therefore, the assessee was treated as not having paid the advance tax on the due date. As in the other case to which we have adverted, in this case also the assessee was treated as in default and the benefit under s. 214 was denied to him. The assessee challenged the order before the learned single judge as in the other case. To understand the scope of the controversy in these cases it may be necessary to advert to some of the provisions of the I.T. Act in brief. Section 207 of the Act provides for the liability for payment of advance tax. Advance tax has to be paid in accordance with ss. 208 to 219 on income which is subject to advance tax. Section 210, as it stood during the concerned year, which alone is relevant for our purpose, contemplates an order by the ITO in the case of an assessee who has been previously assessed under the Act. By that order he requires the assessee to pay to the credit of the Central Govt. advance tax determined in accordance with the provisions of ss. 207, 208 and 209. Such advance tax is payable under s. 211 in three equal instalments, the dates of payment of which are 15th June, 15th September and 15th December and in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vision enables the ITO to charge simple interest at 12% on an assessee if on making the regular assessment the assessing authority finds that the assessee has failed to make an estimate revising his income, as he ought to, for the purpose of payment of advance tax. Section 219 may also be adverted to. That provides that any sum, other than a penalty or interest, paid by or recovered from an assessee as advance tax in pursuance of the chapter shall be treated as a payment of tax in respect of the income of the period which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable, and credit therefor shall be given to the assessee in the regular assessment. Whatever is paid as advance tax is entitled to credit at the time of regular assessment by reason of s. 219 of the Act. Now, we will revert back to s. 214 of the Act. In simple terms, that obliges the Central Govt. to pay simple interest at 12% on a specified sum in case the amount of advance tax paid exceeds the amount of tax determined on regular assessment. Such interest has to be paid on the first day of April next following the said financial year and is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ch calls for contruction in this case. It is only when that aggregate sum exceeds the amount of tax determined on regular assessment that the question of payment of interest on the difference arises. Should the advance tax paid, say, on the 16th of March but payable on 15th March, be taken into account in determining the aggregate sum of instalments of advance tax paid ? Does it cease to be an instalment of advance tax, when it is paid not on 15th March but on 16th March ? Is the qualification of the term " advance tax paid " by the words " during any financial year " of any significance ? The words " in which they are payable " under s. 207 to 213 evidently qualify the term " financial year ". That also indicates that the liability to pay advance tax under ss. 207 to 213 is in relation to a financial year, though no doubt the dates are specified. Apart from the reference to financial year, the fact that interest commences to run not from the dates of payment but from the first of April of the next year would show that advance tax paid in excess during a year begins to earn interest for the assessee from the I.T. Dept. only from 1st of April next year. The payment need not, it appe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... December. Explanation.-In this sub-section, " total income " means, (a) in a case where the advance tax is paid by the assessee in accordance with the statement sent by him under sub-section (1) of section 209A or in accordance with an order of the Income-tax Officer under section 210, the total income with reference to which the advance tax payable has been calculated in such statement or order; (b) in a case where the advance tax is paid in accordance with an estimate (including a revised estimate) made by the assessee under section 209A or section 212, the total income with reference to which the advance tax is so estimated; as reduced, in either case, by the amount of capital gain and income referred to in sub-clause (ix) of clause (24) of section 2, if any, included therein. (2) If the notice of demand issued under section 156 in pursuance of the order under section 210 is served after any of the dates on which the instalments specified therein are payable, the advance tax shall be payable in equal instalments on each of such of those dates as fall after the date of the service of the notice of demand, or in one sum on the 15th day of March, if the notice is served af ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Andhra Pradesh case, an argument which was attempted here also. It was urged that non-payment of advance tax on the respective due dates may invite an imposition of penalty and, therefore, there is no question of interest being paid on such belated payments. As rightly pointed out by Chief Justice Divan in Chandrakant Damodardas v. ITO [1980] 123 ITR 748, speaking for the Bench, the liability for penalty under some provision of the Act has no relevance at all in considering the right to interest under s. 214. The assumption to the contrary made by the Andhra Pradesh High Court in Kangundi Industrial Works (P.) Ltd. v. ITO [1980] 121 ITR 339 is not warranted by the terms of the Act. The Act imposes penal consequences in respect of certain Acts. Independently it provides for the rights of parties such as for interest on excess payments. The fact that penal consequences may follow a failure to pay on the dates specified need not affect the right to interest envisaged under other provisions. In other words, if by reason of an excess payment during a financial year an assessee is entitled to claim interest on the amount of excess so paid that need not be denied to him merely because, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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