Compensatory interest on late return filing is not chargeable where advance tax fully covers assessed tax liability

Interest for delay in filing a return under Section 139(8) is compensatory, and it is not leviable where advance tax already paid exceeds the tax ultimately assessed. On the facts stated, no interest arose merely because the return was filed beyond time, since the tax liability stood fully covered after adjustment of advance tax. The registered-firm status did not create a separate basis for charging interest in the absence of any remaining tax payable. Interest under Section 139(8) was therefore not chargeable.

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Issues: Whether interest under Section 139(8) of the Income-tax Act, 1961 is leviable on a registered firm where the advance tax paid exceeds the tax ultimately assessed.

Analysis: Interest for late filing of return is compensatory in nature. Where the advance tax paid by the assessee covers the entire tax ultimately determined, no liability to interest arises merely because the return was filed beyond time. The status of a registered firm cannot attract interest under Section 139(8) when there is no remaining tax payable after adjustment of advance tax.

Conclusion: Interest under Section 139(8) was not chargeable on the assessee, and the question was answered in favour of the assessee.

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