Interest under section 139(8) not chargeable when assessed tax is lower than tax already paid by the assessee.

Interest under section 139(8) is not chargeable where the tax ultimately assessed is less than the tax already paid by the assessee. The governing comparison is between assessed tax and tax paid; if the assessee has paid advance tax exceeding the assessed liability and a refund results, the statutory interest provision does not apply. The Rajasthan High Court applied this principle to an assessment made under the proviso to section 144 and answered the reference against the Revenue and in favour of the assessee.

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Issues: Whether interest under section 139(8) of the Income-tax Act, 1961, is chargeable where the tax ultimately assessed is less than the tax paid by the assessee.

Analysis: The reference arose from an assessment made under the proviso to section 144, in which the assessee had already paid advance tax exceeding the tax ultimately assessed and had consequently received a refund. Applying the governing principle that interest is not attracted when the assessed tax is lower than the tax already paid, the question referred was answered on the basis of the assessed-tax and tax-paid comparison.

Conclusion: Interest under section 139(8) is not chargeable in a case where the tax assessed is less than the tax paid by the assessee, and the question was answered against the Revenue and in favour of the assessee.

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