Full Advance Tax Payment Within Year Entitles Assessee to Interest u/s 214 Despite Instalment Delays HC held that for purposes of interest under section 214 on excess advance tax, the determinative condition is payment of the entire advance tax on or ...
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Full Advance Tax Payment Within Year Entitles Assessee to Interest u/s 214 Despite Instalment Delays
HC held that for purposes of interest under section 214 on excess advance tax, the determinative condition is payment of the entire advance tax on or before the end of the financial year, irrespective of minor delays in individual instalments beyond prescribed due dates. Since the assessee had fully paid advance tax within the financial year, denial of interest solely on the ground of delayed instalments was held illegal. HC quashed the orders of the Income-tax Officer and Commissioner and directed payment of interest under section 214, including interest on such interest at 12% from July 25, 1978 to September 30, 1984, and 15% thereafter until actual payment.
Issues involved: Petition under article 226 for writ of certiorari and mandamus regarding interest payment u/s 214 of Income Tax Act, 1961.
Summary: The petitioner filed a petition under article 226 seeking a writ of certiorari to quash an order by the Commissioner of Income-tax denying interest payment u/s 214 of the Income Tax Act, 1961. The petitioner was assessed for the year 1976-77, with excess advance tax paid, leading to a request for interest payment. The Income-tax Officer refused the interest citing delayed instalment payments. The petitioner's application to the Commissioner was also rejected, prompting the current petition.
The court noted that interest was denied due to delayed instalment payments, despite the excess advance tax paid. The petitioner argued, based on precedent, that interest should be paid if the total advance tax is paid before the end of the financial year, regardless of instalment dates. The court agreed with this interpretation, finding the petitioner entitled to interest u/s 214.
Additionally, the petitioner claimed interest on the interest amount, citing a previous case where the government was held liable to pay interest on such amounts. The court agreed, directing the respondents to pay the interest amount requested by the petitioner, along with interest on that sum at specified rates from different time periods.
In conclusion, the court quashed the orders denying interest payment, directing the respondents to pay the interest amount requested by the petitioner along with interest on that sum at specified rates. The rule was made absolute accordingly, with no order as to costs.
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