Advance tax by cheque relates back to tender date when honoured, supporting interest entitlement under section 214.

Payment of advance tax by cheque is treated as made on the date the cheque is tendered and accepted, provided it is later honoured on presentation. Applying that relation-back principle, the advance tax instalment was treated as paid on the date of tender rather than the later date of encashment. On that basis, the assessee was held entitled to interest under section 214 of the Income-tax Act, 1961.

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Issues: Whether advance tax paid by cheque on the last date for payment, but encashed a few days later within the financial year, entitled the assessee to interest under section 214 of the Income-tax Act, 1961.

Analysis: Payment by cheque, when accepted and later honoured on presentation, relates back to the date on which the cheque is received. On that principle, the instalment of advance tax was treated as paid on 15 March 1976, the date of tender of the cheque, and not on the later date of encashment.

Conclusion: The assessee was entitled to interest under section 214 of the Income-tax Act, 1961. The question was answered in the negative, in favour of the assessee and against the Revenue.

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