Advance tax credit must be deducted while computing interest under section 139(8) for estimated voluntary payment.

A voluntary payment made by an assessee as advance tax on estimate, even without a notice under section 210, must be credited when computing interest under section 139(8) of the Income-tax Act, 1961. Sections 207, 208, 209 and 211 form the advance tax scheme, and where the assessee has itself filed an estimate and paid tax accordingly, that amount is treated as tax already paid. Interest under section 139(8) cannot therefore be charged on the full assessed tax without deducting the advance tax payment.

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Issues: Whether, for the purpose of computing interest under section 139(8) of the Income-tax Act, 1961, a voluntary payment made by the assessee as advance tax on estimate, though no notice under section 210 had been issued, was required to be deducted from the tax payable on regular assessment.

Analysis: Sections 207, 208, 209 and 211 create the scheme of advance tax liability, and in the present case the assessee had itself filed an estimate of income and paid a sum as advance tax. That amount was treated and credited as tax paid. In these circumstances, interest under section 139(8) could not properly be levied on the entire assessed tax without giving credit for the amount already paid as advance tax.

Conclusion: The voluntary advance tax payment had to be deducted in computing interest under section 139(8), and the answer to the reference was in favour of the assessee.

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