Advance tax accepted after the due date still counts for section 214 interest if paid before year-end.

Advance tax paid after the due date but before the close of the accounting year, and accepted by the Revenue, retains its character as advance tax for interest under section 214 of the Income-tax Act, 1961. Construing sections 211 and 214 together, the Madras HC view is that punctual payment on each instalment date is not indispensable where the payment is received before year-end. Any default consequences for late payment do not alter the nature of the amount once accepted by the Department. On that basis, excess advance tax remains eligible for interest under section 214.

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Issues: Whether advance tax paid after the due date but before the end of the accounting year and accepted by the Revenue retains its character as advance tax for the purpose of interest under section 214 of the Income-tax Act, 1961.

Analysis: The issue turned on the construction of sections 211 and 214 of the Income-tax Act, 1961, and whether punctual payment on the due dates was an indispensable condition for claiming interest on excess advance tax. The Court held that once the Department accepts the belated payment, the amount continues to be advance tax for the purpose of section 214. The fact that the assessee may be liable for default consequences does not alter the character of the payment when it has been received before the close of the accounting year. The Court preferred the view that the statutory scheme of section 214 focuses on payment of advance tax before the end of the financial year, not strict adherence to the instalment dates, and aligned this with prior decisions taking the same view.

Conclusion: Delayed advance tax payments accepted by the Revenue remain advance tax for section 214, and the assessee is entitled to interest on the excess payment.

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