Court rules interest payable under Section 214 of Income Tax Act despite late payment. Controversy on assessee's entitlement.

The court held that interest under Section 214 of the Income Tax Act is payable to the assessee on the excess amount of advance tax paid during the financial year, even if paid after the due dates stipulated under Section 211. However, the court ruled that the issue of the assessee's entitlement to interest under Section 214 was controversial and could not be rectified under Section 154 of the Income Tax Act, based on conflicting decisions from different High Courts regarding the interpretation of the provision.

---

---

Issues involved: Interpretation of Section 214 of the Income Tax Act regarding payment of interest on excess advance tax and the permissibility of rectification under Section 154 based on controversial issues.

Interpretation of Section 214 - Payment of Interest on Excess Advance Tax:
The case involved a dispute regarding the entitlement of the assessee to interest under Section 214 of the Income Tax Act on the excess amount of advance tax paid during the financial year. The Tribunal held that interest was payable under Section 214 even if the instalments of advance tax were not paid on the due dates as prescribed under Section 211, as long as they were paid during the financial year. The court referred to the Gujarat High Court decision in Chandrakant Damodardas v. ITO, which supported the view that interest is payable on excess advance tax paid. However, the Andhra Pradesh High Court and the Kerala High Court had taken a contrary view, stating that non-payment of instalments on due dates disentitles the assessee from claiming interest under Section 214. The court disagreed with this view, emphasizing that Section 214 is a self-contained provision and does not need to be interpreted with reference to other sections like Section 218. Ultimately, the court held that interest under Section 214 is payable to the assessee on the excess amount paid during the financial year, even if paid after the dates stipulated under Section 211.

Permissibility of Rectification under Section 154 based on Controversial Issues:
The second issue pertained to the permissibility of rectification under Section 154 of the Income Tax Act based on controversial issues. The court referred to the Supreme Court's decision in T. S. Balaram, ITO v. Volkart Brothers, which stated that rectification can only be done for obvious and patent mistakes, not for debatable points of law. The court noted that the issue of the assessee's entitlement to interest under Section 214 was debatable, as evidenced by conflicting decisions from different High Courts. Despite the assessee's argument that the Gujarat High Court's decision should bind the Tribunal, the court held that the issue's debatability was intrinsic and not dependent on a particular High Court's decision at a given time. Therefore, the court concluded that the issue about the assessee's entitlement to interest under Section 214 was controversial and could not be rectified under Section 154 of the Income Tax Act.

In conclusion, the court answered the first question affirmatively, stating that interest under Section 214 is payable to the assessee on the excess amount paid during the financial year. However, the court answered the second question negatively, ruling that the issue of the assessee's entitlement to interest under Section 214 was controversial and could not be rectified under Section 154 of the Income Tax Act.

---