Court upholds denial of interest claim for late tax payment under Income Tax Act.

The court upheld the Commissioner of Income-tax's decision to reject the petitioner's claim for interest under section 214 of the Income Tax Act due to the late payment of the third installment of advance tax. The court ruled that interest is only payable by the Government on advance tax paid in excess of the tax determined on regular assessment if the advance tax was paid on time as specified in section 211. As the petitioner paid the third installment after the due date, the court held that the Government was not obligated to pay interest, ultimately dismissing the petitioner's challenge against the Commissioner's order.

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Issues involved: Impugned order rejecting interest claim u/s 214 of the Income Tax Act for late payment of advance tax installment.

Summary:
The petitioner challenged an order passed by the Commissioner of Income-tax rejecting the claim for interest u/s 214 of the Income Tax Act in relation to the third installment of advance tax paid late. The petitioner paid the first two installments on time but paid the third installment after the due date. The petitioner's contention was that interest should be paid by the Government for the excess amount paid as advance tax, even if paid after the due dates specified under the Act.

The petitioner's counsel argued that as per section 212(3A), the liability of the assessee is fulfilled by sending the estimate before the due date, regardless of when the payment is received by the department. However, the court noted that while the estimate was sent before the due date, the actual payment was received after the due date, making the petitioner a defaulter as per section 218(2).

The court referred to section 214 which mandates the Central Government to pay interest on advance tax paid in excess of the tax determined on regular assessment, but only if the advance tax was paid on the due dates specified in section 211. Since the payment in this case was not made on time, the court held that the Government was not liable to pay interest.

The court cited a similar decision by the Andhra Pradesh High Court and disagreed with a decision of the Bombay High Court, ultimately dismissing the challenge against the impugned order.

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