Advance tax treatment in penalty computation: payment accepted as deductible from the base under section 273(b).

Advance tax paid by the assessee on 26 March 1965 was treated as a valid payment for computing the base of penalty under section 273(b) of the Income-tax Act, 1961. The Court accepted the High Court's view that, on the facts and circumstances, the amount could be deducted from 75% of the tax determined when arriving at the penalty basis. The question was answered against the Revenue, and the payment was recognised as deductible in the penalty computation.

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Issues: Whether the amount of Rs. 1,83,000 paid by the assessee on 26 March 1965 was a valid advance tax payment deductible from 75% of the tax determined for computing penalty under section 273(b) of the Income-tax Act, 1961.

Analysis: The Tribunal's reference turned on the treatment of the payment as advance tax for penalty computation. The Court accepted the High Court's reasoning that, on the facts and in the circumstances of the case, the assessee was entitled to claim deduction of the said payment while determining the base for penalty under section 273(b).

Conclusion: The question was answered in the negative and against the Revenue. The payment was to be treated as valid advance tax deductible for arriving at the penalty basis.

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