Interest on refund for delayed advance tax payments was allowed where the sums were accepted as advance tax and credited on assessment.

Advance tax instalments paid after the prescribed dates, but accepted by the assessing authority as advance tax and credited against the regular assessment, could be treated as payment toward the last instalment falling due subsequently. On that basis, denial of interest on refund under section 214 of the Income-tax Act, 1961 solely because the payments were out of time was not justified. The rectification under section 154 was therefore properly allowed, and the assessee was held entitled to interest on the refund.

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Issues: Whether the assessee was entitled to interest on refund under section 214 of the Income-tax Act, 1961 in respect of advance tax instalments paid after the prescribed dates, and whether the application under section 154 of the Income-tax Act, 1961 was rightly allowed.

Analysis: The payments, though not made by the prescribed instalment dates, were accepted by the assessing authority as advance tax and given credit against the tax determined on regular assessment. On that basis, the payments could be treated as advance-tax payments towards the last instalment falling due subsequently. The refusal to grant interest on the ground that the payments were out of time was therefore not justified.

Conclusion: The assessee was entitled to interest under section 214, and the order directing allowance of the rectification application was upheld.

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