Section 234A interest must exclude pre-return tax payments, even if made after year-end and not as formal advance tax.

Interest under section 234A is compensatory and must be computed on tax payable after reducing amounts already paid before filing the return, even if such payment was made after the close of the financial year and not strictly as instalment advance tax under Chapter XVII-C. The Tribunal read the term "advance tax" in its contextual, generic sense because the provision is aimed at preventing interest on money already with the Revenue where there is no continued retention by the assessee. On that basis, the tax payment made on 30 June 2000 was to be excluded while calculating section 234A interest, and the assessee succeeded on this issue.

---

---

Issues: Whether a tax payment made after the close of the relevant financial year but before filing the return could be treated as advance tax for reducing interest under section 234A.

Analysis: The provision for interest under section 234A operates on tax payable on returned income as reduced by advance tax paid and tax deducted or collected at source. Although section 2(1) defines advance tax as tax payable in accordance with Chapter XVII-C and section 211 regulates instalments and due dates, the definition is subject to context. The object of section 234A is compensatory, not penal, and interest cannot be levied on amounts already paid by the assessee where there is no retention of money. Reading the provision in its context, the term advance tax was construed in its generic sense to cover taxes paid in advance of the anticipated liability before filing the return, even if not paid strictly as advance tax under Chapter XVII-C.

Conclusion: The payment of Rs. 8,30,000 made on 30-6-2000 had to be excluded while computing interest under section 234A, and the assessee succeeded on this issue.

---