Advance-tax interest not leviable where enhanced compensation could not be quantified for tax estimation

Interest on enhanced compensation for acquired land was treated as accruing year by year, but that accrual did not enable the assessee to anticipate the quantified amount for advance-tax purposes. On the facts, there was no default in advance-tax estimation that attracted interest liability. Accordingly, interest was held not chargeable under the advance-tax interest provisions, and the assessee succeeded on the substantive issue.

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Issues: Whether interest under sections 234B and 234C of the Income-tax Act, 1961 was leviable on interest arising from enhanced compensation for acquired land, when the assessee could not have anticipated the quantified amount for the purpose of advance tax.

Analysis: The interest on enhanced compensation was treated as accruing year by year, but that treatment only established taxability in the relevant years. It did not mean that the assessee could foresee the precise amount during the accounting period so as to include it in advance-tax estimates. On the facts, there was no failure to comply with the advance-tax provisions in a manner attracting liability for interest under sections 234B and 234C. The remaining arguments were not dealt with as unnecessary.

Conclusion: Interest under sections 234B and 234C was not chargeable on the facts of the case, and the assessee succeeded on the substantive issue.

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