Advance tax interest under section 214 remains payable for payments made before year-end, and continues until refund is issued.

Interest on advance tax under section 214 was treated as admissible where the tax was paid before the close of the financial year, even if some instalments were deposited after the statutory due dates, because delay in instalment timing did not defeat the statutory entitlement. The Tribunal also read section 214(2) as governing the running of interest up to the date of refund, so interest continued until refund was actually made. The departmental appeals therefore failed and the directions granting interest were sustained.

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Issues: (i) Whether interest under section 214 of the Income-tax Act, 1961 is payable on advance tax instalments paid after the statutory dates but before the end of the financial year; (ii) Whether such interest is payable up to the date on which refund is actually granted.

Issue (i): Whether interest under section 214 of the Income-tax Act, 1961 is payable on advance tax instalments paid after the statutory dates but before the end of the financial year.

Analysis: The payment of advance tax before the close of the financial year was treated as sufficient for the grant of interest under section 214. The provision was read as covering advance tax paid before the end of the relevant financial year, and the Tribunal relied on supporting High Court decisions to hold that delay beyond the statutory instalment date did not by itself defeat the claim to interest.

Conclusion: Interest under section 214 was held to be admissible on advance tax paid before the end of the financial year, even if some instalments were paid after the statutory dates.

Issue (ii): Whether such interest is payable up to the date on which refund is actually granted.

Analysis: Section 214(2) was treated as expressly governing the period for which interest is payable, namely up to the date of refund. The Tribunal accepted that the direction to allow interest until the refund voucher was issued was consistent with the statutory scheme.

Conclusion: Interest was held payable up to the date of refund.

Final Conclusion: The departmental appeals failed, and the directions granting interest under section 214 and allowing it until the date of refund were sustained.

Ratio Decidendi: Interest on advance tax under section 214 is allowable where the tax is paid before the end of the financial year, and the period of interest continues until the refund is made as provided in section 214(2).

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