1978 (10) TMI 95 - AT - Income Tax

Tribunal grants interest on excess tax payment, citing precedent. Assessee's appeal successful.

The Tribunal allowed the appeal, canceling the CIT's order withdrawing interest granted under section 214 of the Income Tax Act. It was held that the ... Entitlement to interest under s. 214 - acceptance by the Department of a belated payment as an advance-tax instalment - CIT's revision under s. 263Entitlement to interest under s. 214 - acceptance by the Department of a belated payment as an advance-tax instalment - Assessee entitled to interest under s. 214 on excess advance tax where the payment, though made after the prescribed date, was accepted by the Department as an advance-tax instalment. - HELD THAT: - The assessment order expressly recorded that credit was given for advance tax paid and that the payment was accepted by the Department as payment of an advance-tax instalment. Reliance was placed on the Bombay High Court decision in the Traub(India) case where, although the last instalment was paid after the prescribed date, the Tribunal's finding that the Department had accepted the belated payment as an advance-tax instalment meant that entitlement to interest under s. 214 followed and the High Court declined to refer the legal question. Applying the same reasoning, the Tribunal held that acceptance by the Department of the payment as advance tax satisfies the factual prerequisite and, where other requirements of s. 214 are met, the assessee is entitled to interest on the excess advance tax so paid. The CIT's withdrawal of the interest under s. 263 was therefore not justified. [Paras 3, 4]Interest under s. 214 granted to the assessee on excess advance tax reinstated; CIT's order under s. 263 cancelling the interest set aside.Final Conclusion: The appeal is allowed: the Tribunal restores the interest awarded under s. 214 because the Department had accepted the payment as an advance-tax instalment; the CIT's revision under s. 263 cancelling that interest is cancelled. Issues: Appeal against order of CIT withdrawing interest granted under section 214 of the Income Tax Act.Analysis:The appeal was filed by the assessee against the CIT's order under section 263 of the IT Act, which withdrew the interest of Rs. 2,092 granted to the assessee under section 214. The contention of the assessee was that the ITO had given credit for advance tax paid, and the assessee was entitled to interest under section 214 on the excess amount paid. The Departmental representative argued that payments made after due dates cannot be considered as advance tax payments, citing a Board Circular. However, the Tribunal found that the payment made by the assessee had been accepted by the Department as an advance tax installment, making the assessee entitled to interest on the excess amount paid.In a similar case before the Bombay High Court, it was held that even if a payment was made slightly beyond the prescribed date, if it was accepted by the Department as an advance tax installment, the assessee would be entitled to interest under section 214. The High Court rejected the argument that adherence to the prescribed schedule was necessary for claiming interest under section 214. The Tribunal's factual finding that the payment was accepted as an advance tax installment led to the conclusion that the assessee was entitled to interest, and no question of law arose. This precedent was applied to the present case, where the Department had accepted the payment as advance tax, as evident from the assessment order.Therefore, the Tribunal held that the assessee was entitled to the interest under section 214 for the excess advance tax paid, and the CIT was not justified in withdrawing the interest. Consequently, the Tribunal allowed the appeal and canceled the CIT's order, affirming the entitlement of the assessee to the interest granted under section 214.