1989 (4) TMI 27

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.... for the purpose of calculation of interest under section 214 of the Income-tax Act, 1961 ?" The facts shortly stated are that in respect of the assessment year 1976-77, the Income-tax Officer found that the assessee has paid advance tax on the following dates : Date of payment Amount Rs. 25-06-1975 19,250 12-11-1975 19,250 15-12-1975 3,65,000 16-01-1976 37,500 ------------------ 4,41,000 ------------------ At the time of completion of the assessment, a question regarding the allowance of interest to the assessee under section 214 of the Income-tax Act, 1961, arose. The Income-tax Officer felt that interest under section 214 was not available to the assessee on the sum of Rs. 37,500 which had been paid on Ja....

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....paid during any financial year in which they are payable under sections 207 to 213 exceeds the amount of the tax determined on regular assessment, from the 1st day of April next following the said financial year to the date of the regular assessment for the assessment year immediately following the said financial year, and where any such instalment is paid after the expiry of the financial year during which it is payable by reason of the provisions of section 213, interest as aforesaid shall also be payable on that instalment from the date of its payment to the date of regular assessment." (underlined by us) To attract this provision, two conditions have to be satisfied. Firstly, instalments of advance tax must have been paid during the ....

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....ction 214 which is only concerned with the payments made during the financial year and not payments made on the specified date(s) during the financial year. In our view, whatever is paid before the close of the financial year would qualify as advance tax. If credit is given by the Department for the belated payments made during the financial year in calculating the tax due on regular assessment, we fail to see how such tax would not be treated as advance tax. It is a payment in advance towards tax to be determined on regular assessment. If the Revenue, for the purpose of determining the tax due on regular assessment, cannot ignore such payment, then for the purpose of calculating interest also, such payment cannot be kept out of considerati....