2004 (11) TMI 92 - HC - Income Tax

1. Whether Tribunal was correct in law in holding that the interest u/s 214(1) is payable to the assessee on the excess amount paid during the financial year on the date subsequent to the date fixed u/s 211 for payment of such installment? 2. Whether Tribunal was correct in law in holding that the interest u/s 214(2) is payable to the assessee, from the date of the regular assessment to the date of making the refund, on the amount refundable as a result of excess amount paid only as a result of the proceedings under section 155, subsequent to the regular assessment? - Held that the amount of tax paid by way of advance tax on September 17, 1973 by the respondent has rightly been treated as advance tax and taken into consideration for the purposes of granting interest u/s 214(1) Held that Tribunal was justified in directing the payment of interest u/s 214(2) up to the date of refund from the date of the regular assessment

Summary

Issues:
1. Interpretation of interest under section 214(1) of the Income-tax Act for excess amount paid after the due date.
2. Interpretation of interest under section 214(2) of the Income-tax Act for the period from regular assessment to refund due to proceedings under section 155.

Issue 1 - Interpretation of interest under section 214(1):
The case involved questions regarding the payment of interest under section 214(1) of the Income-tax Act for an excess amount paid after the due date specified under section 211. The respondent had paid advance tax after the due date, leading to a dispute over the eligibility for interest. The Income-tax Officer initially disallowed interest on the amount paid after the due date, but the Appellate Assistant Commissioner directed the interest to be allowed. The Tribunal upheld this decision, leading to the current reference. The Court analyzed the provisions of section 214(1) and relevant case laws from various High Courts to determine that the amount paid after the due date should be treated as advance tax, making the assessee eligible for interest under section 214(1).

Issue 2 - Interpretation of interest under section 214(2):
The second issue revolved around the interpretation of interest under section 214(2) of the Income-tax Act, specifically for the period from regular assessment to the refund due to proceedings under section 155. The Revenue contended that the assessee was not entitled to interest under this section for the said period. However, the respondent argued that interest should be paid from the regular assessment to the refund date as per section 214(2). The Court examined the provisions of section 214(2) and clarified that it operates differently from section 214(1), with interest payable from the regular assessment to the refund date. Relying on this interpretation and the provisions of the Act, the Court ruled in favor of the assessee, directing the payment of interest under section 214(2) up to the refund date from the regular assessment.

In conclusion, the Court answered both questions in favor of the assessee, emphasizing the correct interpretation of the provisions under sections 214(1) and 214(2) of the Income-tax Act. The judgment clarified the eligibility for interest on excess amounts paid after the due date and the period for which interest should be paid from regular assessment to the refund date.