1993 (10) TMI 3 - HC - Income Tax

Advance Tax, Financial Year, Income Tax Act, Interest Income, Interest Payable, Rectification Of Mistakes, Tax Deducted At Source

Summary

Issues:
1. Interpretation of the term "advance tax" for calculating interest under section 139(8) of the Income-tax Act, 1961.
2. Whether payments made by an assessee after the close of the relevant financial year can be considered as "advance tax" for interest calculation.

Detailed Analysis:
1. The judgment revolves around the interpretation of the term "advance tax" for calculating interest under section 139(8) of the Income-tax Act, 1961. The case involved a dispute regarding the treatment of payments made by the assessee after the close of the relevant financial year as "advance tax." The Income-tax Officer recalculated the interest under section 139(8) after realizing that certain payments were made after the specified dates for advance tax payment. The Appellate Assistant Commissioner initially allowed the appeal filed by the assessee, but the Revenue challenged this decision before the Tribunal.

2. The Tribunal held that payments made after the close of the relevant financial year could not be considered as "advance tax" for calculating interest under section 139(8) of the Act. The Tribunal referred two questions of law to the High Court for opinion, focusing on whether the interpretation of the term "advance tax" was debatable and whether the original assessment order suffered from an obvious mistake. The High Court analyzed the provisions of sections 207 to 219 of the Act, emphasizing that advance tax must be paid in accordance with these sections in the financial year preceding the assessment year to be considered as such.

3. The High Court concluded that the Income-tax Officer was justified in rectifying the mistake apparent from the record regarding the treatment of payments made after the relevant financial year as advance tax. The Court clarified that the term "specified dates" in section 139(8) pertained to the period for calculating interest, not the interpretation of advance tax. Payments made after the financial year could not be deemed as advance tax unless in accordance with the Act's provisions. The Court answered both questions in favor of the Revenue, affirming that the payments made after the relevant financial year could not be regarded as advance tax for interest calculation under section 139(8).

4. In summary, the High Court upheld the Tribunal's decision that payments made after the close of the relevant financial year could not be considered as "advance tax" for calculating interest under section 139(8) of the Income-tax Act, 1961. The judgment clarified the legal interpretation of advance tax provisions and affirmed the rectification made by the Income-tax Officer based on a mistake apparent from the record.