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Controversy over interest payment on excess advance tax paid. Analysis: The judgment delivered by the High Court of Punjab and Haryana revolves around the issue of interest payment on advance tax paid in excess of the determined tax amount. The case involved the assessee being required to pay advance tax for the assessment year 1974-75 in three instalments. The final assessment revealed an excess payment of tax, which was refunded along with interest. However, the Commissioner of Income-tax, through revisional jurisdiction, modified the interest payable on the excess amount, leading to a dispute. The key question referred to the court was whether the Appellate Tribunal erred in holding that the Commissioner lacked proper jurisdiction, rendering his order invalid. The Commissioner of Income-tax argued that interest is not payable if advance tax is paid after the due date specified in the Income-tax Act. Reference was made to an amendment in the Act, suggesting that interest on excess advance tax is only payable if paid before specified dates. However, judicial precedents and interpretations indicated that interest is payable if the entire advance tax amount is paid before the end of the financial year, regardless of due dates for instalments. The court highlighted that the concept of interest on advance tax is distinct from penalty provisions for delayed payments. Various High Courts, including Gujarat, Gauhati, Madhya Pradesh, Bombay, and others, have upheld the view that interest is payable if two conditions are met: full payment of advance tax and payment before the financial year end. The court also addressed the judgment of the High Court of Kerala, which was later reversed on appeal, emphasizing the settled legal position on interest payment. The argument based on the proviso to section 211 of the Act, added through an amendment, was dismissed as clarificatory in nature. Ultimately, the court ruled in favor of the assessee, holding that interest on excess advance tax should be paid if the specified conditions are met. The reference was answered in the negative, favoring the assessee and against the Revenue, with no costs awarded.
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