1988 (11) TMI 26 - HC - Income Tax

Summary

Issues:
Claim of interest on advance tax payment for the assessment year 1972-73. Interpretation of sections 214 and 211 of the Income-tax Act, 1961. Determination of interest on advance tax refund based on final assessment.

Analysis:
The judgment delivered by the High Court of Punjab and Haryana addressed the claim of interest on advance tax payment by the assessee, Oswal Woollen Mills Ltd., for the assessment year 1972-73. The relevant period for the assessment was the calendar year 1971, and the advance tax payments made by the assessee were detailed, with the last payment being made on October 10, 1972. The main contention was whether the assessee was entitled to interest on all advance tax payments, as only the last payment was made after the relevant financial year. The Revenue argued that interest was only applicable to payments made within the accounting year of the assessee, up to December 31, 1971.

The Tribunal ruled in favor of the assessee regarding interest on advance tax payments and also addressed the issue of interest on advance tax refund based on the final assessment by the Appellate Assistant Commissioner. The two questions referred to the court were whether the payments made after December 15, 1971, were eligible for interest and whether interest on advance tax refund should be calculated based on the final assessment.

The court referred to sections 214 and 211 of the Income-tax Act, 1961, which govern the payment and calculation of interest on advance tax. It was noted that interest is payable on aggregate advance tax payments exceeding the assessed tax from the following financial year's commencement until the assessment for the subsequent year. The court clarified that the last installment of advance tax for the assessee was due on December 15, 1971, based on the provisions of section 211.

The court rejected the argument of extension for advance tax payment due to trade conditions and ruled partially in favor of the assessee for the sum deposited on December 21, 1971. However, the balance amount was not eligible for interest, favoring the Revenue. The second question was answered in the negative, following precedents set by previous court decisions.

In conclusion, the court disposed of the reference without costs, maintaining the decision against the assessee regarding interest on advance tax payments and refund.