1988 (7) TMI 7 - HC - Income Tax

Summary

Issues:
Computation of interest under the Income-tax Act, 1961 when advance tax is paid during the financial year but not on the due date.

Detailed Analysis:
The judgment delivered by the High Court of GAUHATI pertained to the computation of interest under the Income-tax Act, 1961, specifically addressing the issue of whether interest can be charged when advance tax is paid during the financial year but not on the due date of payment. The case involved the Sookerating Tea Co. (P.) Ltd. at Dibrugarh, Assam, which was taxed to pay Rs. 1,05,687 for the assessment year 1975-76. The assessee made multiple payments in 1974 and 1975, totaling Rs. 59,487, with an additional payment of Rs. 11,953 in 1976.

The dispute primarily arose concerning the payments made in 1975, with the petitioner contending that payments made during the financial year 1975 were not appropriately considered for interest calculation. The Income-tax Officer had issued a notice demanding Rs. 68,026, based on calculations under sections 139 and 215 of the Act. The petitioner challenged the calculation made under section 139, arguing that payments made during the financial year should have been taken into account.

The Commissioner of Income-tax, North Eastern Region, at Shillong, rejected the petitioner's contention, stating that any tax not paid in accordance with the provisions of sections 208 to 219 cannot be treated as advance tax. However, the court noted an anomaly in the calculations where the amount of Rs. 38,354 was included for interest calculation under section 215 but omitted under section 139 without explanation.

Examining the relevant provisions of the Act, the court emphasized that payments made during the financial year, even after due dates, should be considered for interest computation, as they contribute towards the tax liability covering the financial year. Therefore, the court directed the Income-tax Officer to include Rs. 38,354 in the calculation and recompute the interest before serving a revised demand on the assessee.

In conclusion, the writ petition was allowed, and the court provided a clear directive for the inclusion of payments made during the financial year for interest calculation purposes, ensuring a fair and accurate assessment under the Income-tax Act, 1961.