1982 (1) TMI 56 - HC - Income Tax

Summary

Issues Involved:
1. Entitlement to interest u/s 214 of the I.T. Act for advance tax paid after the due date but within the financial year.
2. Validity of payment by demand draft and cheque for advance tax purposes.

Summary:

Issue 1: Entitlement to Interest u/s 214 of the I.T. Act

The primary issue in these cases was whether an assessee is entitled to interest u/s 214 of the I.T. Act for advance tax paid after the due date but within the financial year. The petitioner in O.P. No. 3799 of 1977 challenged the Commissioner's order rejecting his claim for interest on the ground that the third instalment of advance tax was paid on March 16, 1976, instead of the due date, March 15, 1976. The court examined the relevant provisions, including sections 207, 210, 211, 212, 214, 217, and 219 of the I.T. Act. It concluded that advance tax paid within the financial year retains its character as advance tax, even if not paid on the specified dates. The court held that the Central Government is obliged to pay interest on any excess advance tax paid during the financial year, starting from April 1 of the next financial year, regardless of minor delays in payment dates.

Issue 2: Validity of Payment by Demand Draft and Cheque

The court did not delve deeply into the issue of whether payment by demand draft or cheque constitutes timely payment for advance tax purposes. However, it referenced previous judgments, including Varghese v. Annamma, which held that payment by demand draft is equivalent to cash payment, and Oswal Woollen Mills Ltd. v. CIT, which considered the validity of cheque payments. The court decided that these questions were not necessary to resolve the main issue in these cases.

Conclusion:

The court allowed the appeals, quashed the orders of the ITO denying interest, and directed that interest be paid on the excess advance tax. The court declined the revenue's oral application for a certificate for leave to appeal to the Supreme Court, stating that no substantial question of law of general importance arose in these cases.