1984 (1) TMI 95 - AT - Income Tax

Summary

Issues:
1. Whether the Commissioner (Appeals) wrongly directed the ITO to allow interest under section 214 of the Income-tax Act for an excess payment of advance tax made after the close of the financial year 1978-79.

Detailed Analysis:
The case involved a dispute regarding the treatment of an excess payment of advance tax made after the financial year 1978-79. The respondent-assessee had requested an extension of time for filing income estimates and paying the shortfall of advance tax, which was granted by the Commissioner. Subsequently, the respondent paid the balance tax amount. However, the ITO did not adjust this payment as advance tax and levied interest under section 139(8) of the Act, despite the assessment resulting in a refund. The Commissioner (Appeals) directed the ITO to treat the payment as advance tax for adjustment purposes and cancel the interest levy under section 139(8).

The main contention raised by the revenue was that the provisions of section 212(3A), allowing payments made beyond the financial year to be treated as advance tax, do not extend to section 214, which governs the payment of interest. The revenue argued that to be eligible for interest under section 214, advance tax must be paid during the financial year itself. The respondent, on the other hand, argued that sections 212(3A) and 214 should be read together, contending that the relaxation under section 212(3A) should apply to section 214 as well.

After careful consideration, the Tribunal agreed with the revenue's arguments. It held that the concession provided under section 212(3A) does not extend to section 214, which has its own mandatory conditions for the payment of interest on advance tax. The Tribunal emphasized that the plain reading of section 214 clearly states that interest is payable only on advance tax paid during the financial year. Therefore, the Commissioner (Appeals)'s decision to allow interest under section 214 for the excess payment made after the financial year was deemed erroneous and contrary to the provisions of the Act.

In conclusion, the Tribunal allowed the revenue's appeal, ruling in favor of the revenue and setting aside the Commissioner (Appeals)'s decision to allow interest under section 214 for the excess payment of advance tax made after the close of the financial year 1978-79.