1992 (6) TMI 53 - AT - Income Tax

Summary

Issues:
1. Whether the assessee is liable to pay interest under section 216 of the Income-tax Act, 1961 for underestimating advance tax payable.

Analysis:
The appeal by the Revenue was against the Commissioner of Income-tax(Appeals) order deleting interest levied under section 216 of the Income-tax Act, 1961 for the assessment year 1987-88. The assessee filed advance tax statements and paid instalments accordingly. The Revenue contended that the assessee under-estimated the advance tax payable, leading to a reduced amount paid in the first two instalments, thus attracting interest under section 216. The CIT(Appeals) allowed full relief to the assessee, prompting the Revenue to appeal to the Appellate Tribunal.

The Appellate Tribunal considered the arguments of both parties. The Revenue claimed that the assessee under-estimated the advance tax payable, justifying interest under section 216. However, the Tribunal found no merit in the Revenue's appeal. It highlighted the conditions under section 216(a) where interest can be charged, emphasizing that mere reduced payment does not constitute underestimation. The Tribunal analyzed the statutory obligations regarding advance tax payment and revisions, concluding that the assessee did not default in paying the first two instalments based on the current income computed under the Act.

The Revenue argued that the assessee's self-filed estimate at the time of the second instalment was an underestimation, precluding a claim of no default. The Tribunal disagreed, stating that interest is charged for underestimating advance tax and not following statutory provisions. Since the assessee met the statutory requirements, no interest under section 216 was warranted. Consequently, the Tribunal upheld the CIT(Appeals) order, dismissing the Revenue's appeal.