1985 (5) TMI 115 - AT - Income Tax

Summary

Issues:
- Interpretation of Section 214 for allowing interest on excess advance tax paid.
- Whether self-assessment tax should be excluded from the tax computed for determining excess payment of advance tax.

Analysis:
1. The judgment involves three appeals by the assessee concerning the assessment years 1979-80, 1981-82, and 1982-83. One of the main points of contention was the calculation of interest under Section 214 based on the amount by which advance tax payments exceeded the tax computed for each year reduced by self-assessment tax paid.

2. The assessee argued that interest should be allowed on the amount by which advance tax payments exceeded the tax computed for each year after deducting tax deducted at source and self-assessment tax. The counsel referred to Section 214(1) and relied on a decision of the Allahabad High Court to support the position that tax deducted at source should be reduced from the tax computed.

3. On the other hand, the Departmental Representative contended that self-assessment tax should not be excluded from the tax computed to determine the excess payment of advance tax.

4. The Tribunal analyzed Section 214(1) which specifies the payment of interest on the excess amount of advance tax paid. The term "tax determined on regular assessment" was discussed, emphasizing that it does not always equate to "tax payable" but refers to the tax quantified on regular assessment.

5. Section 219 provides for giving credit for tax deducted at source, while Section 104A deals with self-assessment tax payment. The Tribunal highlighted that self-assessment tax payment is considered after a regular assessment, unlike tax deducted at source, which is accounted for earlier.

6. The Tribunal concluded that interest under Section 214 is admissible on the gross amount of advance tax paid in the financial year preceding the assessment year. While tax deducted at source is considered in the same period, self-assessment tax is paid later. Therefore, excluding self-assessment tax from the tax computed for determining excess advance tax payment was deemed inappropriate.

7. The Tribunal dismissed the appeals, stating that the authorities were justified in not granting interest under Section 214(2) and upheld the decision regarding the treatment of self-assessment tax in the computation of excess advance tax payment.