Part payment of outstanding demand — Clarification regarding adjustment thereof - Income Tax - 1936 - F. No. 404/62/95-ITCC dated 21-3-1996

Part payment of outstanding demand — Clarification regarding adjustment thereof [ Instruction No. 1936 - F. No. 404/62/95-ITCC dated 21-3-1996 from CBDT ] A question has been referred to the Board seeking clarification that : "If the tax paid by the assessee is not sufficient to cover the total demand then should it first be adjusted against the interest." 2. The Board have been informed that the Assessing Officers are not following any uniform procedure in this regard. While one set of Assessing Officers are first adjusting the part payment received from the assessee against the tax due, the others are adjusting the part payments towards the outstanding interest due under section 220(2). The matter was referred to the Ministry of Law for their opinion and they have also observed that both the views are possible. 3. For the sake of uniformity the Board have decided that part payment received from assessee should first be adjusted towards the tax due and not the interest calculated under section 220(2) of the Income-tax Act. 4. The aforesaid instruction may be brought to the notice all officers working under your charge.