Payment of interest u/s 214, Income Tax Act, 1961. - Income Tax - 947/CBDT

INSTRUCTION NO. 947/CBDT Dated : April 23, 1976 Section(s) Referred: 214 Statute: Income - Tax Act, 1961 The Board has had occasion to consider the question whether interest payable under section 214 can be altered in view of an appellate order or orders under sections 263/264 or as a result of rectification orders under section 154. 2. Section 214 of the Income-tax Act, 1961 provides for payment of interest on the difference between the advance-tax and the amount of tax determined on regular assessment from the first day of April next following the said financial year to the date of regular assessment. 3. Interest under section 214 is, therefore, to be paid upto the date of regular assessment. Regular assessment has been defined in section 2(40) as assessment made under section 143 or section 144. It has been explained in Boards Instruction No. 921 dated 12th February, 1976 (F.No.404/81/75-ITCC) that it is the first assessment that will be treated as the regular assessment and later assessments were immaterial. Therefore, the terminus (i.e. the date of regular assessment) for calculating interest under section 214 cannot be altered because income assessed has undergone any changes on account of subsequent vicissitudes as a result of appeal before the appellate authorities or revision petitions before the Commissioner of Income-tax. That is, interest payable under section 214 will not be altered with reference to the tax payable according to the appellate orders or orders under section 263/264. 4. But, if an assessment made needs rectification under section 154 on account of mistakes apparent from record, either on the assessee's application or by the Income-tax Officer on his own motion, it might be argued that it is the rectified order which should be considered for the purposes of determining the tax payable on regular assessment. This is only reasonable. It is, therefore, felt that, interest under section 214 can be altered with reference to the tax payable as per the rectified order under section 154.