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TMI Blog1992 (6) TMI 10X X X X Extracts X X X X X X X X Extracts X X X X ..... case came up for final disposal On March 10, 1988, before G. Ramanujulu Naidu and Y. V. Anjaneyulu JJ., learned counsel for the assessee represented that the said decision of this court required reconsideration as the High Courts of Bombay, Madhya Pradesh, Kerala and Gujarat dissented from the view of this court. The learned Judges felt that, in view of the importance of the matter, it was desirable to refer the matter to a Full Bench and that is how this referred case is before us. The facts are in a narrow compass. The relevant assessment year is 1972-73 and the relevant previous year is the calendar year ending on December 31, 1971. The assessee made payments of advance tax on June 15, 1971, September 15, 1971, and December 15, 1971, aggregating to Rs. 9,07,500. On March 10 and 14, 1972, the assessee paid further amounts aggregating to Rs. 6,71,000 as advance tax. By an assessment order dated May 23, 1976, the Income-tax Officer assessed the income of the assessee at Rs. 19,43,750 and computed the income-tax payable thereon by the assessee as Rs. 11,49,281 and arrived at the amount refundable to the assessee as follows : Rs. Rs. " Income assessed 19,43,750 Tax thereon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ixed for payment if the assessee was to be given the right to claim interest under section 214 of the Income-tax Act, 1961. Section 214 of the Income-tax Act has to be read along with section 218 of the Act. Under section 218 of the Income-tax Act, if the instalment of advance tax was not paid by the specified date, the assessee shall be deemed to be an assessee in default in respect of such instalment and the Revenue is given the right to impose penalty on such assessee for not paying the instalment before the due date. It is not disputed that the Department could have proceeded against the petitioner and levied the penalty for the delay.... Under the Explanation to section 221 of the Income-tax Act, an assessee shall not cease to be liable to any penalty merely by reason of the fact that before the levy of such penalty he has paid the tax. When once the company committed default in paying the instalments before the specified dates, it cannot claim interest on the excess of tax paid over the tax determined on regular assessment. " It is obvious from the above that the Division Bench viewed section 214 in the shadow cast by sections 211 and 218 of the Act and not in the light of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ould be paid during the relevant financial year. Another aspect to be noticed is that, whatever the date on which the instalments of advance tax are paid during the relevant financial year, sub-section (1) of section 214 provides for interest on the said payments only from the first day of April next following the said financial year and not from the date of actual payment of each of the instalments. Keeping these several aspects in view, we find it difficult to sustain the view of the Division Bench of this court in Kangundi Industrial Works' case [1980] 121 ITR 339 ( at page 341 ) : that " a careful reading of section 214 of the Act will indicate that the stress is not on the question whether all the instalments of advance tax are paid during the financial year, but the stress is that the instalments must have been paid before the due dates fixed for payment if the assessee was to be given the right to claim interest under section 214 of the Act ". An examination of the various relevant provisions including sections 207 to 213 specifically referred to in sub-section (1) of section 214 does not support the view of the Division Bench. Sections 207 to 213 occur in Part C of Chapte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he tax payable in advance is compendiously referred to as " advance tax " Section 207(2). Therefore, when sub-section (1) of section 214 refers to sections 207 to 213, there is no justification for looking only at section 211 and to conclude that unless the instalments are paid strictly as per section 211, interest is not payable under section 214 on the excess amount of advance tax paid during the financial year, ignoring section 208 which provides that advance tax shall be payable during the financial year. There, is no justification also for relying on the provisions of sections 218 and 221 for interpreting section 214. Section 218 specifically deals with defaults in payment of instalments of advance tax on the dates specified under section 210 or in section 211. If an assessee does not pay any instalment of advance tax on the date specified in section 210 or in section 211, under section 218, he is deemed to be an assessee in default in respect of such instalment or instalments and penalty will be leviable under section 221. But from that it does not follow that instalments of advance tax cannot be paid after the specified dates or that amounts paid as advance tax after the s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 92) : "Section 214 provides that where the advance tax paid during any financial year exceeds the amount of tax determined on regular assessment, interest shall be payable by the Central Government to the assessee on such excess amount from the 1st day of April next following the relevant financial year to the date of the regular assessment for the said assessment year. Similarly, section 215 provides that where during any financial year, the assessee has paid advance tax which is less than 75 per cent. of the assessed tax, interest at the prescribed rate shall be chargeable up to the date of the regular assessment on such advance amount. Where, however, no advance tax is paid on the prescribed dates, he will be treated as a defaulter and he will be liable to the levy of penalty under section 221. Section 219 provides that any sum paid by or recovered from an assessee as advance tax in pursuance of the said Chapter shall be treated as a payment of tax in respect of the income of the period which would be the previous year for an assessment year next following the financial year in which it was payable and credit therefor shall be given to the assessee in the regular assessment. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d to be paid. There is nothing in this section to suggest that any payment made after the last of these dates will cease to be payment of advance tax. This section, as pointed out by Shri Singh, says that the advance tax shall be payable on the dates mentioned in the section. The argument adopted by the Department, if accepted, may even mean that payments made before those dates ( and not on these dates ) will not be payments of advance tax. The argument is plainly illogical. " Another Division Bench of this court in Co IT v. T. N. Viswanatha Reddy [1991] 190 ITR 266, addressing itself to the question whether there was scope for controversy or debate in regard to the interpretation of section 214 of the Act observed as follows ( at page 270): "Section 211(1) sets out the time schedule for the payment of advance tax instalments. In Kangundi Industrial Works (P.) Ltd. v. ITO [1980] 121 ITR 339, this court took the view that unless the instalments have been paid before the due dates fixed for payment, the assessee forfeits the right to claim interest under section 214. In that context, the Division Bench referred to section 218 of the Act and observed that, if the instalment of adva ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on of the various relevant provisions, held as follows ( at page 753 ) : " The question is of the financial year in which the instalments are payable under sections 207 to 213. The Legislature in our opinion has deliberately omitted to use the words 'paid in accordance with sections 207 to 213'. The Legislature has used the words 'payable under sections 207 to 2 13'. That being the case and since there is no other indication in section 214 that the dates of instalments are strictly to be adhered to and if they are not adhered to interest will not be payable, the contention urged on behalf of the Revenue cannot be accepted. We would be required to do violence to the language used by the Legislature if we read into section 214 the requirement that for the purpose of earning interest from the 1st day of April, following the end of the financial year in question, the assessee must have paid all the instalments of advance tax on the dates referred to in section 211.... In view of the language used in section 214 particularly with reference to the 1st day of April and not with reference to the dates on which the instalments are actually paid by the assessee, it is clear that what the L ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l Works' case [1980] 121 ITR 339, found favour with a learned single judge of the Kerala High Court in A. Sethumadhavan v. CIT [1980] 122 ITR 587, on appeal, a Division Bench of that court reversed the judgment of the learned single judge in Santha S. Shenoy v. Union of India [1982] 135 ITR 39 (Ker), disagreeing with the decision in Kangundi Industrial Works' case [1980] 121 ITR 339 (AP) and agreeing with the view of the Gujarat High Court in Chandrakant Damodardas' case [1980] 123 ITR 748. The Division Benches of the Madhya Pradesh High Court in CIT v. Jagannath Narayan Kutumbik Trust [1983] 144 ITR 526 and of the Madras High Court in CIT v. T. T. Investments and Trades Pvt. Ltd. [1984] 148 ITR 347 and of the Gauhati High Court in Moheema Ltd. (No. 1) v. CIT [1990] 182 ITR 187 disagreed with the decision of this court in Kangundi Industrial Works' case [1980] 121 ITR 339 and agreed with the view of the Gujarat High Court in Chandrakant Damodardas' case [1980] 123 ITR 748. A Division Bench of the Karnataka High Court in CIT v. Karnataka State Warehousing Corporation Ltd. [1990] 185 ITR 25 agreed with the view of the Gujarat High Court in Chandrakant Damodardas' case [1980] 123 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ombay High Court that, in order to be entitled to interest under the provisions of section 214 of the Act, the payment of advance tax must have been made in accordance with the schedule prescribed under sections 207 to 213 and since the schedule had not been adhered to, but there had been a default (though only of a period of two days ), the assessee would not be entitled to interest under section 214, and the Division Bench observed (at page 527) : "The question whether this is a proper reading of section 214 is debatable ". The Division Bench did not further enquire into the question in view of the finding on the facts of that case that the delayed payment by the assessee was accepted by the Department as payment of advance tax instalment and that as all the other requirements of section 214 were satisfied, the assessee was entitled to interest in respect of the excess of the advance tax so paid by it and that, therefore, the facts did not give rise to any question of law. However, a learned single judge of the Bombay High Court in Pfizer Ltd. v. K. N. Anantharama Aiyar, CIT [1987] 163 ITR 461, while dealing with the question whether delayed payments of advance tax could be ignor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an additional argument was sought to be advanced on behalf of the Department, based on the proviso added to section 211 of the Act by the Direct Tax Laws (Amendment) Act, 1987, with effect from April 1, 1988. The said proviso reads as follows ( at page 641 ) : " Provided that any amount paid by way of advance tax on or before the 31st day of March shall also be treated as advance tax paid during the financial year ending on that day for all the purposes of this Act. " The contention advanced was that, prior to the introduction of the proviso, the intention of the Legislature was otherwise and that, therefore, any amounts paid subsequent to the dates specified in section 211 could not be treated as advance tax. The learned judges of the Punjab and Haryana High Court rejected the said contention observing that the said amendment was only clarificatory in nature and must be construed as such. We agree with this view. For the reasons stated above, we overrule the decision of the Division Bench, of this court in Kangundi Industrial Worhs (P.) Ltd. v. ITO [1980] 121 ITR 339, and hold that, under sub-section (1) of section 214 of the Act, any amount paid towards advance tax during t ..... 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