9911796707
TMI Blog1978 (2) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... ip during the relevant period of assessment. Subsequently, on attaining majority, the said minor was taken up as a partner of the first petitioner-firm. The first petitioner manufactures textile machinery and sells the same. All the partners of the first petitioner-firm including the minor are all citizens of India and have their domicile in India. The petitioner No. 1 and its three partners who are petitioners Nos. 2 to 4 were required to file estimates under section 212(3A) of the Income-tax Act, 1961 (hereinafter referred to as " the Act "), for the assessment years 1970-71 and 1971-72. These estimates under section 212(3A) were required to be filed on or before December 15, 1969, so far as assessment year 1970-71 was concerned and on or before December 15, 1970, so far as assessment year 1971-72 was concerned. The estimate for the assessment year 1970-71 was filed by the first petitioner-firm on March 26, 1970, instead of on December 15, 1969. The petitioner No. 2 filed the estimate for the assessment year 1970-71 on March 31, 1970, and for the assessment year 1971-72 on December 22, 1970. The petitioner No. 3 filed the estimate for the assessment year 1970-71 on March 31, 19 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f sections 208 to 219 in the case of income other than income chargeable under the head " capital gains ". Such income is thereafter in the chapter concerned referred to as " income subject to advance tax " and the tax thereafter referred to as " advance tax ". Therefore, where anywhere in sections 208 to 219 advance tax is referred to, it means tax payable in advance in accordance with the provisions of sections 208 to 219. If it is not payable in accordance with the provisions of sections 208 to 219 then it is not " advance tax " though it may be tax other than advance tax. As is well known, the provisions regarding advance tax were introduced in the Indian Income-tax Act, 1922, in accordance with what was known as " Pay As You Earn Scheme " (P.A.Y.E. Scheme). Ordinarily, under the scheme of the Indian Income-tax Act, 1922, and also under the scheme of the Income-tax Act, 1961, tax is payable on the income of the previous year but under the provisions relating to advance tax even before the end of the previous year in question advance tax has to be paid in accordance with the provisions of the Act as and when the income is being earned. Section 208 provides for " condition of lia ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which the last instalment of advance tax is due from him, send to the Income-tax Officer an estimate of (i) the current income ; and (ii) the advance tax payable by him on the current income calculated in the manner laid down in section 209, and shall pay such amount of advance tax as accords with his estimate on such of the dates applicable in his case under section 211 as have not expired, by instalments which may be revised according to sub-section (2). The proviso to section 212, sub-section (3A), which was added by the Finance Act, 1970, is not material for the purpose of this judgment. Section 217(1) provides for the payment of interest when no estimate is made and under sub-section (1A) of section 217 which was added by the Finance Act, 1969, where, on making a regular assessment, the Income-tax Officer finds that any such person as is referred to in sub-section (3A) of section 212 has not sent the estimate referred to therein, simple interest at the rate of nine per cent. per annum from the 1st day of April next following the financial year in which the advance tax was payable in accordance with the said sub-section up to the date of the regular assessment shall be payabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od at the relevant time, it is clear that the interest payable for late filing of the estimate and consequential late payment of the advance tax in accordance with that estimate is to be charged at the rate of nine per cent. per annum from the 1st day of April next following the financial year in which the advance tax was payable in accordance with section 212(2A) and it is to be payable by the assessee upon the amount by which the advance tax paid by him falls short of the assessed tax. Since provisions of sub-section (2) of section 215 have been made applicable to the interest payable under section 217(1A), in calculating interest even under section 217(1A), under clause (i) if before the date of completion of a regular assessment, any tax is paid by the assessee under section 140A or otherwise or under the section relating to provisional assessment or otherwise, as the case might be, interest has to be calculated up to the date on which the tax is so paid and, thereafter, interest has to be calculated at the rate prescribed on the amount by which the tax as so paid falls short of the assessed tax. Under section 215(5) " assessed tax ", for the purposes of section 215, means the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation under section 217(1A) itself that if any tax or advance tax is paid before the 1st day of April next following the financial year in which the advance tax was payable, that tax must be given credit for in calculating the amount of interest. Since in the instant case though estimates under section 212(3A) were filed late and consequently the advance tax payable in accordance with those estimates was paid late, and the tax was paid before the 1st day of April next following the financial year in which the advance tax was payable in accordance with section 212(3A), interest under section 217(1A) cannot be charged and could not have been charged without giving credit to the assessee concerned for the payments so made. It must be emphasised that for the purposes of section 215(2) which has to be given effect to while calculating interest under section 217(1A) it is tax paid which matters and not advance tax paid. Advance tax undoubtedly means advance tax payable in advance in accordance with the provisions of sections 208 to 219. Mr. G. N. Desai appearing for the revenue is right when he contends that tax which is not paid in accordance with the provisions of section 212(3A) is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... page 577, it was further observed : " This interest which a person filing his return under section 139, sub-section (4), is required to pay is thus not by way of penalty but it is only by way of compensation for delay in realisation of tax. It is very much different from the penalty for default in furnishing return of income within the time allowed under sub-section (1) or sub-section (2) of section 139. " We may point out that under section 273 as it stood with effect from April 1, 1970 : " If the Income-tax Officer, in the course of any proceedings in connection with the regular assessment for the assessment year commencing on the 1st day of April, 1970, or any subsequent assessment year, is satisfied that any assessee--...... (c) has without reasonable cause failed to furnish an estimate of the advance tax payable by him in accordance with the provisions of sub-section (3A) of section 212, he may direct that such person shall, in addition to the amount of tax ; if any, payable by him, pay by way of penalty a sum--....... (iii) which, in the case referred to in clause (c), shall not be less than ten per cent. but shall not exceed one and a half times the amount by wh ..... X X X X Extracts X X X X X X X X Extracts X X X X
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