9911796707
TMI Blog1984 (1) TMI 80X X X X Extracts X X X X X X X X Extracts X X X X ..... by the appellant, the factual position is as follows: Rs. Total income as per AO 10,05,629 --------- Tax payable on regular assessment 6,33,347 75 per cent thereof 4,75,160 Advance tax paid Rs. 16-6-1978 1,63,330 11-9-1978 1,63,330 11-1-1979 1,63,330 --------- 4,89,990 On these facts and figures, the appellant's contention on merits is as follows: "The assessed tax is Rs. 6,33,347.75 per cent of the assessed tax works out to Rs. 4,74,160. The assessee had paid advance tax of Rs. 4,89,900. Since the advance tax paid is more than 75 per cent of the assessed tax, interest under section 215 is not chargeable to the assessee." 3. On appeal, the Commissioner (Appeals) dismissed the appeal filed by the assessee. He observed that third instalment of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... three instalments as advance tax. Besides, nothing was mentioned in the assessment order in respect of charging of interest under section 215, but according to tax calculation form, a copy of which was submitted, it was submitted that interest was charged under section 215 to the extent of Rs. 18,584. It was because of this charge of the tax calculation form that application under section 154 was made to the ITO claiming that 75 per cent of the assessed tax worked out to Rs. 4,75,160 and the assessee had paid advance tax of Rs. 4,89,990 and, therefore, since the advance tax paid was more, interest under section 215 was not chargeable. In reply, the ITO rejected the application for rectification on the ground that the last instalment of advance tax paid on 11-1-1979 was beyond the due date, i.e., 15-12-1978 and, therefore, while calculating the interest, credit for that amount has not been given. According to section 59 of the Indian Contract Act, 1872, since the payments were made on the advance tax challans, the appropriation of the payment had to be made as per the direction and it was not open for the ITO to ignore the same. Besides, the opening words in sub-section (1) of sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance tax paid and so treated in the tax calculation in the assessment order itself was higher than 75 per cent of the assessed tax. The appeal in itself is an appeal against rectification of a mistake apparent from the record as held by us in our discussion following. Therefore, it cannot be said that appeal is against charging of interest under section 215. Under section 246(1)(f) of the Act it is mentioned that order under section 154 refusing to allow the claim made by the assessee can be appealed against. It reads as under : "(f) an order under section 154 or section 155 having the effect of enhancing the assessment or reducing a refund or an order refusing to allow the claim made by the assessee under either of the said sections;" Under section 154, the ITO is empowered, nay, duty bound, to rectify any mistake apparent from record. Section 154(1)(a) reads as under: "(a) the Income-tax Officer may amend any order of assessment or of refund or any other order passed by him ;" From the above it is clear that mistake apparent from the record in any other order passed by the ITO is also required to be rectified. Charging of interest under section 215 would be equivalent to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an assessee has paid advance tax under section 209A or section 212 on the basis of his own estimate (including revised estimate), and the advance tax so paid is less than seventy-five per cent of the assessed tax, simple interest at the rate of twelve per cent per annum from the 1st day of April next following the said financial year up to the date of the regular assessment shall be payable by the assessee upon the amount by which the advance tax so paid falls short of the assessed tax : " Sub-section (5) of section 215 defines the assessed tax as under: "In this section and sections 217 and 273, 'assessed tax' means the tax determined on the basis of the regular assessment (reduced by the amount of tax deductible in accordance with the provisions of sections 192 to 194, section 194A, section 194C, section 194D and section 195, so far as such tax relates to income subject to advance tax and so far as it is not due to variations in the rates of tax made by the Finance Act enacted for the year for which the regular assessment is made." These two sub-sections nowhere state that instalments paid after the due date will not be treated as advance tax payments. The learned counsel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t of the amount of assessed tax and in doing so all the instalments paid during the financial years should be considered as advance tax payments. We would also mention that controversy, if at all, is only of the Andhra Pradesh High Court in Kangundi Industrial Works (P.) Ltd. v. ITO [1980] 121 ITR 339. According to Kanga and Palkhivala, this view is erroneous. Regarding appeal against interest under section 139 of the Act also, the Delhi High Court has taken favourable view for the assessee---CIT v. Mahabir Parshad Sons [1980] 125 ITR 165. The Allahabad High Court in CIT v. Sarju Prasad [1983] 15 Taxman 99 has upheld appeal under section 154 for deleting interest under section 217(1A) of the Act. 6.3 We are also in agreement with the submission made by the learned counsel that provisions of the Indian Contract Act, regarding appropriation of debt would also apply to the payments made on advance tax challans consequent to estimates filed. It cannot be the case of the revenue that provisions of the Indian Contract Act do not apply to the Income-tax Department. Besides, if the ITO did not wish to treat the advance tax so paid, though late, as advance tax payment and if he did not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xcept to complicate the otherwise simple provision. We, therefore, reject this stand of the revenue. 8. Guidance is also sought by us from decision of the Andhra Pradesh High Court in CIT v. Andhra Pradesh State Road Transport Corpn. [1983] 15 Taxman 512. In this case the assessee made voluntary payments without notice under section 210 of the Act for advance tax. Subsequently, the ITO computed tax under section 210 taking wrong assessment. On regular assessment the ITO found that there was excess payment and granted interest refund under section 214. The Commissioner invoked section 263 of the Act and directed the ITO to withdraw interest as it could not be said that the assessee made the payments pursuant to notice under section 210. The Tribunal held the Commissioner's order as erroneous. The High Court agreeing with the Tribunal observed that : (i) the assessee made voluntary payment makes no difference in principle or in substance; (ii) neither the assessee nor the ITO had any doubt that the payment was made and recovered as advance tax; (iii) having regard to the nature of the payment as well as nature of demands, it was clear that the assessee made payment and treate ..... X X X X Extracts X X X X X X X X Extracts X X X X
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