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Section 214 of the Income-tax Act, 1961 - Advance tax - Interest payable by Government - Assessment year 1976-77 - Whether interest under section 214 is payable to assessee on an instalment of advance tax paid after due date of its payment but before close of relevant financial year - Held, yes FACTS The ITO did not allow interest under section 214 to the assessee on the amount of last instalment of advance tax paid on 16-1-1976 on the ground that the amount paid after the date provided under law could not be eligible for allowance of interest under section 214. On appeal, the AAC upheld the ITO's order. On second appeal, the Tribunal, however, held that instalments of advance tax which had been paid from time to time and before the close of the financial year should be eligible for payment of interest under section 214. On reference: HELD To attract the provisions of under section 214, two conditions have to be satisfied. Firstly, instalment of advance tax must have been paid during the financial year in which they are payable under section 207 to 213. Secondly, the aggregate sum of instalments should exceed the amount of tax determined on regular assessment. If these two conditions are satisfied, interest becomes payable by the Central Government. There is no reference in section 214(1) about the dates on which instalments are payable under section 211. This section does not prescribe that to be eligible for interest, advance tax was to be paid on the dates stipulated under section 211 for payment of such instalments. Whatever is paid before the close of the financial year would qualify as advance tax. If credit is given by the department for the belated payments made during the financial year in calculating tax due on regular assessment, there is no reason why such tax should not be treated as advance tax. It is a payment in advance towards tax to be determined on regular assessment. If the revenue, for the purpose of determining the tax due on regular assessment, cannot ignore such payment, then for the purpose of calculating interest also such payment cannot be kept out of consideration. Even otherwise, in view of the reference to the date from which…

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