Law:

Section:

Section 214, read with section 209A, of the Income-tax Act, 1961 - Advance tax - Interest payable by Government - Assessment year 1979-80 - Assessee paid advance tax in excess of amount arrived at in revised estimate - Assessing Officer, while calculating interest on refund of advance tax, did not grant interest on such excess amount - Whether advance tax has to be in accordance with estimate or as the case may be, revised estimate, sent by assessee to assessing authority and it is not left to sweet will of assessee to pay any amount by way of advance tax - Held, yes - Whether in instant case, though assessee paid an excess amount above revised estimate, such excess amount was not covered by section 214 - Held, yes - Whether, therefore, Assessing Officer was absolutely right in not awarding interest on excess amount of advance tax - Held, yes FACTS The assessee, who was liable to pay the advance tax, paid advance tax in excess of the amount arrived at in the revised estimate. The assessment was completed and tax was determined at a lower amount. The Assessing Officer, while calculating the amount of interest on refund of advance tax, did not grant interest on the excess amount, as according to him, this amount was in excess of the estimated advance tax and calculated the interest on the difference of estimated advance tax and tax due. On appeal, the Commissioner (Appeals) allowed the assessee's appeal but, on the revenue's appeal, the Tribunal upheld the Assessing Officer's finding. On reference : HELD The Tribunal had been absolutely right in not awarding the interest on the excess amount of advance tax paid. The language of sub-section (1) of section 214 makes it clear that for arriving at the excess amount, which is refundable and which also carries interest, two components are contemplated by the section. The first component is the aggregate sum of instalments of advance tax paid during any financial year in which they are payable under sections 207 to 213; the second component is the amount of the tax determined on the regular assessment. When the first component exceeds the second component, the resultant amount would carry the interest. Now it will be…

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