EMICO KCP LTD. Vs. COMMISSIONER OF INCOME TAX

JUDGEMENT

(1.) TWO questions are referred to us at the instance of the assessee and under the directions of this court. They are :

(2.) THE assessment year is 1979 -80. The assessee, who was liable to pay the advance tax, filed an estimate on 13 -9 -1978. The assessee estimated the payable amount at Rs. 14,18,506 and made the payment of Rs. 4,75,000 on 15 -9 -1978. It made another payment of Rs. 5,60,000 by way of second instalment on 15 -12 -1978. The assessee then filed a revised estimate in the month of March, i.e., before the third and final instalment on 13 -3 -1979 wherein the assessee had estimated the advance tax payable at Rs. 21,80,000. However, instead of paying the amount to complete the payment of Rs. 21,80,000, i.e., Rs. 11,45,000, the assessee had made the payment of Rs. 12 lakhs, which was in excess of the required payment by Rs. 55,000. This was on 14 -3 -1979. Thus, instead of Rs. 21,80,000 which was the estimated tax, the assessee paid Rs. 22,35,000. The assessment was completed and a total income of Rs. 35,30,820 and the tax was determined at Rs. 20,39,049. As per that, the excess tax paid would have been Rs. 1,95,951. Any excess amount paid by way of advance tax carries interest under Sec. 214 of the Income Tax Act, 1961 (hereinafter referred to as 'the Act'). However, the assessing authority did not grant interest on the total amount of Rs. 1,95,951 and instead took a view that the amount on which the interest was liable to be paid should be calculated as under : <FRM>JUDGEMENT_299_LAWS(MAD)7_2002.htm</FRM>

(3.) IF two questions are read together, then alone the real controversy could be properly understood. The real controversy is whether the excess amount of advance tax paid would also be entitled to earn interest under Sec. 214. We are of the clear opinion that the Tribunal was absolutely right in not awarding the interest on the excess amount of advance tax paid of Rs. 55,000 for the following reasons: