: 1 : IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY IN THE HIGH COURT OF JUDICATURE AT BOMBAY Ordinary Original Civil Jurisdiction Ordinary Original Civil Jurisdiction Ordinary Original Civil Jurisdiction WRIT PETITION NO.1721 OF 1993 WRIT PETITION NO.1721 OF 1993 WRIT PETITION NO.1721 OF 1993 Hotel Sahil Private Ltd. (private limited company incorporated under the Companies Act 1956 and having its registered office at 292, J.B. Behram Marg, Bombay 400 008. ...Petitioner. V/s. 1. A.K.Thatai, Asstt. Commissioner of Income-tax Circle 4(i)(Investigation), Bombay and having his office at Aaykar Bhavan, Maharshi Karve Road, Bombay- 400 020. 2. S.C.Parija, Commissioner of Income Income-tax Bombay City IV having his office at Aaykar Bhavan, Maharshi Karve Road, Bombay 400 020 3. Union of India ...Respondents. Mr.P.J.Pardiwalla i/by Federal and Rashmikant , advs. for the Petitioner. Ms.Suchitra Kambli a/w Suresh Kumar , advs. for the Respondents. CORAM : F.I.Rebello & CORAM : F.I.Rebello & CORAM : F.I.Rebello & J.H.Bhatia,JJ J.H.Bhatia,JJ J.H.Bhatia,JJ. RESERVED ON : RESERVED ON : RESERVED ON : 20TH APRIL, 2009. 20TH APRIL, 2009. 20TH APRIL, 2009. PRONOUNCED ON: PRONOUNCED ON: PRONOUNCED ON: 4TH MAY, 2009. 4TH MAY, 2009. 4TH MAY, 2009. JUDGMENT: JUDGMENT: JUDGMENT: 1. The brief point involved in this petition is whether the respondent nos.1 and 2 being the Assessment Officer and the Commissioner of Income-Tax respectively : 2 : were justified in refusing payment of interest on the amount of advance tax, which was required to be refunded to the petitioner after finalisation of the assessment. 2. The Petitioner is a private limited company and was regularly submitting its income-tax returns. For the financial year 1987-88 (the assessment year 1988-89), on 25.1.1988, the petitioner deposited an amount of Rs.2,10,000/- with the respondents as advance tax. The petitioner submitted income-tax returns for the said year and initially, the taxable income was found to be Rs.2,68,328/- and an order was passed to issue demand notice and challan and to give credit for prepaid tax. Afterwards, however, revised income-tax returns was submitted by the petitioner, pointing out that certain depreciations were not taken into consideration while submitting returns earlier. In the revised estimates, net loss was shown and the income-tax payable was found to be nil. The said returns were accepted and assessment was finalised by the Assessing Officer by the order dated 30.9.1991. The Assistant Commissioner, who was Assessing Officer, directed to refund the excess amount of advance tax alongwith the interest under Section 214 of the Income-Tax Act, 1961 (In short ’The Act’). According to the petitioner, the refund of Rs.2,10,000/- alongwith interest thereon under Section 214 of the Act was to be : 3 : directed while as per the demand notice 3.12.1991, a refund of Rs.1,69,048/- was shown that too without interest. In view of this, on 17.2.1992 the petitioner made a request to the Assistant Commissioner to rectify the mistakes and to direct payment of interest under Section 214 on the total refund of Rs.2,10,000/-. After that the Assistant Commissioner passed impugned order dated 26.5.1992 and refused interest on the excess payment of advance tax on the ground that the assessee company had not filed any estimate of advance tax as required under Section 212 of the Act. That order was challenged before the respondent no.2, who by the order dated 2.3.1993, rejected that petition under Section 264 of the Act. These two orders rejecting the claim of the petitioner for interest under Section 214 on the advance tax, which was directed to be refunded, are challenged in the present petition. 3. Heard the learned counsel for the parties and perused the record. The learned counsel for the petitioner contended that the petitioner had deposited an amount of Rs.2,10,000/- as advance tax on 25.1.1988. At that time, the petitioner was under the impression that it will be required to pay the tax and to avoid any penalty which could be imposed due to non-payment of the advance tax, the said amount of advance tax was deposited. That amount was accepted by the respondent no.1 and it was duly credited to : 4 : the Income Tax account of the petitioner under Section 219 of the Act. Only after the revised returns were submitted, it was found that for that assessment year, petitioner was not liable to pay any tax and, therefore, the whole amount of the advance tax was required to be refunded. It is contended that when the amount of advance tax has been paid in excess of the liability which is finally assessed, the excess amount has to be refunded with interest as provided under Section 214 of the Act. 4. On the other hand, the learned counsel for the respondents contended that the petitioner was required to submit a statement of estimate of income for the relevant financial year/assessment year and alongwith that statement, advance tax could be deposited. However, the petitioner had failed to fulfil the requirement of submission of the statement of estimate and, therefore, the Government is not liable to pay interest on the amount of advance tax. 5. Sections 207 to 219 provided for payment of advance tax, refund of the excess amount, payment of interest on the excess payment of advance tax as well as the interest on the deficit amount of advance tax. Section 207 provides that the tax shall be payable in advance during a financial year, in accordance with the provisions : 5 : of Sections 208 to 219, in respect of the total income of the assessee which would be chargeable to tax for the assessment year immediately following that financial year. Section 208 provides about the conditions of liability to pay advance tax. Section 209(A)(1), as it stood during the relevant period provided that every person, who has been previously assessed by way of regular assessment, shall, in each financial year, on or before the date on which the first instalment of advance tax is due in his case, under Section 211(1), if his current income is likely to exceed the amounts specified in Section 208(2), shall send to the Income-Tax Officer, a statement of advance tax payable by him computed in a manner laid down in Sub-section 1 to Section 209 and he shall also pay such amount of advance tax as accords with the statement of advance tax in equal instalments on the dates applicable in his case. The payment of advance tax could be made either by the assessee on his own or in pursuance of the order of Assessing Officer under Section 211. Section 211 provided about due date of instalments and the amount of the instalment to be paid in respect of advance tax. Section 212, as it stood during the relevant period, provided for submission of estimate of current income and the advance tax, in case, the income and the liability of the advance tax was likely to be more or less than assessed at earlier estimate or less or more than the amount ordered to be paid as advance : 6 : tax under Section 210. Section 219 provides that any sum, other than penalty or interest, paid by or recovered from an assessee as advance tax shall be treated as a payment of tax in respect of the income of the financial year and credit therefore, shall be given to the assessee in the regular assessment. 6. Section 214 provided that the Central Government shall pay simple interest at 15% p.a. on the amount by which the aggregate sum of any instalments of advance tax paid during any financial year in which they are payable under Sections 207 to 213 exceeds the amount of the assessed tax from the first day of April next following the said financial year to the date of the regular assessment for the assessment year immediately following the said financial year. Similarly Section 215 provides that if in any financial year, an assessee has to pay 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 75% of the assessed tax simple interest at the rate of 15% p.a. from the first day of the April following the said financial year to the date of regular assessment shall be payable by the assessee upon the amount by which the advance tax so paid falls short of the assessed tax. If Sections 214 and 215 are read together, it becomes clear that if the amount of advance tax paid : 7 : exceeds the amount of the tax assessed, the Government has to pay interest on the excess amount from the first April following the financial year and if the advance tax paid is less than what is required to be paid as per the assessment, the assessee would pay interest on the deficit amount to the Government. Full Bench of this Court in CIT CIT CIT v Carona Sahu Co. Ltd. [1984] 146 ITR 452 (Bom.) v Carona Sahu Co. Ltd. [1984] 146 ITR 452 (Bom.) v Carona Sahu Co. Ltd. [1984] 146 ITR 452 (Bom.) held that Section 214 is counter part of Section 215. 7. The learned counsel for the petitioner vehemently contended that merely because the estimate of income and the tax is not submitted alongwith the payment of the advance tax, payment of advance tax does not cease to be advance tax particularly when the credit has been given to the payment of said amount as per the provisions of Section 219 of the Act. In CIT v. Traub (India) Private Limited In CIT v. Traub (India) Private Limited In CIT v. Traub (India) Private Limited [1979] 118 ITR 525 (Bom.) [1979] 118 ITR 525 (Bom.) [1979] 118 ITR 525 (Bom.) the advance tax was paid two days after the last date of the instalment and in spite of that it was held by the Tribunal that the assessee was entitled to interest on the amount of advance tax which was in excess of his liability. While rejecting the reference under Section 256(2) of the Act, this Court observed that there was a clear finding by the Income Tax Appellate Tribunal that the payment that had been made by the assessee had been accepted by the Revenue as payment of instalment of advance tax. Madras High Court in Additional Additional Additional : 8 : CIT v. Chitra Sagar [1979] 121 ITR 699 CIT v. Chitra Sagar [1979] 121 ITR 699 CIT v. Chitra Sagar [1979] 121 ITR 699 held that what is treated by Revenue as payment of advance tax under one provision of the Act must be treated as payment of advance tax for other provisions of the Act. In Pfizer v. Pfizer v. Pfizer v. K.N.Anantharama Aiyar, CIT 1987 ITR 462, K.N.Anantharama Aiyar, CIT 1987 ITR 462, K.N.Anantharama Aiyar, CIT 1987 ITR 462, a certain amount of advance tax was paid beyond the date of the last payment of advance tax and, therefore, the Assessing Officer imposed interest under Section 215. This Court held that the said payment having been treated by Revenue as payment of advance tax, Revenue could not for the purpose of Section 215 exclude that payment from the computation of advance tax paid and could not claim that there was a under payment of advance tax which would attract Section 215. In R.V.S. and Sons v. Commissioner of Income-Tax and Another R.V.S. and Sons v. Commissioner of Income-Tax and Another R.V.S. and Sons v. Commissioner of Income-Tax and Another 1999 I.T.R. 192 (Madras), 1999 I.T.R. 192 (Madras), 1999 I.T.R. 192 (Madras), the assessee had deposited certain amount as advance tax. However, as per the order of the assessment, it was found that tax liability was less than the amount of advance tax and, therefore, the Assessing Officer ordered refund of certain amounts for both the assessment years. However, he refused and levied interest under Section 139(8) and treated the payment of advance tax as ad-hoc payment since the assessee had filed estimates in the form of 28-A instead of form No.29 as required for the advance tax. Madras High Court relying on CIT v. Roadmaster Industries of India (Pvt.) Ltd. [1992] CIT v. Roadmaster Industries of India (Pvt.) Ltd. [1992] CIT v. Roadmaster Industries of India (Pvt.) Ltd. [1992] 193 ITR 639, 193 ITR 639, 193 ITR 639, held that merely because the proper form was : 9 : not used statutory interest under Section 214 on the excess tax could not be refused. Punjab & Haryana High Court in CIT v. Road Master Industries of India (Pvt.) Ltd. CIT v. Road Master Industries of India (Pvt.) Ltd. CIT v. Road Master Industries of India (Pvt.) Ltd.(Supra) observed as follows: "The preponderance of judicial opinion, is, however, to the contrary. There is a string of judicial precedents expressing the view that the Legislature intended to provide that, irrespective of the dates on which the instalments of advance tax are paid, interest would be payable on the excess advance tax paid, if two conditions are satisfied : (i) that the entire amount of advance tax is paid up: and (ii) it is paid up before the end of the financial year." In Commissioner of Income-tax v. Kohinoor Flour Mills P. Commissioner of Income-tax v. Kohinoor Flour Mills P. Commissioner of Income-tax v. Kohinoor Flour Mills P. Ltd. 1991 ITR Vol.187 Supreme Court, Ltd. 1991 ITR Vol.187 Supreme Court, Ltd. 1991 ITR Vol.187 Supreme Court, the assessee was liable to file an estimate of advance tax for the assessment year 1965-66 before 1st March 1965 and to pay the advance tax by 15th March, 1965 but the assessee filed the estimate on 25th March and paid advance tax on 26th March, 1965. The appellate Tribunal directed to levy penalty only in respect of the balance amount after deduction of the payment actually made on 26th March. Even though that payment was made 11 days after the date fixed for payment that order was confirmed by the High Court. The appeal preferred by the Revenue was dismissed by the High Court as well as by the Supreme Court. : 10 : 8. From all the above referred authorities, it will be clear that only thing to be seen is whether the whole of the advance tax has been paid and is within the financial year. If it is paid within the financial year, that amount has to be treated as advance tax and no penalty can be charged merely because estimate is not filed in particular form or that payment is made beyond the date fixed for payment of advance tax. As pointed out earlier, Full Bench of this Court had held that Sections 214 and 215 are counter parts of the same principle . If the payment of tax is not made, the assessee is liable to pay interest on the same and if the advance payment is made in excess of the tax liability finally assessed, the Government has to pay interest on the excess amount. Section 214 clearly provides that the State Government "shall" pay simple interest on the amount on which aggregate sum of any instalment exceeds the amount of the assessed tax which connotes that the provisions for payment of interest on the excess payment is mandatory. Therefore, interest can not be refused on the excess amount of advance tax merely because the estimate was not submitted alongwith the advance tax. That right can not be refused to the petitioner. 9. The learned counsel for the Revenue contended that if the assessee has deposited excess amount knowing well : 11 : that it is in excess of the tax liability, he is not entitled to interest under Section 214. The learned counsel relied upon Eimco-KCP Ltd. v. Commissioner of Eimco-KCP Ltd. v. Commissioner of Eimco-KCP Ltd. v. Commissioner of Income-tax [2002] 258 ITR 0449 Income-tax [2002] 258 ITR 0449 Income-tax [2002] 258 ITR 0449 wherein as per the estimate filed by the assessee, he was liable to pay Rs.11,45,000/- as tax but he had made the payment of Rs.12 lacs as advance tax. In that case, Madras High Court refused interest on the excess amount of Rs.55,000/-. In that case, it appears that the assessee was fully aware that his liability was Rs.11,45,000/- according to his own estimate and in spite of that, he deposited excess money and, therefore, it was held that the payment was not made as per the requirement of the Act. Facts of the present case are different. Petitioner had deposited an amount of Rs.2,10,000/- assuming that it would be tax liability but later on, it was found that he was entitled to certain depreciations and, therefore, tax liability became nil. In such circumstances, it can not be said that the petitioner had intentionally deposited excess money with the respondents and, therefore, in our considered opinion, the authority of Madras High Court in Eimco-KCP Ltd. (Supra) Eimco-KCP Ltd. (Supra) Eimco-KCP Ltd. (Supra) is not applicable to the facts of the present case. 10. The contention of the learned counsel for the respondents that the said amount should be treated as ad-hoc payment cannot be accepted particularly in view of : 12 : the record which clearly shows that the amount of Rs.2,10,000/- was deposited as advance tax. That amount was admittedly credited to the tax account of the petitioner as per the provisions of Section 219 and by order dated 30.9.1991, the Assessing Officer had rightly revised the assessment and directed to allow interest under Section 214 on the excess payment of advance tax. Later on, the Assessing Officer passed the impugned order dated 26.5.1992 refusing the interest and, thereby recalled his own earlier order dated 30.9.1991. We find that the Assessing Officer as well as the Commissioner committed serious error of refusing the interest on the advance tax, which was required to be refunded after the assessment. Therefore, Writ Petition deserves to be allowed. 11. For the aforesaid reasons, petition is allowed. Impugned order is hereby set aside. Respondents are directed to pay simple interest on the amount of Rs.2,10,000/- deposited by the petitioner as advance tax under Section 214 of the Income-Tax Act. (F.I.Rebello, J.) (F.I.Rebello, J.) (F.I.Rebello, J.) : 13 : (J.H.Bhatia, J.) (J.H.Bhatia, J.) (J.H.Bhatia, J.)