Commissioner of Income Tax vs Oswal Woollen Mills Ltd.

S.S. Sodhi, J.—The matter here concerns the claim of the assessee, Oswal Woollen Mills Ltd., Ludhiana, for interest on payment of advance tax, the assessment year in question being 1972-73.

Before proceeding further, it may be pointed out that the accounting year of the assessee was the calendar year and the relevant period in this behalf thus being January 1, 1971, to December 31, 1971. The amounts said to have been paid by the assessee as advance tax and the dates on which they were paid being as under :

December 21, 1971

Rs. 2,50,000

March 17, 1972

Rs. 2,45,000

March 17, 1972

Rs. 12,375

March 30, 1972

Rs. 3,35,000

October 10, 1972

Rs. 13,998

Rs. 8,56,373

According to the assessee, as all the payments except the last one, namely, that of Rs. 13,998 made on October 10, 1972, had been made within the relevant financial year, the assessee was entitled to interest on all these amounts. The case of the Revenue, on the other hand, was that the benefit of interest payable to the assessee u/s 214 of the Income Tax Act, 1961 (hereinafter referred to as "the Act"), was available to the assessee only in respect of advance tax paid within his accounting year, that is, up to December 31, 1971.

The Tribunal held in favour of the assessee in this respect and with regard to the other question posed, namely, interest on advance tax refund to be determined by taking into account the income finally assessed in appeal by the Appellate Assistant Commissioner and the tax paid thereon.

The two questions referred to this court for its opinion, in this context, are as under :

"(1) Whether, on the facts and in the circumstances of the case, the Appellate Tribunal is right in law in holding that the payments of Rs. 8,42,375 were advance tax payments made by the assessee though, admittedly, they were all made after the 15th of December, 1971, when the last instalment of advance tax fell due from the assessee for the assessment year 1972-73 ?

(2) Whether, on the facts and in the circumstances of the case, the Tribunal is right in law in holding that the assessee is entitled to interest u/s 214 of the Income Tax Act, 1961, on the advance tax refund to be determined by taking into account the income finally determined in appeal by the Appellate Assistant Commissioner and the tax payable thereon ?"

A reference to the provisions of Section 214 of the Act (provisions as are relevant here) would show that interest is payable on the aggregate sums of instalments of advance tax paid during any financial year in which they were payable under Sections 207 to 213, exceeding the amount of assessed tax from the first date of April next following the said financial year to the date of regular assessment for the assessment year immediately following the said financial year. Turning now to Section 211 of the Act, it will be seen that it provided that in the case of an assessee whose total income to the extent of 75 per cent. thereof or more, was derived from a source or sources for which the previous year ended on or before 31st day of December, the advance tax was payable in three equal instalments on June 15, September 15, and December 15. The assessee here clearly came within the purview of these provisions and, consequently, the date for payment of his last instalment of advance tax was December 15 and not March 31 of the following year as was sought to be canvassed on his behalf.

Faced with this situation, counsel for the assessee sought to press in aid the argument that the Commissioner of Income Tax (Recovery), New Delhi, had allowed the assessee extension of time for payment of advance tax in view of the disturbed trade conditions in the border areas. Counsel could not, however, point to any provision of law under which such extension could have been granted by the Commissioner. At any rate, the matter here is not with regard to the date for the payment of advance tax, but the interest payable thereon. The answer to the first question has to be partly in the affirmative and in favour of the assessee, namely, to the extent of the sum of Rs. 2,50,000 which was deposited on December 21, 1971, and against the Revenue, but with regard to the balance amount, the answer has to be in the negative, in favour of the Revenue and against the assessee.

The second question raised is covered by the decisions of this court in Commissioner of Income Tax Vs. Rohtak Delhi Transport P. Ltd., and Commissioner of Income Tax Vs. Ambala Electric Supply Co. Ltd., . This reference is consequently, in terms thereof, answered in the negative, in favour of the Revenue and against the assessee.

This reference is disposed of accordingly. There will be no order, as to costs.