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Commissioner of Income-tax Vs. P.V.S. Beedies (P.) Ltd. - Court Judgment

LegalCrystal Citation
SubjectDirect Taxation
CourtKarnataka High Court
Decided On
Case NumberI.T.R.C. Nos. 199 and 200 of 1982
Judge
Reported in[1987]163ITR846(KAR); [1987]163ITR846(Karn)
ActsIncome Tax Act, 1961 - Sections 139(8) and 214
AppellantCommissioner of Income-tax
RespondentP.V.S. Beedies (P.) Ltd.
Appellant AdvocateK. Srinivasan and ;H. Raghavendra Rao, Advs.
Respondent AdvocateS.P. Bhat, Adv.
Excerpt:
.....income-tax officer did not allow interest on the excess advance tax paid on the ground that the payment of advance tax was belated and hence it could not be considered as an advance tax paid for purposes of section 139(8) and section 214. 4. in the appeal preferred by the assessee against the assessment order, it was contended, inter alia, that the payment made on march 13, 1974, was a valid payment of advance tax towards the instalment due on march 15, 1974, and that, therefore, the interest levied without giving deduction to the advance tax paid was illegal and, consequently, the assessee was entitled to interest on the excess tax paid under section 214. 5. the appellate assistant commissioner upheld the claim of the assessee both as regards interest levied under section 139(8) as..........in a refund and the assessee also claimed interest under section 214 of the act on the excess tax paid. the income-tax officer did not allow interest on the excess advance tax paid on the ground that the payment of advance tax was belated and hence it could not be considered as an advance tax paid for purposes of section 139(8) and section 214. 4. in the appeal preferred by the assessee against the assessment order, it was contended, inter alia, that the payment made on march 13, 1974, was a valid payment of advance tax towards the instalment due on march 15, 1974, and that, therefore, the interest levied without giving deduction to the advance tax paid was illegal and, consequently, the assessee was entitled to interest on the excess tax paid under section 214. 5. the appellate.....
Judgment:

Rajasekhara Murthy, J.

1. The following three questions have been referred by the Income-tax Appellate Tribunal, Bangalore Bench, under section 256(1) of the Income-tax Act, 1961, at the instance of the Revenue, for our opinion :

'1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in allowing interest under section 214 of the Income-tax Act, 1961

2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in confirming the action of the Appellate Assistant Commissioner in admitting an appeal against the levy of interest under section 139(8) of the Income-tax Act, 1961

3. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in cancelling the interest levied under section 139(8) of the Income-tax Act, 1961, holding that the amount paid through cheque given on March 13, 1974, and encashed on March 16, 1974, should be treated as advance tax paid for purpose of levy of interest under section 139(8) ?'

2. It would be convenient to take up question No. 3 at the outset and then deal with the other two questions.

3. The assessee is a private limited company manufacturing and selling beedies. The Income-tax Officer levied interest under section 139(8) in the assessment for the assessment year 1974-75. Towards the advance tax due for the assessment year 1974-75, the assessee had remitted by a cheque, a sum of Rs. 9,93,939 on March 13, 1974, which was credited to Government on March 16, 1974. While computing the interest under section 139(8), the Income-tax Officer did not give deduction to the advance tax paid towards the last instalment due on March 15, 1974. The assessment resulted in a refund and the assessee also claimed interest under section 214 of the Act on the excess tax paid. The Income-tax Officer did not allow interest on the excess advance tax paid on the ground that the payment of advance tax was belated and hence it could not be considered as an advance tax paid for purposes of section 139(8) and section 214.

4. In the appeal preferred by the assessee against the assessment order, it was contended, inter alia, that the payment made on March 13, 1974, was a valid payment of advance tax towards the instalment due on March 15, 1974, and that, therefore, the interest levied without giving deduction to the advance tax paid was illegal and, consequently, the assessee was entitled to interest on the excess tax paid under section 214.

5. The Appellate Assistant Commissioner upheld the claim of the assessee both as regards interest levied under section 139(8) as well as claim for interest under section 214. On appeal by the Department, the Tribunal agreed with the view taken by the Appellate Assistant Commissioner on both the issues and dismissed the appeal. Hence, this reference at the instance of the Revenue.

6. The point for consideration is whether the payment made on March 13, 1974, by way of cheque, towards the instalment of advance tax due on March 15, 1974, was a valid payment in law. There can be no dispute that a payment by cheque relates back to the date of receipt of the cheque by the payee and in law the date of payment is the date of delivery of cheque. We place reliance on the principle laid down by the Supreme Court in CIT v. Ogale Glass Works (P) Ltd. : [1954]25ITR529(SC) . It, therefore, follows that the assessee when he tendered the cheque on March 13, 1974 itself, made a valid payment.

7. Hence, question No. 3 should be answered in the affirmative and against the Revenue and we hold that the Tribunal's order cancelling the interest levied under section 139(8) is justified.

8. It follows, as a consequence, that the assessee would be entitled to interest under section 214 on the excess of the tax paid as determined on the regular assessment. Hence, the first question is also answered in the affirmative and against the Revenue.

9. As regards question NO. 2, in view of the decision of this court in National Products' case : [1977]108ITR935(KAR) , the appeal challenging the levy of interest, was maintainable and the Appellate Assistant Commissioner was right in entertaining the appeal on this point.

10. All the questions are thus answered in the affirmative and against the Revenue.


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