1. The petitioner herein has filed this special civil application under article 226 of the Constitution seeking a writ of certiorari or a writ in the nature of certiorari or any other appropriate writ, direction and/or order quashing the decision of the ITO dated December 17, 1977, refusing to award interest on the amount which was claimed by the petitioner. He has also further prayed that a writ of mandamus be issued asking the respondent to pay Rs. 9,050 being the interest at the rate of 12 per cent. from April 1, 1975, till the date of regular assessment as computed in Ex. C to the petition.
2. The facts leading to this special civil application are few and simple. The assessee is an individual and Samvat year is his year of account. We are concerned with the assessment year 1975-76, the corresponding accounting year being Samvat year 2030. The order of assessment in respect of the assessment year 1975-76 was passed on October 3, 1977, and it appears that before the end of the financial year in question, that is, before March 31, 1975, the petitioner had paid advance payments of tax. He had paid Rs. 27,445 on June 190,1974, and a further sum of Rs. 27,450 on September 20,1974, making and aggregate amount of Rs. 54,895. Tax was assessed in the course of the assessment proceeding s for the assessment year 1975-76 came to much less and an amount of Rs. 30,015 was payable by the income-tax authorises by way of refund so far as payment of advance tax was concerned. However, at the time of passing the order of refund, the ITO stated : 'No interest under section 214 granted as advance tax instalment paid after due dates.' The petitioner wrote to the ITO on November 16,1977, stating that a sum of Rs. 9,005 by way of interest was also payable to the petitioner under s. 214 of the I.T. Act and requested the respondent to pay same. By his letter dated December 17,1977, a copy of which is Ex. D to the petition, the respondent, the ITO, observed : 'For qualifying for interest under section 214 instalment should have been paid on the dates specified in the Act. In your case, instalments of advance tax have not been paid within the statutory dates fixed by the Act. Therefore, payment cannot be considered as advance tax and interest under s. 214 cannot be granted. Your application has been filed.' The petitioner applied to the respondent to review the decision and in the course of the application for review he relied upon the decision of this High Court in CIT v. Kohinoor Flour Mills : 99ITR54(Guj) . A copy of the letter asking for review was also sent to the IAC concerned requesting that necessary instructions be issued to the respondent. The IAC confirmed the stand taken up by the ITO and when an application was made to the Commissioner the same stand was taken up by that officer also. The Commissioner in his letter dated March 28,1978, stated : 'The dates of instalments have been statutorily fixed under section 211 and, therefore, interest is payable only if the instalments are paid before the last date of instalments.' Thereafter the petitioner has approached this High Court and prayed for the reliefs stated above. In the petition, the petitioner has also relied upon the decision of this High Court in Bharat Textile Works v. ITO : 114ITR28(Guj) .
3. On these facts, a neat question of law arises as to whether under s. 214 interest which is contemplated can be denied to an assessee who has not paid the instalments of advance tax on the dates specified under s. 211 of the I.T. Act.
4. In order to appreciate the contentions which have been urged before us, it is necessary to refer to the group of sections from s. 207 onwards. This group of sections from ss. 207 to 219 deals with advance payment of tax. Under s. 207, sub-s. (1), tax shall be payable in advance in accordance with the provision of ss. 208 to 219 in the case of income other than, (a) income chargeable under the head 'Capital gains' and, (b) income referred to in sub-clause (ix) of clause (24) of s. 2. Such income is referred to in the rest of the chapter where this group of sections occur as income subject to advance tax and such tax is referred to in the rest of the chapter as advance tax. Under s. 208 advance tax shall be payable during the financial year and we are not concerned with the rest of the provisions of that section. Ordinarily tax is computed after the end of the financial year and when tax is assessed, the assessment may take the form of provisional assessment or final assessment but until tax is assessed, except in cases falling under the provisions regarding advance tax or the provisions of s. 140A regarding self-assessment of tax, there is not liability to pay tax other than tax in pursuance of an order of assessment, either provisional or final. Under section 211.
'(1) Subject to the provisions of this section and of sections 209A and 212, advance tax shall be payable in three equal instalment on the following dates during the financial year, namely :- (i) the 15th day of June, the 15th day of September the 15th day of December......'
5. In the case of some assessees tax may be paid on 15th day of September, 15th day of December and the 15th day of March. Under sub-s. (2) of s. 210 :
'If the notice of demand issued under section 156 in pursuance of the order under section 210 is served after any of the dates on which the instalments specified therein are payable, the advance tax shall be payable in equal instalments on each on such of those dates as fall after the date of the service of the notice of demand, or in one sum on the 15th day of March, if the notice is served after the 15th day of December.'
6. It is thus clear that though the dates of instalments are specifically fixed under s. 211(1)(i) and (ii), it is possible in a particular case for an assessee to be exempted from the payment of the instalment in accordance with those dates and the rigidity of those dates and to pay in one lump sum before 15th March or 15th December, as the case may be. Section 212 deals with the question of estimate by an assessee and under s. 214, sub-s. (1) :
'The Central Government shall pay simple interest at twelve percent. per annum 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 tax determined on regular assessment, from the 1st 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, and where any such instalment is paid after the expiry of the financial year during which it is payable by reason of the provisions of section 213, interest as aforesaid shall be payable on that instalment from the date of its payment to the date of the regular assessment.....'
7. The proviso is not material for the purposes of this judgment. It is important to note at this stage that the interest is payable on the amount by which the aggregate sum of any instalments of advance tax paid during the financial year exceeds the amount of tax determined in regular assessment and, consequently, advance tax which is referred to is the advance tax payable under ss. 207 to 213. The Legislature has not used the words 'paid in accordance with sections 207 to 213' but while referring to the instalments of advance tax which have been paid during the financial year it refers to them as 'payable under sections 207 to 213'. The entire scheme of the sections relating to payment of advance tax was considered by a Division Bench of this High Court in Bharat Textile Works v. ITO : 114ITR28(Guj) and after considering this scheme at page 34, the position was summarised as follows :
'In our opinion, looking to the provisions of section 217(1A) in view of the reference to the date from which the interest has to be calculated, namely, 1st day of April next following the financial year in which the advance tax was payable in accordance with section 212(3A), there is an inherent indication under section 217(1A) itself that if any tax or advance tax is paid before the 1st day of April next following the financial year in which the advance tax was payable, that tax must be given credit for the calculating the amount of interest. Since in the instant case though estimates under section 212(3A) were filed late and, consequently, the advance tax payable in accordance with those estimate was paid late, and the tax was paid before the 1st day of April next following the financial year in which the advance tax was payable in accordance with section 212(3A), interest under section 217(1A) cannot be charged and could not have been charged without giving credit to the assessee concerned for the payments so made. It must be emphasised that for the purposes of section 215(2) which has to given effect to while matters and not advance tax paid. Advance tax undoubtedly means advance tax payable in advance in accordance with the provisions of sections 208 and 219. Mr. G. N. Desai appearing for the revenue is right when he contends that tax which is not paid in accordance with the provisions of section 212(3A) is not advance tax for the purpose of any of the provisions of sections 208 to 219 and, therefore, for the purpose of section 217(1A). However, by virtue of the language of section 215(2) which has got to be given effect to while calculating interest under section 217(1A), interest has to be calculated keeping in mind the date on which tax is paid before the date of completion of the regular assessment and if that tax, that is, tax chargeable under the provisions of the Income-tax Act, 1961, is paid before the 1st day of April next following the financial year in which the advance tax was payable under section 212(3A) then full effect to that payment must be made in computing the interest under section 217(1A).'
8. In Bharat Textile Works case : 114ITR28(Guj) , the Division Bench was dealing with the question of payment of interest by the assessee. Section 214 speaks of payment of interest by the Central Government to the assessee in respect of excess of advance tax which has been paid in the course of the financial year in question.
9. It is thus clear that for the purpose of payment of interest, s. 214 provides for the mirror image of what h as been provided in s. 217. Section 217 lays down the principles for the payment of interest by the assessee when he fails to make the estimate as required by s. 209A or s. 212. The Division Bench in Bharat Textile Works case : 114ITR28(Guj) has laid down that looking to the date from which interest begins to run, namely, 1st day of April following the end of the financial year in question, interest shall not be paid or will not be required to be paid if before the end of the financial year the entire advance tax has been paid by the assessee concerned. Section 214 deals with a case where interest becomes payable by the Government in respect of excess over the tax assessed, the excess being found from the aggregate sum of the instalments of advance tax paid during the financial year. In principle, therefore, there should be not difference between the two positions, namely, position No. 1 when interest is required to be paid by the assessee and position No. 2 when the interest is required to be paid by the Government and if the Legislature wanted to make any departure, it should have clearly stated so.
10. It is true that in Bharat Textile Works case : 114ITR28(Guj) , the Division Bench accepted the contention of learned counsel appearing for the revenue that tax which is not paid in accordance with the provisions of s. 212(3A) is not advance tax for the purposes of any of the provisions of ss. 208 to 219 and, therefore, in that particular case is on the word 'paid' in that passage occurring at page 35 of the report. The payability of the advance tax is different from the actual payment of advance tax. Tax payable in accordance with the provisions of ss. 208 to 219 is advance tax for the purpose of that particular group of sections and for the purpose of ss. 207 to 219, both inclusive. If tax becomes payable in the sense that liability to pay advance tax is incurred, there is provision in ss. 208 to 219 about the liability. Under s. 211, instalments of advance tax are to be paid in a particular manner laid down in that section but we have pointed out earlier that even looking to the provisions of sub-s. (2) of s. 211 there is no special sanctity about the date set out in s. 211. All that the substance of advance tax requires is that before the end of the financial year, advance tax should be paid. So far as failure to pay on due date of an instalment is concerned, it is possible that under the other provisions of the I.T. Act, say, for example, s. 221 or under s. 273, which was dealt with by this court in Kohinoor Flour Mills' case : 99ITR54(Guj) , the liability to pay the penalty for failure to pay the amount of advance tax on due dates may arise but when the Legislature speaks in s. 214 regarding payment of interest, it merely prescribes not the actual payment but the payability of advance tax and the concept under s. 214 is the concept of aggregate amount of the instalments of advance tax paid during the particular financial year. The question is of the financial year in which the instalments are payable under ss. 207 to 213. The legislature in our opinion has deliberately omitted to use the words 'paid in accordance with ss. 207 to 213'. The legislature has used the words 'payable under sections 207 to 213'. That being the case and since there is no other indication in s. 214 that the dates of instalments are strictly to be adhered to and if they are not adhered to interest will not be payable, the contention urged on behalf of the revenue cannot be accepted. We would be required to do violence to the language used by the Legislature if we read into s. 214 the requirement that for the purpose of earning interest from the 1st day of April following the end of the financial year in question, the assessee must have paid all the instalments of advance tax on the dates referred to in s. 211.
11. There is another angle from which the matter can be looked at. Interest is paid under normal circumstances as and by way of consideration for the use of the money which the person paying the interest had, though the money belonged to somebody else, namely,. the person to whom interest is paid. The assessee's money was really required to be paid after the final assessment or the regular assessment order is passed but from the 1st of April following the end of the financial year in question up to the date of regular assessment, some time may elapse and the Government is enjoying the use of the money during that period and that is why the legislature in its wisdom has provided in s. 214 that interest at twelve per cent. shall be paid by the Government to the assessee for the excess of the aggregate sum of instalments of advance tax over the tax determined in the course of the regular assessment. Interest is not even payable on the entire amount of the aggregate of instalments but only on the excess of the advance tax over the regular tax assessed in regular assessment proceedings. In view of the language used in s. 214 particularly with reference to the 1st day of April and not with reference to the dates on which the instalments are actually paid by the assessee, it is clear that what the legislature intended to do is to provide that irrespective of the dates on which instalments of advance tax are paid, interest will be payable if the entire amount of advance tax which was paid up in the course of the financial year exceeds the amount of tax determined on regular assessment. If these two conditions are satisfied interest must be paid to the assessee. The further requirement which the revenue wants us to read, namely, the third condition which it also wants us to read in s. 214, namely, that instalments of advance tax must have been paid on or before the due dates mentioned in s. 211 for the payment of instalments, cannot be read looking to the language of s. 214. Looking to the purpose and the scheme of s. 214 which we have analysed above, it is obvious that the stand taken up by the revenue is entirely untenable. The payability is one aspect and the dates on which the amounts of instalments are required to be paid is another aspect altogether, As we have indicated earlier, failure to pay the instalments on due dates might involve an assessee in payment of penalty if the other conditions regarding payment of penalty are satisfied, but the concept under s. 214 being totally unconnected with any concept of deprivation of interest in the case where penalty is incurred, the interest referred to in s. 214 must be paid if the two conditions are satisfied, namely, that all the instalments of advance tax are paid in the course of the financial year irrespective of the dates when they are paid, and, secondly, the aggregate sum of the instalments of advance tax paid in the course of the financial year exceeds the amount of tax determined on regular assessment. There is no third condition to be read in s. 214 as one of the conditions qualifying for the payment of interest in respect of excess from the 1st day of April following the end of the financial year in question up to the date of the regular assessment.
12. In view of the conclusion arrived at as above, it is clear that the view taken by the ITO, the IAC and the Commissioner was erroneous and was contrary to law. We, therefore, set aside the order dated December 17, 1977, annex. 'D' to the petition, and also what has been set out in the letter of the Commissioner, annex. 'H' to the petition. Annexure 'F', the letter dated January 17, 1978, of the IAC confirming the action of the ITO, must also be set aside and quashed. We, therefore, allow this special civil application and set aside the letters, annexs. 'D', 'F' and 'H' to the petition. We direct the respondent to pay interest at the rate of twelve per cent. On the excess referred to in s. 214 from April 1, 1975, till the date of regular assessment. The respondent will pay the costs of this special civil application to the petitioner. Rules made absolute accordingly.