JUDGMENT
1. The Tribunal has referred the following question of law under Section 256(1) of the IT Act, 1961 (hereinafter referred to as "Act") for the asst. yr. 1986-87 for opinion to this Court:
Whether, on facts and in the circumstances of the case, learned Tribunal was legally correct in holding that the interest under Section 7B of Companies (Profit) Surtax Act, 1964 was admissible to the assessee, even though, the advance tax of Rs. 18,00,000 due on 15th Dec, 1985 was paid on 8th Feb., 1986 and there is no provision under the said Act entitling the assessee to claim interest where interest is paid after the statutory date, i.e., 15th December, of the relevant previous year though before the 31st March, of the relevant previous year?
2. The brief facts of the case are that the assessee-company was not previously assessed, by way of regular assessment under Companies (Profit) Surtax Act, 1964 (hereinafter referred to as 'Act') and as such, it was liable to submit its estimate in respect of correct chargeable amount to surtax in accordance with the provisions of Section 7A(5)(b) and to pay the advance tax by 15th Dec, 1985 in accordance with the provisions of Section 7A(4)(a). The assessee had filed its estimate in time on 16th Dec, 1985 but consequential due tax of Rs. 18 lakhs was not paid upto 15th Dec, 1985 within the financial year. According to the AO as well as the CIT(A) it has not been paid its liability within the stipulated period under the provisions of Section 7A(4)(a), accordingly interest held not payable under Section 7B of the Act.
When the matter came up before the Tribunal, the Tribunal allowed interest under Section 7B of the Act.
3. We have heard learned standing counsel on behalf of the Revenue and Sri S.D. Singh, learned Counsel appearing on behalf of the assessee respondent.
4. Learned standing counsel submitted that since a sum of Rs. 18 lakhs which was due to be payable by 15th Dec, 1985 was not paid within the time stipulated under Section 7A(4)(a), interest under Section 7B of the Act was not payable and the Tribunal has erred in granting the interest under Section 7B of the Act. Learned Counsel for the assessee submitted that any amount paid during the financial year, was in the nature of an advance tax and interest under Section 7B of the Act was payable. In respect of his contention, he relied upon various decisions of Hon'ble High Court and apex Court.
5. We have given our anxious consideration to the submissions made by the learned Counsel for the parties and perused the order of Tribunal and the authorities below. Section 7A(4)(a) and Section 7B read as follows:
7A. Advance payment of surtax.--(1) In this section--....
(4) Subject to the provisions of this section, advance surtax shall be payable in three equal instalments on the following dates during the financial year, namely:
(a) the 15th day of June, the 15th day of September and the 15th day of December, in the case of an assessee whose chargeable amount to the extent of 75 per cent thereof or more is derived from a source or sources for which the previous year (relevant to the assessment year next following the financial year aforesaid) ends on or before the 31st day of December;
(b) the 15th day of September, the 15th day of December and the 15th day of March, in any other case;
7B. Interest payable by Government.--The Central Government shall pay simple interest at, (fifteen per cent) 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 Section 7A 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.
Thus, under Section 7B, interest is payable on the aggregate sum of any instalments of advance tax paid during any financial year. The provision of Section 7B of the Companies (Profit) Surtax Act, 1964 is similar to the Section 214 of the IT Act.
6. We find that Andhra Pradesh High Court in the cases of J & J Dechane v. CIT ; Bakelite Hylam Ltd. v. CIT , the Bombay High Court in the case of Harinagar Sugar Mills Ltd. v. ITO , the Calcutta High Court in the cases of CIT v. Ajoy Paper Mills Ltd. ; CIT v. Graphite India Ltd. , the Gujarat High Court in the cases of Chimanlal S. Patel v. CIT ; Chandiakant Damodaidas v. ITO ; Anup Engineering Ltd v. ITO , the Gauhati High Court in the case of Moheema Ltd. v. CIT and Ors. , the Karnataka High Court in the cases of CIT v. Karnataka State Warehousing Coronation Ltd. ; CIT v. Woodlands Hotel (P) Ltd. , the Kerala High Court in the cases of Santha S. Shenoy and Ors. v. Union of India and Ors. ; CIT v. Travancore Cements Ltd. (1995) 124 CTR (Ker) 17, 19, the Patna High Court in the case of CIT v. Kharsawan Mineral Concern (P) Ltd. (1995) 213 ITR 270 272 (Pat), the Punjab & Haryana High Court in the cases of CIT v. Roadmaster Industries of India (P) Ltd. (1992) 101 CTR (P&H) 243 : (1992) 193 LTR 639 (P&H); CIT v. Agrawal Metal Works (P) Ltd. , the Rajasthan High Court in the case of Jai Drinks (P) Ltd. v. CIT , the Madras High Court in the cases of CIT v. T.T. Investments & Traders (P) Ltd. ; CIT v. Southern Sea Foods Ltd. ; CIT v. Coimbatore Distt. Central Cooperative Supply & Marketing Society Ltd. (1995) Tax LR 1308 (Mad); R.V.S. & Sons v. CIT , the Madhya Pradesh High Court in the cases of CIT v. Jagannath Narayan Kutumbik Trust ; Nasiruddin v. CIT (1996) 135 CTR (MP) 219 : (1996) 131 Taxation 421 423-24 (MP) and the Delhi High Court in the case of CIT v. Eskay Electronics (I) Ltd. (2001) 165 CTR (Del) 741 : (2001) 248 ITR 536 (Del), have taken a view that under Section 214(1) of the Act the assessee becomes entitled to interest in respect of excess payment of advance tax paid during any financial year even if the date is subsequent to the dates stipulated under Section 211 for payment of such instalments.
7. The Gujarat High Court in the case of CIT v. Kohinoor Floor Mills (1975) 99 ITR 54 (Guj) has held that in computing the penalty under Section 273(b) of the Act, the amount of tax paid by the assessee subsequent to the prescribed date for payment of advance tax should be treated as valid advance tax and should be deducted from 75 per cent of the tax determined. The aforesaid decision has been affirmed by the apex Court in CIT v. Kohinoor Floor Mills (P) Ltd. (1991) 94 CTR (SC) 162 : (1991) 187 ITR 585 (SC). Thus, the amount of advance tax which is paid after the prescribed date, is to be treated as advance tax.
8. The view taken by various High Courts referred hereinabove has been followed by this Court in IT Ref. No. 102 of 1987, CIT v. Praveen Kapoor decided on 22nd Nov., 2004 reported at (2005) 197 CTR (All) 63Ed.
9. Respectfully following the aforesaid decisions of various High Courts and our High Court, we held that the amount of tax paid by way of an advance tax after 15th of December, 1985 but paid on 8th Feb., 1986 during the financial year has been rightly treated as advance tax and has been taken into consideration for the purposes of granting interest under Section 7B of the Act.
10. In view of the reasons stated above, we answer the question referred to us in affirmative, i.e., in favour of the assessee and against the Revenue. There shall be no order as to costs.