1. The Tribunal has referred the following question of law u/s 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 u/s 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 u/s 7B of the Act.
When the matter came up before the Tribunal, the Tribunal allowed interest u/s 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 u/s 7A(4)(a), interest u/s 7B of the Act was not payable and the Tribunal has erred in granting the interest u/s 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 u/s 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 u/s 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, u/s 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
7. The Gujarat High Court in the case of
8. The view taken by various High Courts referred hereinabove has been followed by this Court in IT Ref. No. 102 of 1987,
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 u/s 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.
