(1.) THE question which arises for our consideration in this petition filed under art. 226 of the Constitution of India is, whether the petitioner is entitled to claim interest u/s. 214 of the IT Act, 1961 (hereinafter referred to as "the Act"), on the excess amount paid during the relevant financial year on the dates subsequent to the date u/s. 211 of the Act for payment of instalments of advance tax.
(2.) PETITIONER, a limited company registered under the Companies Act, was served with a notice under s. 212(3) of the Act and was required to pay advance tax in three equal instalments for the asst. yr. 1975-76. PETITIONER's year of account was calendar year 1974 and, therefore, it was required to pay advance tax in three equal instalments on the following dates under s. 211 of the Act, namely, 15th June, 1974, 15th September, 1974, and 15th December, 1974. There is no dispute as regards the payment of the first two instalments which were paid on the due dates. The third and the last instalment of Rs. 1,88,103 was payable on 15th December, 1974. Before this last instalment became due, petitioner's income-tax assessment for the asst. yr. 1973-74 was completed and as a result of this assessment, the petitioner became entitled to a refund of Rs. 2,20,000. PETITIONER, therefore, addressed a letter dated December 12, 1974, to the ITO, Companies Circle-II, Ahmedabad, who had jurisdiction to assess the petitioner to income-tax and who is respondent herein, requesting him to adjust the refund of Rs. 2,20,000 due to it as stated above against the last and third instalment of Rs. 1,88,103 payable for the asst. yr. 1975-76. On December 21, 1974, the respondent wrote a letter to the petitioner rejecting its request for adjustment of the refund of Rs. 2,20,000 as stated above, and calling upon it to pay up the last instalment within three days from the receipt of the letter. It was stated in the letter that if the instalment was paid within three days from the receipt of the letter, the petitioner would not be considered in default. PETITIONER received this letter on December 24, 1974, and paid the last and third instalment of Rs. 1,88,103 on December 25, 1974. PETITIONER's assessment to income-tax for the asst. yr. 1975-76 was completed on September 13, 1976. As a result of the assessment order passed on September 13, 1976, the petitioner was entitled to refund of excess tax paid by it. The respondent, however, did not award any interest on the amount refundable under s. 214 of the Act on the ground that the last instalment which was not paid on the due date, namely, December 15, 1974, could not be treated as advance tax. PETITIONER thereafter addressed a letter dated October 20, 1976, to the respondent demanding interest on the refund of Rs. 1,20,507 u/s. 214 of the Act. The respondent, however, by his letter dated November 11, 1976, rejected the petitioner's demand. PETITIONER thereafter approached the CBDT claiming interest on the amount refunded, but it appears that the CBDT also rejected the petitioner's demand. The decision of the Board was communicated by the CIT, Gujarat-I, vide his letter dated October 10, 1978. PETITIONER has, therefore, approached this Court praying for a writ of certiorari or a writ in the nature of certiorari, or any other appropriate writ, direction and/or order under art. 226 of the Constitution of India, quashing and/or setting aside the decision of the ITO, refusing to pay interest u/s. 214 of the Act as stated above and directing the respondent to pay Rs. 20,485 by way of interest at the rate of 12 percent. per annum from April 1, 1975, till September 13, 1976, the date of regular assessment. The petition is resisted by the respondent contending that since the last instalment of Rs. 1,88,103, which was more than the amount ordered to be refunded, was not paid on the due date, that is, December 15, 1974, such payment could not be treated as payment of advance tax and consequently no interest on the amount refused was awarded u/s. 214 of the Act.