Fathima Beevi, J.
1. The petitioner is an income-tax assessee. This petition raises the question as to the liability of the Central Government to pay interest to assessees under the provisions of the Income-tax Act, 1961, on the difference between the aggregate of the income-tax deducted at source under the provisions of Sections 193, 194 and 194A of the Act and paid to the credit of the Central Government under Section 200 of the said Act and the tax determined on regular assessment and the constitutional validity of the provisions of Sections 214, 215 and 217 of the Act.
2. The assessment years concerned in the petition are 1975-76 to 1979-80, both inclusive. The petitioner, a company engaged in the business of banking, had investments in the shape of securities and shares. Income-tax had been deducted at source on the interest due to the petitioner on securities held by it and dividends payable to the petitioner on shares and paid to the Central Government under the provisions of the Act by the persons authorised by the Act to deduct the tax at source during the previous yearsrelating to the aforesaid assessment years. During all such previous years, the tax deducted at source exceeded the tax finally determined in respect of the said assessment years and the refund allowed to the petitioner ranged between Rs. 28,000 odd and Rs. 1,98,138 as stated hereunder :
AssessmentAmount refundedyearRs.1975-7628,0021976-7755,5971977-781,57,4451978-791,98,1381979-801,40,289
3. Exhibit P-1 statement gives the details of the total tax deducted at source, the gross amount of tax finally determined and the amount ordered to be refunded to the petitioner in respect of each of the years. The first respondent, in directing refund of the excess amount collected, did not provide for the payment of interest to the petitioner. The petitioner presented petitions under Section 154 of the Act for rectification of the assessment orders praying for amendment of the assessment by providing for payment of interest to the petitioner on the amounts refunded from the commencement or each assessment year till date of the regular assessment at 12% per annum. Exhibit P-2 series are the copies of the said petitions. The first respondent, by his orders dated April 7, 1981, rejected the petitions by exhibit P-3 series orders. The first respondent was of the view that the tax deducted at source could not be considered as advance tax paid as envisaged by Sections 207 - 213 of the Act, that such payments do not fall within the purview of Section 214 of the Act and that there was no mistake apparent on the face of the record. The appeals preferred by the petitioner had been dismissed on September 8, 1983, by exhibit P-4 series.
4. The petitioner has challenged exhibit P-3 series and exhibit P-4 orders as erroneous in law and has prayed for a writ or appropriate direction quashing the same. The petitioner, by amending the petition, has also challenged the constitutional validity of Section 214, alternatively contending that it is discriminatory and violative of Article 14 of the Constitution of India.
5. The first contention taken up by the petitioner is that the income-tax paid in advance by the assessee and the tax deducted at source are to be treated as advance tax for the purpose of payment of interest under Section 214. The language used in Sections 193, 207 - 213 and 214 does not warrant this construction. Section 214 specifically provides for payment of interest on the excess amount out of the instalments of advance tax paid by anassessee in terms of Sections 203 - 214. What was collected as advance tax under these provisions is on the estimated income for the current year on the basis of the income of the previous year before the same is earned. The tax deducted at source is the tax on the income already earned. The provisions constitute the machinery for collection of tax on income earned before the assessment is made and as and when the income is received by the assessee. A distinction has been clearly drawn between these payments in Section 214 wherein a specific provision is made in regard to the excess payments on the basis of the estimate made. What is deductible at source is only the tax at the rate applicable on the amount which has actually fallen due and is paid. The amount of tax and even the rate may vary when the total income is computed resulting in refund. But that is not the case with advance tax. The tax is paid on income which is estimated on the previous year's income when that income has not actually been earned and is not actually received. The only characteristic common to advance tax and tax deducted at source is that they are paid or collected prior to the assessment. The substantial difference between the two is that the former is levied and collected on anticipated income yet to be earned, while the latter is paid on ascertained income already earned in the past. These significant distinguishing features militate against treating the tax deducted at source and advance tax on the same footing for purposes of payment of interest on refund. There is no enabling provision in the Act to direct payment of interest on the tax deducted at source, understandably because the specified rate of tax is applied to income already earned, subject to application of the appropriate rate at the time of finalising the assessment.
6. Section 4 of the Act which is the charging section maintains in Sub-section (2) thereof the two-fold distinction between income-tax deductible at source and income-tax paid in advance. The charging section provides that income-tax shall be charged for any assessment year at the rate prescribed for that year in accordance with the provisions of the Act in respect of the total income of the previous year of every person. Income subject to advance tax is defined under Section 207. Under this section, tax is payable in advance in accordance with the provisions of Sections 208 - 219 in the case of income other than income chargeable under the head 'Capital gains' and that is relatable to winnings from lotteries, crossword puzzles, races, etc. Income subject to advance tax having been thus defined, any other payment of tax in advance of assessment as provided for in the other provisions of the Act cannot be treated as or analogous to advance tax. Sections 208 - 219 provide the machinery for the computation and collection of advance tax. In that scheme, Section 214 provides for payment of interest. The liability of the Central Government to pay interest is limited to the excess over the assessed tax paid as instalments of advance tax asprescribed under Sections 207 - 213. Such interest is payable on completion of the regular assessment;
7. Separate provision is made in the Act for deduction of tax at source and for giving credit for the tax thus deducted. Sections 193 - 202 relate to the mode of payment.
8. Section 190 states :
'Notwithstanding that the regular assessment in respect of any income is to be made in a later assessment year, the tax on such income shall be payable by deduction at source or by advance payment, as the case may be, in accordance with the provisions of this Chapter.'
9. Direct payment by the assessee has to be made in respect of income for which provision is not made for deducting income-tax at source. Under Sections 192 and 193, at the time of payment of salaries and interest on securities, the person responsible for paying taxable income has to deduct income-tax at the rates in force on the amount of salary income or interest due. Section 200 casts a duty on the person making such deduction to pay within the prescribed time, the sum so deducted to the credit of the Central Government or as the Board directs. On failure to make such payment, such person shall be deemed to be an assessee in default in respect of the tax, for further action. The power to levy tax by deduction at source is without prejudice to any other mode of recovery. A certificate has to be issued at the time of credit for payment of the sum. Under Section 199, the deduction made and paid to the Government is treated as payment on behalf of the person who earned the income.
10. It could be thus seen that Chapter XVII of the Income-tax Act empowers the collection of tax on income earned at the time of the receipt itself, whereas the provisions contained under Sections 202 - 213 are for paying the tax in advance before the income is actually received and during the year the income is accruing. This payment in advance is on estimate. To safeguard the collection of the amounts that would be due and to avoid excess collection, provision has been made in Section 214 for payment of interest on whatever excess is collected. That provision also provides safeguards to the assessee while inspiring the assessee to pay the tax in advance without default. These provisions do not specifically state that interest could be collected on the excess paid by the process of deduction at source. The assessee is not directly involved in such deduction which is being made by the person making the payment. The act of such person, though to the benefit and in discharge of the obligation of the assessee, is not with the direct involvement of the assessee. It is true that the amounts deducted at source is the income of the assessee. When excess is paid, such excess is refundable to the assessee only. On such refund, he hasbeen deprived of the benefit of the excess deducted. No equitable consideration can, however, weigh in the absence of statutory provisions in the matter of payment of tax. There is, therefore, no support for the claim that an assessee who receives refund of the excess amount deducted at source on regular assessment is on a par with the assessee who claims interest on excess of advance tax paid. In Addl. CIT v. Bareilly Corporation Bank Ltd., [1978] 115 ITR 449, the Allahabad High Court points out that no interest is payable on excess tax deducted at source stating that the amounts deducted at source could not be treated as advance tax and as there is no provision in the statute for payment of interest on the amounts deducted at source. When there is a specific provision under the Act dealing with the payment of interest in the cases mentioned in Section 214, it is not possible to award interest in cases other than those covered by it. Its terms cannot be enlarged by bringing within its ambit the cases not covered by it, It is true that interest is the compensation allowed by law but where, as here, the statute does not make any provision for the payment of any compensation in the case of amounts deducted at source in excess of the tax liability, it is not possible to award interest thereon.
11. In Dr. Shamlal Narula v. CIT, : [1964]53ITR151(SC) , the Supreme Court stated that (headnotc) :
'The statutory interest paid under Section 34 of the Land Acquisition Act, 1894, on the amount of compensation awarded for the period from the date the Collector has taken possession of land compulsorily acquired is interest paid for the delayed payment of the compensation and is, therefore, a revenue receipt liable to tax under the Income-tax Act.'
12. The principle underlying the award of interest is that the party is compensated for keeping back the amount due and payable to him. It retains the profit the creditor might have made if he had the use of the money for the loss he had suffered. In CIT v. Clittres, : [1981]130ITR301(Ker) a Full Bench of this court held that the payment made pursuant to an assessment under Sub-section (4) of Section 172 could not be treated as payment in advance of the tax leviable for the relevant accounting years and would not carry interest as a payment of advance tax under Section 214 of the Act. Murthy Match Works v. Assistant Collector of Central Excise, AIR 1974 SC 497, in dealing with the question of discrimination in taxation enunciated the principle thus (headnote) :
'Bare equality of treatment regardless of the inequality of realities is neither justice nor homage to the constitutional principle. Another proposition which is equally settled is that merely because there is room for classification, it does not follow that legislation without classification is always unconstitutional. The court cannot strike down a law because it hasnot made the classification which commends to the court as proper. Nor can the legislative power be said to have been unconstitutionally exercised because, within the class, a sub-classification was reasonable but has not been made. The modern State, in exercising its sovereign power of taxation, has to deal with complex factors relating to the objects to be taxed, the quantum to be levied, the conditions subject to which the levy has to be made, the social and economic policies which the tax is designed to subserve, and what not. From the judicial inspection tower, the court may only search for arbitrary and irrational classification and its obverse namely, capricious uniformity of treatment where a crying dissimilarity exists in reality. Unconstitutionality and not unwisdom of a legislation is the narrow area of judicial review.'
13. East India Tobacco Co. v. State of Andhra Pradesh, : [1963]1SCR404 , says (headnote) ;
'Taxation law must also pass the test of Article 14. But in deciding whether a taxation law is discriminatory or not, it is necessary to bear in mind that the State has a wide discretion in selecting the persons or objects it will tax, and that a statute is not open to attack on the ground that it taxes some persons or objects and not others. It is only when within the range of its selection, the law operates unequally, and that cannot be justified on the basis of any valid classification, that it would be violative of Article 14.
Under the law, it is for the person who assails a legislation as discriminatory to establish that it is not based on a valid classification and this burden is all the heavier when the legislation under attack is a taxing statute.'
14. We are satisfied that the provision for payment of interest on the difference between the aggregate of the instalments of advance tax paid and the amount determined on regular assessment has sufficient justification, because such payments were made on income yet to arise. Refusal to pay interest on excess amounts of tax deducted at source after the income had actually arisen and was earned, but before the taxable income was determined and the rate was applied is not discriminatory or arbitrary, We find that both payments are made in advance of actual assessment but the vital distinction that the former is tax paid on income yet to arise and the latter on income already accrued marks out one from the other. Therefore, the challenge against the validity of Section 214 on the ground of discrimination and arbitrariness fails. In the absence of any statutory provision, the assessee has no right to claim interest on excess tax deducted at source. The authority below has negatived the claim, rightly in our opinion. There is, therefore, no scope for any judicial review. The petitioner is, therefore, not entitled to any relief. The petition fails and is accordingly dismissed.