Judgment:
J.S. Verma, C.J.
1. This is a reference under Section 256(1) of the Income-tax Act, 1961 (for short 'the Act'), for answering the following question of law :
'Whether, on the facts and in the circumstances of the case, the Tribunal is right in holding that the assessee was entitled to interest under Section 214 of the Income-tax Act, 1961, treating the payment of Rs. 11 lakhs paid by the assessee after the financial year had ended as advance tax paid within the meaning of Sections 207 to 213 of the Income-tax Act, 1961 ?'
2. The relevant assessment year is 1965-66. The assessee is a public limited company engaged in manufacturing cement at Sawai Madhopur in Rajasthan. The assessee was required to pay by way of advance tax a sum of Rs. 29,45,365 by virtue of the order passed by the Income-tax Officer. This sum was arrived at on the basis of provisional assessment made under Section 141 of the Act for the assessment year 1964-65. The assessee paid a sum of Rs. 12.12 lakhs towards the demand of advance tax in March, 1965, during the relevant financial year and the legality of the remaining demand was challenged by a writ petition filed in this court. On February 26, 1965, a stay order was passed by this court in that writ petition directing the assessee to furnish a bank guarantee for the remaining amount which was done by the assessee. The writ petition was ultimately dismissed by this court and the assessee then went in appeal to the Supreme Court. The Supreme Court by an order dated October 6/8, 1965, permitted the assessee to pay a sum of Rs. 11 lakhs in cash towards the advance tax within the time specified and to furnish a bank guarantee for the remaining amount demanded as advance tax. This order was also complied with by the assessee and the amount of Rs. 11 lakhs was deposited towards the advance tax in November, 1965, in accordance with the stay order passed by the Supreme Court. Ultimately, the total tax liability of the assessee was computed for that year at the sum of Rs. 19.99 lakhs resulting in excess deposit made by the assessee amounting to Rs. 3.13 lakhs. The assessee accordingly claimed interest on this excess amount under Section 214 of the Act.
3. The Income-tax Officer disallowed the assessee's claim for interest. The same view was taken on appeal by the Appellate Assistant Commissioner. However, on further appeal by the assessee, the Tribunal accepted the assessee's contention and held that the assessee was entitled to interest with effect from April 1, 1966, and not with effect from April 1, 1965, as claimed by him under Section 214 of the Act. This conclusion was reached on the ground that the amount of Rs. 11 lakhs paid by the assessee in November, 1965, must be deemed to be a payment towards advance tax by virtue of the aforesaid stay order of the Supreme Court in accordance with the provisions of Sections 207 to 213 of the Act. Aggrieved by the view taken by the Tribunal, the Revenue applied for reference of the above question of law to this court for its decision.
4. This is how the question comes up for decision by us.
5. The only question for our decision is about the effect of the aforesaid order dated October 6/8, 1965, passed by the Supreme Court. A persual of the order shows that a clear direction was given therein for the payment of Rs. 11 lakhs towards the advance tax. The order was not hedged in by any condition with the result that on the deposit of the amount of Rs. 11 lakhs by the assessee in accordance with that order, it was deemed to be payment of advance tax in accordance with the relevant provisions governing the payment of the advance tax. Admittedly, the Revenue did not treat the assessee to be a defaulter for non-payment of this amount of advance tax within the relevant financial year for this very reason. There is no doubt that the nature of the amount in deposit must be the same for all purposes and not merely for the purpose of not treating the assessee to be a defaulter. We are, therefore, unable to accept the contention of learned counsel for the Revenue that the amount of Rs. 11 lakhs paid towards advance tax by the assessee in these circumstances cannot be treated to be payment towards advance tax for the purpose of interest under Section 214 of the Act. The view taken by the Tribunal is, therefore, justified.
6. Consequently, the reference is answered in favour of the assessee and against the Revenue as under :
'The Tribunal was justified in holding that the assessee was entitled to interest under Section 214 of the Income-tax Act, 1961, treating the payment of Rs. 11 lakhs as a payment towards the advance tax.'
7. No order as to costs.