| SooperKanoon Citation | sooperkanoon.com/53474 |
| Court | Authority for Advance Rulings |
| Decided On | May-09-1995 |
| Judge | S Ranganathan, D Lal, R Meena |
| Reported in | (1996)221ITR172AAR |
| Appellant | In Re: Advance Ruling No. P. 2 of |
The applicant has stated that it issued instructions to its chartered accountants to pay the advance tax before March 15, 1994, and sent a cheque bearing the date of March 10, 1994, for advance tax xx,xx,xx,xxx drawn on Bank of XYZ, Bombay, and made payable to ABC Bank, Bombay. It is stated, however, that the cheque was received by the applicant's chartered accountants on March 15, 1994, who deposited it with the ABC Bank, Main Branch, with the income-tax challan, on the same date.
Thereafter, a messenger of the applicant's chartered accountants is said to have visited the main branch of the ABC on March 30, 1994, for collecting the challan when he was told that the challan was not ready.
Another messenger visited ABC on April 6, 1994, when he was informed that the cheque had been returned unpaid by the XYZ, Bombay. Thereupon, a higher employee of the chartered accountants visited the bank and was told that the cheque had been returned with the endorsement : "Advice not received. Please present after two days". The chartered accountant's representative was told that the ABC was not obliged, nor was it their practice, to represent unpaid cheques. Therefore, the returned cheque and the accompanying challan were returned to the chartered accountants' representative on April 7, 1994.
2. It is stated that a representative of the applicant's chartered accountants contacted the XYZ, Bombay, on April 7, 1994, to ascertain whether they could contact the ABC and persuade them to represent the cheques. He was told that it was not possible. On April 7, he collected the cheque from the ABC, Bombay. Efforts were made again on April 12 and 13, to persuade the ABC to re-present the cheque, but the ABC informed them that it was not their practice to re-present dishonoured cheques and that they would require fresh challans, etc., if the amount is to be paid in again. It is also stated that there were some discussions between the officials of the ABC and XYZ, Bombay, and the Deputy Controller of Accounts, Central Board of Direct Taxes (CBDT).
Then it was decided that the ABC's procedure has to be followed and only a representation could be made to the concerned Commissioner of Income-tax for redressal, if any. Thereafter, the applicant presented the returned cheque together with a fresh challan to the ABC on April 15, 1994. This fact is not in K's affidavit. So, it is set out later.
These facts have been stated in an affidavit of Mr. K., an employee of the chartered accountants of the applicant, acting under authorisation from the applicant. The cheque was honoured by XYZ on its presentation the next day and a receipted challan dated April 16, 1994, was issued to the applicant.
3. Later, the applicant made an application before the Commissioner of Income-tax on April 18, 1994, requesting him to "confirm" that the applicants are not liable to pay any interest in terms of Section 234B and/or Section 234C of the Income-tax Act, 1961 ("the Act"). The Commissioner of Income-tax intimated the chartered accountants , vide his letter dated April 20, 1994, that there is no provision in the Income-tax Act to treat the payment made after the end of the relevant financial year as advance tax payment before March 31. Therefore, the provisions regarding charge of interest would squarely be applicable.
After receipt of this letter, the applicant filed this application before us on November 10, 1994, seeking advance ruling on the following question : " Whether the applicant is liable to interest under Sections 234B and 234C in respect of tax of xxx.xxx,xxx.xx paid vide cheque No. xxxxx xxxxx dated March 10, 1994." 4. A copy of the application along with the annexures was sent to the Commissioner of Income-tax in accordance with the provisions of Section 245R of the Act, calling upon him to furnish the relevant records and also a report in compliance with the provisions of Chapter XIX-B of the Act. Thereafter, two hearings were fixed at which the representatives of the parties were heard.
5. The Commissioner of Income-tax submitted that the application was not maintainable because there was no transaction peculiar to the case of the applicant on which advance ruling can be given as the question of chargeability of interest under this Section involves the principal question whether payment of advance tax after the end of the financial year is to be deemed to be advance tax in the circumstances stated by the applicant. This is essentially a question of law which is evident from the fact that the applicant has cited a number of courts' decisions in support of his interpretation. According to the Commissioner of Income-tax, any ruling on the question posed by the applicant will be of general application to all such cases and the Authority was not constituted to handle the questions of law which are of general applicability to all persons.
6. During the course of arguments, the Deputy Commissioner of Income-tax (DCIT), representing the Commissioner of Income-tax, reiterated this view and submitted further that the provisions for advance ruling would apply only where the ruling relates to any transaction undertaken by the applicant, whereas in this ease, the applicant wants a decision regarding chargeability of interest, which is not a transaction.
7. We have carefully considered the arguments of the Commissioner of Income-tax, but we do not find any merit in these arguments. We would like to quote the provisions of Clause (a) of Section 245N of the Act defining the meaning of advance ruling : " ' advance ruling' means the determination, by the Authority, of a question of law or fact specified in the application in relation to a transaction which has been undertaken, or is proposed to be undertaken, by the applicant." 8. It is amply clear from the Section itself that the ruling can be on a question of law or fact and that it need not be only on facts. Of course, these questions of law or fact have to be in relation to a transaction which has been undertaken or is proposed to be undertaken by the applicant. In the instant case, the applicant had undertaken transactions of purchase and sale of shares and debentures which led to capital gains and consequent advance tax liability during the financial year 1993-94. On account of some default in this payment, if liability of penal interest or penalty, etc., arises, it is evident that this liability arises only on account of this transaction and not otherwise.
There is a direct nexus between the transaction and charging of interest, etc., therefore, it is not correct to say that the question raised in the application on which the advance ruling has been sought is not relatable to any transaction undertaken by the applicant. It is, therefore, clear that the application is maintainable.
9. Mr. D, the applicant's advocate, arguing for the applicant, submitted that the ABC Bombay was bound by the provisions of the Central Treasury Rules (CTR). Sub-clause (b) of Clause (1) of Rule 79 of the Central Treasury Rules specifically provides that in the event of the cheque being dishonoured on presentation the fact shall be reported at once to the tenderer with a demand of payment in cash and the dishonoured cheque should be returned to the tenderer on surrendering the preliminary acknowledgments of the receipt of the cheque or any token previously granted.
10. It was pointed out to him, that those rules are not applicable to payments of central revenue after June 1, 1983, and that the Central Government Account (Receipts and Payments) Rules, 1983 (RPR), are applicable instead. He conceded the point but argued that the provisions of the RPR are almost identical to the provisions of the Central Treasury Rules in this regard inasmuch as Clause (b) of Rule 19(1) of the RPR is an exact duplication of Clause (b) of Rule 79 of the Central Treasury Rules and reads as below ; " (b) In the event of the cheque or draft being dishonoured, the fact shall be reported at once to the tenderer with a demand for payment in cash and the dishonoured cheque or draft should be returned to the tenderer on surrendering the preliminary acknowledgment of the receipt of the cheque or draft or any token previously granted. The Government cannot, however, accept any liability for loss or damage which may possibly occur as a result of delay in intimating that the cheque or draft has been dishonoured.
Note : The challan accompanying the cheque or draft and presented to the bank should not be returned to the tenderer when the dishonoured cheque or draft is returned to him but should be retained and destroyed in due course." 11. He argued that the ABC has failed in its duty, imposed by the Central Treasury Rules to inform the tenderer (the applicant) about the cheque being dishonoured ; and, had this been done at once in compliance with the Central Treasury Rules, the applicant would have paid the tax immediately and would have been saved of this predicament.
If the bank has failed in its duty, the applicant cannot be made responsible for the consequent interest. The applicant's counsel also relied upon a circular issued by the C. B. D. T. No. 261 (see [1979] 120 ITR (St.) 7), dated August 8, 1979, providing, inter alia, that if a cheque or draft is presented for payment of the Government dues and is honoured on presentation, under the provisions of Rule 80 of the Central Treasury Rules, the payment is deemed to have been made on the date on which the cheque was handed over to the Government bank.
Placing reliance on this, Mr. D submitted that the same cheque dated March 10, 1994, was represented and was honoured, and, therefore, in accordance with this circular the payment is deemed to have been made on March 15, 1994, or latest by March 16, 1994, on which date the money was received by XYZ, Bombay, from London.
12. He also placed reliance on two decisions of the Supreme Court and four decisions of the different High Courts, which are listed below :Damadilal v. Parashram, AIR 13. The essence of these decisions is that if the payment is made by a cheque which is honoured on presentation after some delay the payment relates back to the date when the cheque had been received by the bank.
14. The Deputy Commissioner of Income-tax arguing on behalf of the Commissioner of Income-tax submitted that the applicant has stated that four cheques were deposited by the chartered accountants representing the applicant on March 15, 1994 (one of which was the applicant's cheque under reference). This cheque and one more cheque of the sister company was riot honoured by the XYZ, Bombay. Although the same cheque was presented later it was presented with a new challan for payment of tax. Therefore, the date of encashment should be taken as the date of presentation of the second challan and not the date of presentation of the original challan on March 15. It was also submitted that out of the four cheques presented by the same messenger two challans are admitted to have been received in March itself, but no efforts were made by the applicant or its representative to check from the ABC or from the XYZ, Bombay as to why the two other challans which were deposited on the same date did not come back. They could realise only on April 6, 1994, that they should go and contact the ABC, Bombay, to know the fate of the two challans. On this date they met some senior officials of the bank when they were informed that the cheque had been dishonoured by XYZ, Bombay, therefore, the tax could not be paid into the Government account. Although, it has been stated on behalf of the applicant that its messenger had visited the bank on March 30, 1994, the officials of the SBI have not admitted it. In any case, no efforts were made to ascertain the fate of the two challans on March 30, 1994, as any prudent taxpayer would have done. It is stated that on account of bank holidays on March 31, April 1, April 2, and April 3, 1994, they could not contact the ABC, but there is no explanation again why on April 4 and April 5, 1994, no effort was made to get the challans.
15. The Deputy Commissioner of Income-tax submitted that a person dealing in shares is meticulous about the rise and fall in the share market and exchange rates, etc. ; therefore, it is not explained how the applicant and his representative became complacent only with regard to the tax payments and did not bother to ascertain whether the cheque, which was presented on the last date prescribed under Section 211 of the Act, was in fact, honoured or not, especially when the applicant did not have any account with XYZ, Bombay, which was to honour the cheque or with ABC, Bombay, which was to present the cheque. He further submitted that the applicant issued a cheque from London on March 10, 1994, but did not ensure that the money was also remitted from the London office of XYZ to the Bombay branch of XYZ before the cheque is presented. From the papers submitted by the applicant, it is evident that the applicant's account in the XYZ, London, was debited for this amount only on March 15, 1994, and the amount was transferred by micro-wire (which permits a person having an account in London to draw a cheque on the Bombay branch of the same bank). He pointed out that even the date of March 15, 1994, appearing in the copy of accounts filed by the applicant has been made by hand. But, in any case, it is admitted by the XYZ, Bombay, that the amount had not been received by March 16, 1994, when the ABC, Bombay, presented the cheque to XYZ, Bombay. The ABC, Bombay, has stated vide their letter dated March 20, 1995, that they do not represent dishonoured cheques. It was submitted that, on being dishonoured, the cheque does not continue to be a negotiable instrument, therefore, it has to be taken back by the depositor and the consequences of dishonour would follow.
16. As regards the applicant's reliance on the decisions of the Supreme Court and the High Courts mentioned above, the Deputy Commissioner of Income-tax submitted that none of these decisions are applicable to the facts of the present case because in all those cases the same cheque with the same challan or the pay-in-slip had been honoured although there was long delay in presentation of the cheques by the receiving persons on account of negligence or otherwise. None of these cheques had been dishonoured on presentation and, therefore, the courts had held that the payment will relate back to the date on which the cheques were presented by the tenderer to the bank. The circular of the Central Board of Direct Taxes also lays down the same procedure and it specifies that the payment would be deemed to have been made on the date on which the cheque was handed over to the Government banker only if the cheque is honoured. He reiterated that the applicant did not act like a prudent taxpayer and did not take adequate steps to check from the banks as to whether the money was actually received by the XYZ, Bombay, from London or not. Even the officers of the ABC, Bombay, were contacted only on April 6, 1994, and there is nothing to indicate that the messenger of the applicant had contacted any official of the ABC on March 30, 1994. He might have only seen the notice board in the bank indicating the dates, for which challans were available for collection.
Obviously, that board does not indicate the fate of a dishonoured cheque and if the messenger did not find the challan till March 30, 1994, the applicant and its representative should have been alert enough to enquire about the fate of the cheque and challans from both the banks by meeting senior officials because a very heavy amount of tax was involved in this transaction and the date of payment was of crucial importance.
17. The facts mentioned by both the parties needed confirmation from the XYZ, Bombay, and from the ABC, Bombay ; therefore, another Commissioner of Income-tax, who was holding jurisdiction over both the banks, was requested to verify the facts from the concerned banks. The XYZ, Bombay, vide letter dated April 3, 1995, informed that the two cheques were received in clearing by the XYZ, Bombay, on March 16, 1994, (one cheque belonged to the sister company, one cheque was its own) but the advice for payment for both these cheques had not been received from the London branch due to the time zone difference. The said cheques were returned to the ABC, Bombay, with a request to represent the cheques as per normal clearing settlement procedure and that these cheques were, not really dishonoured. However, it is admitted that the applicant-company did not maintain an account with the XYZ, Bombay, and that the amount in question was received on transfer from its London branch on March 17, 1994.
18. The ABC, Bombay, has, however, stated that it is not their procedure to represent a cheque for payment if it is returned unpaid on presentation and that there is no practice to intimate the tenderer regarding return of instruments as they are expected to collect the receipt/counterfoils within 15 days of exchanging the tokens issued at the time of acceptance of challans. If the cheques are returned unpaid the same are delivered to the tenderer and, in the instant case, the unpaid cheques were returned when the tenderer contacted the banker. On further verification of the procedures, the ABC, Bombay, informed vide letter dated April 25, 1995, that the tenderer's representative was intimated by the bank in person on April 6, regarding the dishonoured cheque when he called for collecting the receipted challans. He was also advised to pay a handling charge of Rs. 20 to collect the related returned instruments (cheques), which he did on April 7, 1994. It is also stated that a lot of other Government challans received on March 15, were ready for delivery on March 25, 1994. The ABC has further stated that the cheques under reference were presented to the XYZ, Bombay, through clearance on March 16, 1994, which were dishonoured vide their return memo dated March 16, 1994, and the information of the dishonour of the cheques was received by the ABC through clearing process on March 17, 1994.
19. The bank has naturally not been able to say anything about the contention of the applicant that its messenger had visited the bank on March 30, 1994, as well. Mr. K., an assistant of the chartered accountants of the applicant, has stated that he himself made enquiry from the cashier of his firm on March 30, 1994, and learnt that receipted challans on that date were available only in respect of payments made up to the first week of March, 1994. The ABC, Bombay, has categorically stated in its letter dated April 25, 1995, addressed to the Deputy Commissioner of Income-tax, Bombay, that according to their records (which were inspected by two Inspectors of the Income-tax Department) duly receipted challans received on March 15, 1994, were ready for delivery on March 25, 1994. This statement and the records inspected by the Inspectors of Income-tax on behalf of the Authority are more reliable, and, therefore, acceptable and we cannot be guided by the averment made by Mr. K based upon some oral or telephonic conversation with the cashier of his firm.
20. After examining the material placed before us by the applicant, by the Commissioner of Income-tax and obtained by us from the two banks, we find that the applicant's representative deposited with the ABC, Main Branch, a cheque No. xxxxx xxxxx dated March 10, 1994, for the required amount drawn on XYZ, Bombay, along with the advance tax challan, drawn on XYZ, Bombay. This cheque was sent for clearing by the ABC, Bombay, to the XYZ, Bombay, on March 16, 1994, which returned the cheque unpaid with the remarks "Advice not received. Please present after two days". Though this memo is dated March 16, 1994, it was received by the ABC on March 17, 1994, through clearing process. It is noticed that the paper token issued by the ABC dated March 15, 1994 [exhibit-A(ii) with the application], has listed six important points giving the details of the procedure followed by the ABC with regard to the clearing of such cheques. It advises the tenderer to exchange the token for the bank receipt within 15 days failing which a search fee of Rs. 3 would be charged and if the delivery is not taken within three months, the challan will be destroyed and the token issued would be treated as cancelled. The sixth point relates to challans/instruments returned unpaid which is quoted below ; " The challans/instruments returned unpaid or not collected within three months from the date of delivery indicated above (15 days from the deposit) will be destroyed without reference to the remitter and token issued will be treated as lapsed." 21. The chartered accountants of the applicant made an effort only on March 30, 1994, for the first time to collect the challans but only two challans deposited on March 15, 1994, were found and the other two challans deposited on the same date one after the other were not found on the relevant counter. No serious effort was made by the applicant or its representative on March 30 to know the reasons for those two challans (one of which was relevant to the applicant and the other one was relevant to the applicant's sister company) not being available.
March 31 was the last date of the grace period allowed under the proviso to Section 211 of the Act ; therefore, the representative of the applicant should have been seriously concerned when he found that the two challans had not been received on March 30. Accordingly, they should have acted prudently by taking steps to know the reasons for this not only from the ABC, Bombay, but also from the XYZ, Bombay, and the XYZ, London, but no such effort was made.
22. Thereafter, there was a lull and a part of it was on account of bank holidays in India. No effort in this direction, however, was made on April 4 and 5, 1994, and there is no explanation for that lapse. On April 6 and 7, 1994, the applicant did whatever was possible which should have been done on March 30 itself. They obtained the original cheque dated March 10, 1994, by paying a fee of Rs. 10 and presented the same cheque along with a fresh challan, which was accepted by the ABC, Bombay, on April 15, 1994. This cheque was presented to the XYZ, Bombay, on April 16, and was honoured on the same date and the receipted challan was issued by the ABC on April 16, 1994.
23. On the basis of the facts discussed in this ruling we agree with the submissions made on behalf of the Commissioner of Income-tax that the decisions cited by the applicant relate to cheques which are honoured on presentation- In those cases, there were delays on account of negligence of persons other than the tenderers of the cheques and, therefore, the courts had held that the date of deposit of the cheque would be deemed to be the date of actual payment. This view finds place also in the rules and the circular of the Central Board of Direct Taxes which have been relied upon by the applicant which also talk of a situation where a cheque is honoured on presentation. They do not apply to a case where the cheque is returned unpaid, for whatever reason.
24. Much is made of the fact that the same cheque was redeposited by the applicant with a fresh challan on April 15, 1994, and it is claimed that the payment should be related back to the date of its original presentation, viz., March 15, 1994. This contention cannot be accepted.
It may be that in form the applicant had represented the same cheque to the ABC, Bombay, but since the cheque originally deposited on March 15, 1994, had been returned unpaid, the presentation was in truth and reality, the deposit of a fresh cheque and its realisation can be traced back only to the date of the second presentation. The applicant's argument carries an air of plausibility only because the cheque was represented on April 15, 1994, itself after the unrealised cheque was returned to the applicant, but its untenability would become manifest if we consider a slightly different situation. Suppose the applicant, after taking back the cheque on April 7, 1994, had not been in a position to represent it, either due to lack of funds or some other disability or unforeseen cause, and had represented it, say a month later, could it argue, on the principle now urged, that since the same cheque had been redeposited, its payment should be related back to the date of original deposit We think the answer should be an emphatic "no". To accept the applicant's argument would lead to absurd consequences and result in the abuse of banking procedures. A person without sufficient funds in his bank could issue a cheque and taking advantage of the time gained in the process of presentation and return, or perhaps by persuading his banker to return the cheque with an endorsement that it should be represented after some days, arrange for funds in the meantime and claim retrospective effect of the payment to a date on which the cheque could not have been honoured by the bank. We are, therefore, of the view that once the cheque issued on March 15, 1994, had been returned on March 17, 1994, it had ceased to be a live instrument and could not be rejuvenated by a fresh presentation on a subsequent date. The return of the original cheque by the XYZ, Bombay, with an endorsement seeking representation after two days has no meaning and means nothing more than that the cheque had been returned unpaid on presentation. Our attention has not been drawn to any rule or principle of banking law which casts an obligation on the collecting banker to represent a dishonoured cheque if so suggested or instructed by the drawee bank. In this context, it has also to be borne in mind that, having failed to persuade the ABC to represent the same cheque, the applicant took it back and presented it with a fresh challan on April 15, 1994. To take this as a deposit of the same cheque would render this step meaningless. It may be that to avoid the delay that may be involved in getting a fresh cheque or for other reasons, best known to it, the applicant may have chosen to redeposit the same cheque with the fresh challan, it can be considered in law only as the fresh deposit of a fresh cheque.
25. Great emphasis is laid on behalf of the applicant on the failure of the ABC, Bombay, to return the dishonoured cheque to the applicant as soon as it was received from the XYZ, Bombay, on March 17, 1994. In this context, it is very important to appreciate the practical situation created by the enormous increase of banking transactions and in particular the phenomenal load of work which banks have to carry on or around the 15th of March every year. It would be unreal and impractical to expect the ABC to intimate promptly to every customer the fate of the cheques delivered to it for realisation, Perhaps, the obligation cast by the Rule 79(1)(b) of the Central Treasury Rules and Rule 17(1)(b) of the RPR on the ABC (as one of the wings of the treasury) should be restricted, as contended for by the bank, only to cases where the tenderer is a customer of the ABC. But that apart, it is seen that Clause (2) of Rule 79 of the Central Treasury Rules as also Clause (2) of Rule 19 of the RPR provide that the Government may, in relation to any particular transaction involving the payment of the Government dues, issue orders varying or relaxing any of the conditions prescribed in this rule. The procedure for presentation and representation of cheques, for the issue of tokens for challans and for allied matters must have been drawn up in the light of some orders or instructions in that regard. Therefore, when the ABC has laid down a procedure of not presenting a cheque again on being returned unpaid and when the paper token issued by the ABC at the time of the receipt of the cheque clearly requires that the challans/instruments returned unpaid should be collected by the tenderer himself, the procedure described in Sub-clause (b) of Clause (1) of these rules would no longer be applicable to the bank. Therefore, the applicant cannot take shelter under this rule and plead that the ABC on its own should have intimated the applicant although it was not an account holder in that bank.
26. As we have already pointed out, the records of the ABC, Bombay, indicate that the challans in respect of cheques deposited on March 15, 1994, were ready for delivery by March 25, 1994, and the averment of the applicant runs counter to this. The token issued on receipt of the cheque and challan itself casts an obligation on the depositor to exchange the token for a receipt within 15 days as well as a right to insist on a search for the challan. The applicant was fully aware that the 31st March was the critical date for the payment of this huge sum and it is somewhat surprising that it made no efforts on the 30th itself to contact the higher officers in the ABC, Bombay, or even to contact and ascertain from the XYZ, Bombay, whether the cheque had been presented and cleared. This was a very simple step which it could and should have taken instantly when, it is said, it found that the challan had not come back by March 30, 1994. The provisions of the rules, therefore, would be of no help to the applicant.
27. For the reasons stated above, we are of the opinion that the payment made by the applicant cannot be dated earlier to April 15, 1994, even on the basis contended for by the applicant. We would, however, like to point out that the position of the applicant is more untenable after the promulgation of the RPR. We have earlier referred to the fact that the present situation is governed by the RPR and not the Central Treasury Rules, with effect from June 1, 1983, We have also pointed out that though the applicant's counsel has conceded before us that the RPR would govern the payments on account of the Central Government, he argued that there is no material difference in the two sets of rules and we have so far proceeded on the assumption that he is right on this. But this assumption is not correct. There is a material difference between the two sets of rules which vitally affects the validity of the applicant's arguments based on the rules and judicial decisions which (except one) proceed not on the rules but on general principles. We find that Sub-clause (c) of Rule 19(1) of the RPR read with Sub-rule (1) of Rule 20 thereof makes it clear that the date of payment of the Government dues tendered in the form of cheque or draft shall be the date on which it was cleared and entered in the receipt scroll. Sub-rule (c) of Rule 19(1) also provides that the depositor must take suitable precaution to ensure that his cheque or draft reaches the bank in good time keeping in view the provisions of Rule 20. The applicant did not take this precaution and presented the cheque for an amount payable on March 15, 1994, only on that date and ran the risk of its delayed encashment or dishonour. This apart, Rule 20 of the RPR clearly marks a departure from Rule 80 of the Central Treasury Rules. Whereas, under the former, the payment through a cheque, honoured on presentation, dates back to the date of its tender to the bank, Rule 20 of the RPR provides differently. Under the new rule, which applies to the present case, even if the tender on April 15, 1994, is taken to be the tender only of the old cheque, the payment, on its realisation, can be deemed to have been made only when it was cleared and entered in the receipt scroll. This can only mean the date on which the bank receives intimation that the cheque has been honoured, for the cheque cannot be said to be cleared till then. That date, here, is only the April 16, 1994. This rule, it would seem modifies the principles of the decided cases relied on by the applicant in its applicability to such cases. Under the new set of rules, the date of payment of the dues can be taken to be only April 16.
28. The liability to interest under Section 234B arises if there is a default in payment of advance tax by March 31 of the financial year preceding the assessment year to which the income relates. But liability to interest under Section 234C arises if the instalments of advance tax are deferred. This Section, inter alia, provides exception to capital gains ; therefore, if there is a shortfall in instalments of advance tax on account of capital gains arising on or before March 15 (the last date of instalments) the entire amount of advance tax is payable by March 15, and, if the capital gain arises after March 15, but before April 1, the advance tax on the same must be paid by March 31. In this case, the capital gains arose in January, 1994, but the payment was delayed till the last permissible date and even then none bothered to ensure the transfer of money from London to Bombay quickly so that the cheque is honoured immediately on presentation. Even if the ABC had informed the applicant on March 17, 1994, that the cheque had been returned unpaid or if it had represented the cheque, the payment of advance tax could at best be deemed to have been made on March 17 or 18, 1994. Even in that situation, there would have been a default under Section 234C of the Act as the last date of March 15 was over.
29. On the facts and in the circumstances of the case, we find that cheque dated March 10, 1994, was returned unpaid by the XYZ, Bombay, therefore, the advance tax was not paid in March, 1994. Although the same cheque was represented by the applicant to the ABC on April 15, 1994, it cannot be taken to be a payment of advance tax in March, 1994.
This cheque was honoured on April 16, 1994, therefore, the date of payment of tax would be April 15, 1994, even on the instructions of the Central Board of Direct Taxes and the decision of the courts cited above. Since the payment was not made on March 15, 1994, for the purposes of Section 234C or till the grace period up to March 31, 1994, for the purposes of Section 234B, the provisions of Section 234B and Section 234C would apply and the applicant would be liable to pay interest in accordance with these provisions.
30. In the light of the aforesaid discussions, the Authority pronounces the following ruling on the question posed.
31. On the stated facts of the case, the payment of Rs. xx,xx,xx,xxx can be said to have been made, at the earliest, only on April 15, 1994, and, therefore, the applicant is liable to interest under Sections 234B and 234C of the Act.