What the courts have decided on section 211, in one screen. Read this first; open an entry when you need the facts, the reasoning and the source.
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CIT v Smt. Premlata Jalani
High CourtHelps taxpayer
My capital gain arose after 15 March, so I could not have paid advance tax on it in any instalment. The Assessing Officer has charged s.234C interest from the first instalment date. Can he?
No. The Rajasthan High Court held that the liability to pay advance tax on a capital gain arises only once the gain has accrued, so interest under s.234C on the shortfall attributable to that gain can run only from the date the advance tax on it became payable, and not from any earlier instalment date. Where the gain arose after 15 March, the proviso required only that the tax be paid by 31 March, and interest ran for that period alone.
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Statutory position — s.210(3) to (6): the Assessing Officer's order to pay advance tax, the assessee's own lower estimate in Form 28A, and s.218 default
CBDT Circulars & InstructionsCuts both waysNo later treatment found
The Assessing Officer has served an order in February requiring my client to pay advance tax on the basis of an earlier year's assessed income. Can he do that, and what can my client do if the current year's income will be far lower?
He can, but only within the limits s.210(3) sets: the power exists only where the person has already been assessed by way of regular assessment for some previous year, it must be exercised 'at any time during the financial year but not later than the last day of February', it must be by order in writing, the tax must be calculated in the manner laid down in s.209, and a notice of demand under s.156 specifying the instalments must issue. If the current income will be lower, s.210(5) lets the assessee send an intimation in the prescribed form — Form No. 28A under rule 39 — and pay according to his own estimate instead; if it will be higher, s.210(6) obliges him to pay the higher amount by the last instalment date without waiting to be asked.
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Statutory position — s.219: advance tax is a payment of tax for the year, and credit for it must be given in the regular assessment
CBDT Circulars & InstructionsCuts both ways
The assessment order taxes the year but the computation sheet has not given credit for the advance tax my client paid, or has credited it to the wrong year. What is the statutory basis for insisting on the credit?
Section 219 is the answer and it is a single sentence: any sum, other than a penalty or interest, paid by or recovered from an assessee as advance tax in pursuance of Chapter XVII shall be treated as a payment of tax in respect of the income of the period which would be the previous year for an assessment for the assessment year next following the financial year in which it was payable, and credit therefor shall be given to the assessee in the regular assessment. So the section does two things: it characterises advance tax as a payment of tax rather than a deposit, and it fixes the year to which that payment belongs by reference to the financial year in which the tax was payable.
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Statutory position — the first proviso to s.234C(1): no interest for a shortfall caused by capital gains, casual income, first-year business income or dividend income
CBDT Circulars & InstructionsCuts both ways
My client sold a property in February and paid the whole tax on it with the March instalment. The intimation still charges s.234C interest on the June, September and December instalments. Is there a defence in the section itself?
Yes, and it is in the section itself rather than in any circular. The first proviso to s.234C(1) disapplies the sub-section to any shortfall in the payment of tax due on the returned income where the shortfall is on account of under-estimate or failure to estimate (a) the amount of capital gains, (b) income of the nature referred to in s.2(24)(ix) — casual income such as winnings from lotteries, crossword puzzles and races, (c) income under the head 'Profits and gains of business or profession' in cases where the income accrues or arises under that head for the first time, or (d) the amount of dividend income. The relief is conditional: the assessee must have paid the whole of the tax payable in respect of that income, computed as if it were part of the total income, as part of the remaining instalments of advance tax which are due, or where no such instalments are due, by 31 March of the financial year.
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Statutory position — s.211: the four advance tax instalments, and the single 15 March instalment for a s.44AD or s.44ADA presumptive assessee
CBDT Circulars & InstructionsCuts both ways
My client returns income under s.44AD. The CPC has charged s.234C interest on four instalments. Is a presumptive assessee not entitled to pay the whole advance tax by 15 March?
He is. Section 211(1) now splits assessees into two classes: clause (a) covers 'all the assessees, other than the assessee referred to in clause (b)', who pay in four instalments — fifteen per cent by 15 June, forty-five per cent by 15 September, seventy-five per cent by 15 December and the whole by 15 March, each cumulative and reduced by earlier instalments; clause (b) covers 'an assessee who declares profits and gains in accordance with the provisions of sub-section (1) of section 44AD or sub-section (1) of section 44ADA', who pays 'to the extent of the whole amount of such advance tax during each financial year on or before the 15th March'. Section 234C(1)(b) mirrors this exactly, charging a presumptive assessee interest only on the shortfall from the tax due on the returned income as at 15 March.
Listed strongest first: Supreme Court, then High Court, then Tribunal, then CBDT. Nothing here has yet been read in full by a chartered accountant — open an entry to see where it came from.
