CIT v. Gujarat Flouro Chemicals (2012) 348 ITR 314 (SC)

S. 214 : Advance tax – Interest payable by government – Tax deducted at source – Aggregate of advance tax/ TDS paid exceeds the assessed tax, advance tax or tax deducted at source loses its identity as soon as it is adjusted against the liability created by the assessment order and becomes tax paid pursuant to the assessment order hence the Judgment of Sandvik Asia requires reconsideration

Issue under consideration before the Apex Court was whether interest is payable by the Revenue to the assessee if the aggregate of installments of Advance Tax/TDS paid exceeds the assessed tax. The assessee relied upon Sandvik Asia Limited v. CIT (2006) 280 ITR 643 (SC) where it was held that the assessee was entitled to be compensated by the Revenue for delay in paying to it the amounts admittedly due. The apex court doubting the correctness of Sandvik Asia (supra) held that the judgement in Modi Industries Ltd. and Others v. CIT (1995) 216 ITR 759 (SC) correctly laid down that advance Tax or TDS loses its identity as soon as it is adjusted against the liability created by the assessment order and becomes tax paid pursuant to the assessment order. If Advance Tax or TDS loses its identity and becomes tax paid on the passing of the Assessment Order, then, is the assessee not entitled to interest under the relevant provisions of the Act? The Apex Court thus held that the view taken in Sandvik Asia was not correct and thus, directed the Registry to place this matter before Hon’ble the Chief Justice on the administrative side for appropriate orders.