JUDGMENT
B.C. Patel, J.
1. The petitioner, by filing this petition under article 226 of the Constitution, has prayed for a writ of certiorari, quashing the order dated August 31, 1979, at annexure “E”, passed by the Commissioner of Income-tax, Gujarat-I, Ahmedabad, upholding the order of the Income-tax Officer refusing payment of interest, vide annexure “C”. The petitioner has also prayed for a writ of mandamus asking respondent No. 2, the Income-tax Officer, to grant interest under section 214 of the Income-tax Act, 1961 (hereinafter referred to as “the Act”).
2. The facts relevant to decide this petition shortly stated are as under :
The petitioner was assessed under the Act for the assessment year 1976-77, the corresponding accounting year being the financial year 1975-76. The petitioner was assessed on the income of Rs. 71,640 by the assessment order dated July 25, 1978, vide annexure “A” to the petition. As per the order passed by the Income-tax Officer, the total tax payable by the petitioner was Rs. 38,003 whereas tax deducted at source from the income of the assessee and paid to his account was Rs. 23,933. Therefore, the balance due and payable was Rs. 14,070. It is averred by the petitioner that the total advance tax paid during the year was Rs. 26,034 and there was excess payment of advance tax to the tune of Rs. 11,964. The petitioner, as he was entitled to get interest under section 214 of the Act, addressed a letter (annexure “B”) dated August 12, 1978, to the Income-tax Officer, inter alia, requesting him to grant interest. However, the said request was turned down by letter dated September 1, 1978, vide annexure “C”, holding that the instalments of advance tax were not paid on the due dates and, therefore, no interest can be allowed under section 214. The petitioner preferred an application dated August 3, 1979, under section 264 of the Act to the Commissioner of Income-tax pointing out the details that he is entitled to get interest of Rs. 3,213 under section 214 of the Act. By order dated August 31, 1979, the Commissioner of Income-tax rejected the above application, vide annexure “E”. This petition is directed against the impugned orders passed by the Income-tax Officer and the Commissioner of Income-tax.
3. It is an undisputed position that the amount of advance tax paid is in excess as mentioned hereinabove. Interest is denied only on the ground that the instalments of advance tax were not paid on the due dates, i.e., on September 15, 1975, December 15, 1975, and March 15, 1976, but the same were paid respectively on September 16, 1975, December 16, 1975, and March 22. 1976.
4. The learned advocate, relying upon the decision in the case of Chandrakant Damodardas v. ITO [1980] 123 ITR 748 (Guj), submitted that there is no indication in section 214 that the dates of instalments are strictly to be adhered to. It was submitted that in view of the language used in section 214 particularly with reference to the 1st day of April, and not with reference to the dates on which the instalments are actually paid by the assessee, it is clear that the Legislature intended to provide that irrespective of the dates on which the instalments of advance tax are paid, interest will be payable on the excess advance tax if two conditions are satisfied :
(i) The entire amount of advance tax is paid up, and,
(ii) It is paid up before the end of the financial year.
5. There is no further condition that the instalments of advance tax must be paid on or before the due dates mentioned in section 211.
6. In view of this decision, it is very clear that irrespective of the dates of payment, interest will be payable if the entire amount of advance tax is paid on or before the end of the financial year. In the instant case, these conditions are fulfilled and, therefore, the petitioner is entitled to get the amount of interest under section 214. In view of this position, there is no reason why this petition should not be allowed.
7. Mr. Shah, learned advocate, further submitted that the Government is liable to pay interest on the amount to tax paid in excess of the amount of assessed tax and the Government has withheld payment of interest wrongfully. Section 214 of the Act itself recognises in principles the liability to pay interest on the amount of tax paid in excess of the amount of assessed tax which is retained by the Government. Relying on a reported decision in the case of D. J. Works v. Dy. CIT [1992] 195 ITR 227 (Guj), the learned advocate submitted that the Government is liable to pay interest on the interest amount at the same rate at which interest is payable on the excess amount refundable to the assessee. Excess tax cannot be returned without payment of interest. So also, interest which is payable thereon cannot be retained without payment of interest. The court, while deciding the above case, observed that there is no specific provision for payment of interest on the interest amount. Interest would be payable at the same rate at which the excess amount carries interest. In other words, the court held that the amount payable by way of interest would carry simple interest at the rate of 15 per cent. per annum from the date it became payable to the date it is actually paid. The court held that (headnote) :
“The Government is liable to pay interest, at the rate applicable to the excess amount refunded to the assessee, on the interest amount which had become due under section 214(1) of the Act.”
8. In the instant case, so far as interest on interest is concerned, as per the provisions of the Act, at the relevant time, from July 25, 1978, to September 30, 1984, the petitioner is entitled to get 12 per cent. interest on the amount of Rs. 3,213. The Legislature has allowed 15 per cent. interest from October 1, 1984, onwards and, therefore, the petitioner is entitled to get 15 per cent. interest on the said sum till the date of payment, in view of the aforesaid decision.
9. In the light of the aforesaid discussion, it is clear that the view taken by the Income-tax Officer (annexure “C”) and the order passed by the Income-tax Commissioner (annexure “E”) are erroneous and contrary to the settled principles of law. Both the aforesaid orders, therefore, are hereby quashed and set aside. We direct the respondents to pay interest of Rs. 3,213 as prayed for, vide annexure “B”, and interest on this amount at 12 per cent. per annum from July 25, 1978, to September 30, 1984, and at 15 per cent. from October 1, 1984, till the date of actual payment. Rule is made absolute accordingly, with no order as to costs.