Advance tax- Short payment- Interest u/s. 234CComputation of interest- A. Y. 2009-10- Interest u/s. 234C was to be calculated based on date of presentation of cheque for payment of tax and not on date of clearing of cheque

For the A. Y. 2009-10, the Assessing Officer charged interest u/s. 234C for late payment of advance tax on the basis of date of clearing of the cheque. The CIT(A) and the Tribunal held that the interest has to be charged on the basis of the date of presentation of the cheque and not date of clearing.

On appeal by the Revenue, the Madras High Court upheld the decision of the Tribunal and held as under:

“i) The core issue to be considered in this case is whether interest u/s. 234C is to be calculated based on date of clearing of the cheque or date of presentation of the cheque.

ii) The issue raised in this appeal is no longer res integra in view of the decision of the Supreme Court in CIT vs. Ogale Glass Works Ltd. [1954] 25 ITR 529, where it is held that the position is that in one view of the matter an implied agreement under which the cheques were accepted unconditionally as payment and on another view, even if the cheques were taken conditionally, the cheques not having been dishonoured but having been cashed, the payment related back to the dates of the receipt of the cheques and in law that dates of payments were the dates of the delivery of the cheques.

iii) It is not the case of the department that the cheque issued by the assessee was dishonoured. Once the cheque issued by the assessee is encahsed, in the light of the decisions referred (supra), the payment relates back to the date of receipt of the cheque.”