Commissioner of Income Tax (Central), Ludhiana v. Upper India Steel Manufacturing & Engineering Co. (P) Ltd.

1. FACTS OF THE CASE

The assessee initially estimated advance tax of Rs.46,12,500 and paid two instalments of Rs.15,37,500. On 12 March 1982 it revised liability to Rs.68,88,000 and paid the balance with the final instalment. The Tribunal treated aggregate payment by year-end as sufficient to avoid section 216 interest.

Source: PDF p. 2

2. DISCUSSION BY THE COURT

The Court rejected the aggregate-payment approach. Comparable business activity showed no early decline or late surge; no satisfactory explanation for the lower instalments was supplied despite opportunity. The Court found deliberate underestimation on these facts.

Source: PDF p. 4

3. JUDICIAL DECISION

The reference was answered for Revenue and against the assessee: section 216 applied to the deliberately underestimated first two instalments.

Source: PDF p. 5

4. OUTCOME

The assessee remained liable to interest for the deferred instalments under the historical provision.

Source: PDF p. 5

5. Expert Comments

AKHB editorial analysis, distinct from the Court’s findings.

Year-end payment does not answer the instalment issue

The Tribunal’s aggregate approach ignored the statutory instalment basis. The Court focused on when the advance tax should have been paid.

Source: PDF p. 3

Deliberateness was established from the record

The judgment distinguished bona fide error by examining business comparisons and the absence of an explanation. It did not hold that every forecasting shortfall automatically proves deliberate underestimation.

Source: PDF p. 4

Use the correct statutory period

The dispute is AY 1982-83. Its reasoning should not be transplanted into a present-day interest computation without identifying the applicable statutory regime.

Source: PDF p. 1