Sujata Manohar, A.C.J:— The assessment year in this case is 1975-76. The assessee-company filed an estimate of advance tax payable on June 14, 1974. The estimated income was Rs. 80,00,000 and the total tax payable was Rs. 46,20,000. The first instalment payable, therefore, came to Rs. 15,40,000 being one-third of the total estimate. This was paid by the assessee before June 15, 1974. The second instalment due in September, 1974, was also paid accordingly. For the last and final instalment, an estimate was filed by the assessee on December 13, 1974, estimating the income at Rs. 1.03 crores. The total tax payable came to Rs. 59,48,250. The last instalment, therefore, was of Rs. 28,68,250 which was paid by the assessee.

2. The Income-tax Officer levied interest under section 216 of the Income-tax Act, 1961, for short payment of the first two instalments. The interest so levied was Rs. 39,846. The Commissioner of Income-tax (Appeals) has upheld this levy. Before the Tribunal, the assessee raised a plea based on a judgment of the Andhra Pradesh High Court in the case of CIT (Addl.) v. Vazir Sultan Tobacco Co. Ltd., [1980] 122 ITR 251. The assessee contended that interest under section 216 can be levied only if the assessee had underestimated the advance tax payable and the levy is not authorised if the assessee had underestimated the income. The assessee contended that so long as the Income-tax Officer had not made out a case that the first two instalments of taxes had been incorrectly calculated on the estimated income of Rs. 80 lakhs, no interest was leviable. This plea has been upheld by the Tribunal, which has remitted the matter to the Income-tax Officer for the purpose of considering whether there is any underestimation of advance tax not based on underestimation of income. From this finding of the Tribunal, the following question is raised at the instance of the Revenue:

“Whether, on the facts and in the circumstances of the case, and in law, the Tribunal was justified in setting aside the levy of the interest under section 216 and directing the Income-tax Officer to delete the levy if the underestimation of advance tax payable by the assessee was due to underestimation of current income?”

3. At the instance of the assessee one more question is also referred to us which is as follows:

“Whether, on the facts and in the circumstances of the case, the Tribunal was right in holding that the surtax liability of the assessee-company was not deductible in computing its income from business?”

4. As far as this latter question is concerned, it is agreed between the parties that in view of the decision in the case of Lubrizol India Ltd. v. Commissioner Of Income-Tax., [1991] 187 ITR 25 (Bom), the question must be answered in the affirmative and in favour of the Revenue. Hence, this question is answered accordingly.

5. In respect of the question which is before us at the instance of the Commissioner of Income-tax, it is necessary to examine the relevant provisions of the Income-tax Act. Section 209 of the Income-tax Act deals with computation of advance tax. Under sub-section (1)(a)(i) of section 209 advance tax has to be computed on the basis of the total income of the latest previous year in respect of which the assessee has been assessed by way of regular assessment. The income so ascertained has to be adjusted as set out in that section. However, in a case where an estimate is sent by the assessee under section 212(1), (2), (3) or (3A), the total income so estimated shall be substituted for the purposes of calculation of advance tax.

6. Under section 212(1) of the Income tax Act, 1961, if any assessee who is required to pay advance tax by an order under section 210 estimates at any time before the last instalment of advance tax is due in his case that, by reason of his total income for the relevant period being likely to be less than the income on which the advance tax payable by him under section 210 has been computed or for any other reason, the advance tax payable by him would be less than the amount which he is so required to pay, he may, at his option, send to the Income-tax Officer an estimate of the advance tax payable by him on the current income calculated in the manner laid down in section 209 and shall pay such amount of advance tax accordingly as set out in sub-section (1) of section 212. Under sub-section (2) the assessee may send a revised estimate of the advance tax payable by him before any one of the dates specified in section 211 and adjust any excess or deficiency in respect of any instalment already paid in a subsequent instalment or instalments.

7. Under sub-section (3A) of section 212, where the assessee by reason of his current income being likely to be greater than the income on which the advance tax payable by him under section 210 has been computed or for any other reason, is liable to pay advance tax which is more than 33⅓ per cent. of the latter amount, he shall, at any time before the date on which the last instalment of advance tax is due from him, send to the Income-tax Officer an estimate of the current income as well as of the advance tax payable by him on the current income calculated in the manner laid down under section 209, and he shall pay such amount of advance tax as set out in sub-section (2).

8. Section 215 provides that where, in any financial year, an assessee has paid advance tax under section 212 on the basis of his own estimate, and the advance tax so paid is less than seventy-five per cent. of the assessed tax, simple interest at the rate of twelve per cent. per annum from the 1st day of April next following the said financial year up to the date of the regular assessment shall be payable by the assessee on the amount of deficiency in tax.

9. Section 216 is as follows:

“Section 216. Interest payable by assessee in case of underestimate, etc.— Where, on making the regular assessment, the Income-tax Officer finds that any assessee has—

(a) under sub-section (1) or sub-section (2) or sub-section (3) or sub-section (3A) of section 212 underestimated the advance tax payable by him and thereby reduced the amount payable in either of the first two instalments; or

(b) under section 213 wrongly deferred the payment of advance tax on a part of his income;

he may direct that the assessee shall pay simple interest at twelve per cent. per annum—

(i) in the case referred to in clause (a), for the period during which the payment was deficient, on the difference between the amount paid in each such instalment and the amount which should have been paid, having regard to the aggregate advance tax actually paid during the year; and

(ii) in the case referred to in clause (b), for the period during which the payment of advance tax was so deferred.

Explanation.—….”

10. Section 216, therefore, deals with a situation where on making the regular assessment the Income-tax Officer finds that any assessee has underestimated the advance tax payable by him under the provisions of section 212. We are concerned in the present case with sub-section (3A) of section 212 where the assessee finds that his current income is likely to be greater than the income on which advance tax payable by him under section 210 has been computed. In this situation, he is required to send an estimate of his current income and of advance tax if the advance tax payable on his estimated current income is likely to exceed the amount of advance tax demanded under section 210 by more than 33 per cent. If the assessee in doing so, or under sub-sections (1), (2), (3) and (3A) of section 212, underestimates the advance tax, then he is liable to pay interest under section 216.

11. It is difficult to accept the contention of the assessee that in order to decide whether there is any underestimation of advance tax for the purpose of levy of interest under section 216, one should not take into account any underestimation of current income by the assessee. The estimation of advance tax under section 212(3A) is dependent on the estimation of current income. Therefore, it is not possible, artificially, to sever the two. Undoubtedly, there may also be other reasons for underestimation of advance tax such as an error in calculation or taking into account certain deductions which may be erroneous and so on. But section 216 refers to underestimation of advance tax under sub-sections (1), (2), (3) and (3A) of section 212. It does not limit such underestimation of advance tax to underestimation for reasons other than underestimation of current income.

12. It is true that the Andhra Pradesh High Court in the case of CIT (Addl.) v. Vazir Sultan Tobacco Co. Ltd., [1980] 122 ITR 251 has taken a view that the underestimation of advance tax payable by the assessee must not be due to underestimation of income on the part of the assessee, but for other reasons. Then only the provisions of section 216 for payment of interest can be invoked. It has held that if the advance tax happens to be underestimated as compared to the actual income ascertained at the end of the year, then the provisions of section 216 are not attracted; because, in terms, the Legislature has not provided in section 216 for the consequences of underestimation of income.

13. However, the estimate of advance tax is interlinked with the estimate of current income under section 212. The two cannot be artificially delinked. The Calcutta High Court has differed from this conclusion arrived at by the Andhra Pradesh High Court. In the case of Pasupati Das and Sons Pvt. Ltd. v. CIT, [1988] 170 ITR 110, the Calcutta High Court has held that even if advance tax is underestimated by reason of underestimation of the assessee's current income as compared to the final income actually ascertained at the end of the year, then the provisions of section 216 of the Income-tax Act, 1961, would be attracted. In the case before the Calcutta High Court, the question related to underestimation of the second instalment of advance tax payable on or before December 15, 1976. Both the Commissioner and the Tribunal had found that by December 15, 1976, the major part of the transactions of the assessee in its business by way of sales of seeds had taken place. On the basis of the same, by December 15, 1976, the assessee was in a position to estimate the correct amount of advance tax payable by it and pay the second instalment on such basis. On the facts found, it would have been open to the authorities to come to a finding that the assessee had underestimated the advance tax payable by it so far as the second instalment was concerned. But this formal finding had not been recorded either in the order of the Commissioner or in that of the Tribunal. This was one of the reasons why the Calcutta High Court declined to answer the question referred to it. Therefore, ultimately, whether there is or there is not an underestimation of advance tax payable by the assessee will depend upon the facts of each case. The estimate of advance tax by the assessee under section 212 depends on his estimate of current income. Hence for the purpose of deciding whether there is any underestimation of advance tax under section 216, underestimation of current income cannot be excluded. In the premises, the question which is referred to us at the instance of the Commissioner of Income-tax is answered in the negative and in favour of the Revenue.

14. In the circumstances of the case, there will be no order as to costs.