Section 234A — Taxes paid after the end of the previous year but before the due date of filing of return are to be considered while calculating interest u/s.234A.
Facts: The Assessing Officer had charged interest u/s.234A, u/s.234B and u/s.234C amounting to Rs.2,64,400, Rs.4,38,592 and Rs.1,31,588, respectively upon a total tax liability of Rs. 34,05,610.
Assessee had paid an amount of Rs.7,61,600 up to the last day of the previous year and further a sum of Rs.25,00,000 after the end of the previous year but before the due date of filing of return and Rs.4,38,592 after the due date of filing of return but before filing return.
However, for the purpose of calculation of interest u/s.234A, the Assessing Officer had treated an amount of Rs.7,61,600 only, that was paid up to 15-3-1994, as advance tax. He ignored the payment of Rs.25,00,000 though the same was paid before the due date of filing of return.
On appeal the Commissioner (Appeals) upheld that taxes paid after the financial year could not be treated as advance tax and therefore cannot be reduced from assessed tax for purpose of calculating interest u/s.234A.
Aggrieved by the decision of the CIT(A), the assessee preferred an appeal before the Appellate Tribunal.
Held:
Interest u/s.234A is compensatory in nature and not penal. It aims to compensate the Government for not getting its dues within the time limit provided u/s.139(1).
Therefore, if entire tax amount is paid before the due date of filing of return, though the assessee has delayed in filing the return, no interest is leviable u/s.234A.
The same view was also held by the Apex Court in the case of CIT v. Pranoy Roy & Anr., (309 ITR 231).
