August 2008
S. 234B : Advance tax : Interest on shortfall in payment of advance tax — Interest is payable up to the date of regular assessment and not up to the date of AO consequential to the Tribunal order
By C. N. Vaze, Shailesh Kamdar, Chartered Accountants
Reading Time 2 mins
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Part A — Reported Decisions
40 (2008) 300 ITR (AT) 96 (Delhi)
Freightship Consultants P. Ltd. v. ITO
A.Ys. 1996-97 & 1997-98.
Dated : 25-5-2007
S. 234B — Advance tax — Interest on shortfall in payment
of advance tax — Interest is payable up to the date of regular assessment and
not up to the date of order passed by Assessing Officer in consequence of the
order passed by the Tribunal.
Facts :
The Assessing Officer did not allow the claim of the assessee
u/s.80-O of the Income-tax Act, 1961 for A.Ys. 1996-97 and 1997-98. On appeal,
CIT(A) allowed it in totality. However, in second appeal before Tribunal filed
by the Revenue, ITAT directed the AO to allow deduction u/s.80-O of the Act on
net income. As per the order of ITAT, the Assessing Officer determined the
income for both the years and issued demand notices and also charged interest
u/s.234B up to the date of assessment orders. The said demands were paid by the
assessee.
The AO subsequently passed order u/s.154 of the Act as he was
of the opinion that interest charged by him u/s.234B up to the date of
assessment was wrong and it should have been charged up to the date of
reassessment framed u/s.254/143(3) of the Act. This order was upheld by the
CIT(A). On appeal to the Tribunal it was held that :
(1) As per Explanation 1 to S. 234B of the Act, ‘assessed
tax’ means the tax on the total income determined u/s.143(1) or on ‘regular
assessment’ as reduced by amount of tax deducted or collected at source in
accordance with provisions of chapter XVII on any income which is subject to
such deduction or collection.
2. The Supreme Court in Modi Industries Ltd. v. CIT,
(1995) 216 ITR 759 laid down that ‘regular assessment’ has been defined in S.
2(40) to mean the assessment made u/s.143 or u/s.144.
3. Hence, it was the duty of the assessing officer to
charge interest u/s.234B of the Act up to the date of passing the assessment
order and not up to the date of order passed by him in consequence of the
order passed by the Tribunal.
Cases referred to :
(i) CIT v. Anjum Ghaswala, (2001) 252 ITR 1 (SC)
(i) Modi Industries Ltd. v. CIT, (1995) 216 ITR 759
(SC)
