2004 (9) TMI 583 - AT - Income Tax

Summary

Issues:
1. Computation of deduction under section 80G of the Income-tax Act, 1961.
2. Levy of interest under section 234B for non-payment of advance tax.

Issue 1: Computation of deduction under section 80G:
The case involved a Co-operative Society claiming deduction under section 80G for donations made out of its taxable and non-taxable income. The Assessing Officer allowed the deduction but restricted it proportionately to the taxable and non-taxable income. The Commissioner of Income-tax (Appeals) ruled in favor of the assessee, stating that since the donation was made out of the entire income, the deduction should be allowed in full. The Revenue contended that proportionate deduction should be allowed as settled by previous court cases. The Tribunal held that the assessee is entitled to deduction under section 80G out of the taxable income without any partial disallowance, as the deduction is permissible when computing taxable income, regardless of non-taxable income. The Tribunal dismissed the Revenue's appeal on this ground.

Issue 2: Levy of interest under section 234B:
The dispute also involved the imposition of interest under section 234B for non-payment of advance tax. The Department argued that the interest was rightly imposed as the assessee failed to pay advance tax as required by law. The Commissioner of Income-tax (Appeals) canceled the interest, citing reasons related to conflicting court decisions and the assessee's estimation of income based on favorable decisions. The Tribunal, however, held that section 234B is mandatory, and the Assessing Officer must levy interest if advance tax is not paid. The Tribunal set aside the Commissioner's order and restored that of the Assessing Officer, emphasizing that past history or court decisions cannot justify non-payment of advance tax. The Tribunal allowed the assessee to seek waiver of interest if permissible.

In conclusion, the Tribunal upheld the assessee's right to full deduction under section 80G from taxable income and reinstated the interest levy under section 234B for non-payment of advance tax, emphasizing the mandatory nature of the provision. The Tribunal partly allowed the Revenue's appeals for statistical purposes.