2008 (2) TMI 658 - AT - Income Tax

Summary

Issues Involved:
1. Interest levied u/s 234B of the Income-tax Act.
2. Reference to interest charged u/s 234C.

Summary:

Interest Levied u/s 234B:
The appeals by the revenue for the assessment year 2006-07 challenge the consolidated order of the CIT (Appeals) which deleted the interest levied on the assessees u/s 234B of the Income-tax Act. The assessees, represented by Western Geco International Ltd. as their agent, had only salary income subjected to TDS. The Assessing Officer refused to allow the deduction u/s 10(10CC) and added tax paid on income through multiple grossing. The Special Bench of the ITAT in the case of RBF Rig Corpn. LIC v. Asstt. CIT held that the assessees were entitled to the deduction u/s 10(10CC), thus deleting the additional liability.

The CIT (Appeals) deleted the interest levied u/s 234B, citing that the entire income of the appellants was liable for TDS. The CIT (Appeals) relied on the decision of the Uttaranchal High Court in CIT v. Halliburton Offshore Services, where it was held that interest u/s 234B was not justified if the income was subject to TDS. The CIT (Appeals) also referenced other cases supporting the non-applicability of section 234B where there was no liability to pay advance tax.

The revenue's appeal was dismissed as the matter was fully covered against the revenue by the decision of the Uttaranchal High Court and the Special Bench of the Tribunal in Motorola Inc. v. Dy. CIT. The Tribunal noted that the Assessing Officer did not provide details for charging interest u/s 234B and that the entire income was liable to TDS. The Tribunal upheld the CIT (Appeals) order, confirming that the assessees were not liable to pay interest u/s 234B.

Reference to Interest Charged u/s 234C:
Although the grounds of appeal mentioned interest charged u/s 234C, it was accepted by both parties during the hearing that no interest was charged by the Assessing Officer u/s 234C, nor was any deleted by the CIT (Appeals). The mention of section 234C was stated to be inadvertent and was to be ignored. The Tribunal accepted these submissions.