1997 (11) TMI 487 - AT - Income Tax

Amount so adjusted for liability of tax should be treated as advancer tax for the purpose of computation of interest u/ss.234A 234B and 234C insofar as the claim for non-levy of interest there under is an appealable issue.

Summary

Issues:
1. Levy of interest under section 234A, 234B, and 234C.
2. Treatment of seized cash as advance tax for interest computation.
3. Deduction under Chapter VI-A for investments made.

Levy of Interest under Section 234A, 234B, and 234C:
The dispute centered around the assessment year 1989-90, involving the levy of interest under the mentioned sections. The Assessing Officer had assessed the appellant under section 143(3) and imposed interest. The appellant contended that a sum of Rs. 1,50,000, seized during a search, should be considered as tax paid in advance for interest calculation purposes. The appellant's argument was supported by citing a previous Tribunal decision. The Tribunal, after considering the facts and legal provisions, agreed with the appellant's contention. It held that the seized cash, adjusted against tax liability, should be treated as advance tax, potentially eliminating the interest chargeable under the mentioned sections. The matter was remitted back to the Assessing Officer for appropriate consideration.

Treatment of Seized Cash as Advance Tax for Interest Computation:
During a search and seizure action, Rs. 1,50,000 was seized, and the appellant requested its adjustment against tax liability. The Revenue retained the seized amount as the likely tax liability exceeded the seized cash. The appellant argued that the seized amount should be considered as advance tax payment for interest computation, relying on a Tribunal decision. The Tribunal agreed with the appellant, stating that the seized cash, when adjusted against taxes due, should be treated as advance tax. It directed the Assessing Officer to examine the appellant's claim of no interest under the mentioned sections if the seized amount is considered advance tax.

Deduction under Chapter VI-A for Investments Made:
The Revenue's appeal revolved around the denial of a deduction under Chapter VI-A for investments made by the appellant. The Assessing Officer rejected the deduction, claiming the investments were not from the current year's taxable income. However, the CIT(A) allowed the deduction, noting that the investments were made from earlier years' taxable income. The decision was supported by legal precedents. The Tribunal dismissed the Revenue's appeal, upholding the CIT(A)'s finding and the legal references provided. Consequently, the appellant's appeal was allowed, and the Revenue's appeal was dismissed.