2010 (5) TMI 719 - AT - Income Tax

Summary

Issues Involved:
1. Rejection of application under section 154.
2. Determination of the date from which TDS credit should be allowed for computing interest under sections 234A and 234B.

Issue-wise Detailed Analysis:

1. Rejection of Application under Section 154:

The assessee challenged the rejection of their application under section 154 by the Assessing Officer, which was confirmed by the Commissioner of Income-tax (Appeals). The application sought rectification of the computation of interest under sections 234A and 234B. The assessee argued that the Assessing Officer ignored the ratio of several judgments, including those of the Supreme Court and the jurisdictional High Court. The Tribunal noted that the assessee filed a petition under section 154 on October 23, 2008, and referenced the Tribunal's earlier decision which directed that TDS should be reduced from the amount of tax payable for the computation of interest under sections 234A and 234B. The Tribunal found that the Assessing Officer had reduced the TDS amount only from April 20, 2001, the actual date of TDS, rather than from the beginning of the period for which interest was charged. The Tribunal agreed with the assessee that the TDS should be reduced from the first date of the charging of interest, not from the date of actual TDS deduction.

2. Determination of the Date from which TDS Credit Should be Allowed:

The core issue was whether the TDS credit should be allowed from the date of actual deduction by the bank or from the first date of the period for which interest under sections 234A and 234B was charged. The Tribunal reviewed the facts, including the probate of will granted to the assessee and the subsequent receipt of interest income on fixed deposits. The Tribunal referenced the provisions of sections 234A and 234B, which require the TDS amount to be reduced from the assessed tax for interest computation. The Tribunal found no provision in these sections mandating that the reduction should be from the actual date of TDS deduction. Consequently, the Tribunal held that the TDS should be reduced from the assessed tax from the first date of the charging period for interest under sections 234A and 234B, not from the date of actual TDS deduction by the bank. This interpretation aligns with the Tribunal's earlier decision and the legal provisions.

Conclusion:

The Tribunal concluded that the Assessing Officer was incorrect in reducing the TDS amount from the date of actual deduction by the bank. Instead, the TDS should be reduced from the assessed tax from the first date of the period for which interest is charged under sections 234A and 234B. The Tribunal allowed all four appeals of the assessee, directing that interest computation should consider the TDS from the beginning of the relevant period. This decision was pronounced in the open court on May 31, 2010.