2007 (9) TMI 668 - HC - Income Tax

Summary

Issues involved: Appeal under Section 260A of the Income-tax Act, 1961 against the deletion of interest under Section 215/217 of the Act for assessment year 1987-88.

Summary:
The case involved an appeal by the revenue against the deletion of interest under Section 215/217 of the Income-tax Act, 1961 for the assessment year 1987-88. The assessee had been claiming exemption under Section 10(29) of the Act, which was withdrawn by the Assessing Officer based on judgments of different High Courts and the Supreme Court. The Assessing Officer charged interest under Section 215/217, which was later deleted by the CIT (A). The Tribunal upheld the deletion of interest, stating that the assessee was not liable to pay advance tax based on relevant court decisions. The High Court, after considering the arguments, referred to a Division Bench judgment which held that interest under Section 234B and 234C can only be charged if there is a failure to pay advance tax, which was not the case here. The High Court further emphasized that the assessee acted in good faith based on the prevailing legal decisions and cannot be held liable for advance tax retrospectively. Therefore, the question was answered against the revenue based on the Division Bench judgment.

This summary provides a detailed overview of the legal judgment, highlighting the key issues and the reasoning behind the decision to delete the interest under Section 215/217 of the Income-tax Act, 1961 for the assessment year 1987-88.