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Issues involved: Whether seized amount should be considered as advance tax for computation of interest under Sections 234A, 234B, and 234C of the Income Tax Act, 1961.
Summary: 1. The appeal by the revenue questioned the Tribunal's direction to treat the date of seizure as the date of payment of advance tax for interest calculation u/s 234A, 234B, and 234C of the IT Act. 2. A search u/s 132 of the IT Act was conducted on the respondent-assessee in July 2006, resulting in the seizure of Rs. 41 lakhs. The respondent-assessee requested to adjust the seized amount against tax liability, but the AO and CIT(A) did not consider it as advance tax, leading to interest levied under Sections 234A, 234B, and 234C. 3. The Tribunal ruled that the seized amount should be treated as advance tax payment based on the assessee's statement during the search, thus exempting the Rs. 41 lakhs from interest under Sections 234A, 234B, and 234C. 4. The respondent's counsel cited a previous court decision where seized amounts were adjusted towards advance tax liability upon request, resulting in no interest under Sections 234B and 234C being chargeable. 5. The revenue's counsel argued against the applicability of the previous decision, stating the absence of a formal letter requesting adjustment. However, the Tribunal found the statement made by the respondent during the search to be sufficient for adjustment, dismissing the revenue's distinction. 6. The Court upheld the Tribunal's decision, citing precedent, and dismissed the appeal in favor of the assessee, emphasizing the adjustment of the seized amount for interest calculation under Sections 234A, 234B, and 234C. 7. The appeal was ultimately dismissed with no costs imposed.
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