2011 (8) TMI 1290 - AT - Income Tax

Summary

Issues involved: Appeal against order of ld. CIT(A) restricting charging of interest u/s 234B from 1/4/1997 to 31/3/2000.

Brief facts: Assessee filed return declaring income at &8377; 2,02,450. Scrutiny assessment u/s 143(3) determined total income at &8377; 21,16,497 with additions for labour payments and work in progress. CIT(A) granted relief but sustained some additions. Tribunal confirmed disallowance of labour expenses and set aside addition for work in progress. Issue of interest u/s 234B was also contested.

Tribunal's decision: Tribunal directed AO to compute interest u/s 234B for the period 1/4/1997 to 31/3/2000. Revenue appealed, arguing interest can be charged up to the date of order u/s 254.

Arguments: Revenue relied on various decisions, while assessee cited the case of Freightship Consultants (P) Ltd. vs. ITO. Tribunal analyzed sections 234B(1) and 234B(4) to determine the period for charging interest.

Legal analysis: Section 234B mandates interest from 1st April following financial year to date of income determination u/s 143(1) or regular assessment u/s 143(3). Section 234B(4) deals with adjustments but does not specify the period for interest levy. Tribunal's decision aligned with precedent cases and held interest should be charged up to date of regular assessment.

Conclusion: Tribunal upheld CIT(A)'s decision to charge interest u/s 234B from 1/4/1997 to 31/3/2000. Revenue's appeal was dismissed.