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2015 (9) TMI 904 - AT - Income TaxInterest u/s 234C - Date of presentation of cheque - whether the interest charged u/s 234C is to be computed from the date of presentation/ tendering of cheque of tax payment into bank or from the date of clearance from the Bank Account of the assessee? - Held that - Cheques issued have not been dishonored and so respectfully following the judgment of CIT Vs. REPCO Home Finance Ltd (2014 (11) TMI 487 - MADRAS HIGH COURT ) and DIT( Exemption) v. Raunaq Education Foundation 2013 (1) TMI 239 - SUPREME COURT , we hold that interest u/s 234C of the Act should be computed from the date of presentation of the cheque of tax payment. We direct the Assessing Officer to compute the interest u/s 234C of the Act, accordingly - Decided in favour of assessee.
Issues Involved:
1. Charging of interest under Section 234C of the Income Tax Act, 1961. 2. Validity and applicability of CBDT Circular No. 261 dated 08.08.1979. 3. Date of payment consideration for advance tax: date of cheque presentation or date of cheque clearance. Issue-wise Detailed Analysis: 1. Charging of Interest under Section 234C of the Income Tax Act, 1961: The main grievance in the appeals was the charging of interest under Section 234C of the Income Tax Act, 1961. The assessee contended that the interest should be calculated based on the date of cheque presentation rather than the date of cheque clearance. The Centralized Processing Centre (CPC) had charged interest based on the date of cheque clearance, resulting in a higher interest amount than what the assessee had computed. The Tribunal held that the interest under Section 234C should be computed from the date of presentation of the cheque, provided the cheque is not dishonored. 2. Validity and Applicability of CBDT Circular No. 261 dated 08.08.1979: The assessee argued that the CBDT Circular No. 261 issued on 08.08.1979, which states that the date of tendering the cheque should be considered as the date of payment, was still valid and binding. However, the CIT(A) had noted that the circular was not binding due to the implementation of the Online Tax Accounting System (OLTAS). The Tribunal, relying on the judgment of the Hon'ble High Court of Madras in the case of CIT vs. REPCO Home Finance Ltd., held that the circular was still applicable, and the date of cheque presentation should be considered as the date of payment if the cheque is honored. 3. Date of Payment Consideration for Advance Tax: The primary issue was whether the date of payment for advance tax should be the date of cheque presentation or the date of cheque clearance. The Tribunal referred to the Supreme Court's decision in CIT v. Ogale Glass Works Ltd. and the Hon'ble High Court of Madras's decision in CIT vs. REPCO Home Finance Ltd., which established that the date of tendering the cheque should be considered as the date of payment if the cheque is honored. The Tribunal directed the Assessing Officer to compute the interest under Section 234C from the date of cheque presentation. Conclusion: The Tribunal allowed the appeals of the assessee, holding that the interest under Section 234C should be computed from the date of presentation of the cheque, provided the cheque is not dishonored. The Tribunal also acknowledged the validity and applicability of CBDT Circular No. 261 dated 08.08.1979, which supports the assessee's contention. The appeals for the assessment years 2009-10, 2010-11, and 2011-12 were decided in favor of the assessee, following the same reasoning and legal precedents.
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