2009 (8) TMI 1276 - AT - Income Tax

Summary

Issues involved:
The appeal concerns the computation of interest under Section 234C of the Income-tax Act, 1961 for the assessment year 1996-97.

Computation of Interest under Section 234C:
The Assessee had income from long-term capital gains in 1995, and the Assessing Officer charged interest under Section 234C. The Assessee contended that the interest was wrongly charged. The dispute revolved around whether advance tax on long-term capital gains should be paid immediately or after the date of sale. The CIT(A) upheld the Assessing Officer's order, stating that the amendment to Section 234C was prospective.

Arguments and Analysis:
The Assessee argued that the amendment was retrospective, citing the Finance (No. 2) Bill 1996 and relevant case law. The revenue contended that the amendment was not retrospective. The Tribunal analyzed the provisions of Section 234C, emphasizing the payment of advance tax in instalments for different types of taxpayers. The Tribunal referred to the Supreme Court's decision in Gold Coin Health Food (P.) Ltd.'s case regarding retrospective application of tax law amendments.

Decision:
The Tribunal found that the amendment to Section 234C was clarificatory and retrospective in nature. The Assessee had paid taxes in accordance with the post-amendment provisions, thus not in default under Section 234C. Consequently, no interest was chargeable under Section 234C, and the appeal by the Assessee was allowed.