2001 (7) TMI 260 - AT - Income Tax

Summary

Issues:
- Whether the Assessing Officer correctly computed interest under section 234A for late filing of the return.
- Whether the payments made by the assessee after the end of the accounting year should be considered while computing interest under section 234A.
- Interpretation of provisions of section 234A for computation of interest.
- Whether self-assessment tax paid under section 140A can be excluded while computing interest under section 234A.
- Applicability of the decision of ITAT in the case of Murtuzabhai Mohammedbhai.
- Impact of legislative amendments introduced by the Finance Act, 2001.
- Judicial interpretation of the statutory provisions regarding levy and computation of interest under various sections of the Income-tax Act.
- Whether credit for taxes paid after the end of the accounting year should be allowed while computing interest under section 234A.
- Whether the supposed hardships or inequitable consequences claimed by the assessee empower an appellate authority to modify or rewrite the statutory provision.

Analysis:

1. The appeal was filed by the revenue against the order of the CIT(Appeals) directing the Assessing Officer to give credit of tax paid under section 140A while calculating interest charged under section 234A of the Income-tax Act for assessment year 1992-93. The issue revolved around whether the payment made by the assessee after the end of the accounting year should be considered for computing interest under section 234A.

2. The Assessing Officer did not consider the payment made by the assessee after the end of the accounting year while calculating interest under section 234A. The CIT(A) held that such payment should be given credit while computing interest. The revenue argued that the provisions of section 234A clearly state that interest would be charged on the tax amount reduced by advance-tax and tax deducted at source.

3. The assessee relied on a decision of the Nagpur Bench of ITAT, arguing that self-assessment tax paid under section 140A should not be excluded while computing interest under section 234A. The Tribunal noted that the issue was beyond the scope of section 154 rectification, as the language of section 234A explicitly states that interest is calculated on total income reduced by advance-tax and tax deducted at source.

4. The Tribunal emphasized that the statutory position regarding the computation of interest under section 234A is clear, and only advance-tax and tax deducted at source should be considered for reducing the total income. The legislative amendments introduced by the Finance Act, 2001 clarified the provisions related to interest levy under sections 234A, 234B, and 140A.

5. Referring to a decision of the Gujarat High Court, the Tribunal highlighted that credit for taxes paid after the end of the accounting year should not be allowed while computing interest under section 234A. The Tribunal rejected the argument that such an approach would lead to injustice, stating that courts must adhere to the clear and unambiguous language of the statute.

6. The Tribunal dismissed the contention that supposed hardships or inequitable consequences could justify modifying or rewriting the statutory provision. It cited a decision of the Karnataka High Court, emphasizing that the levy of interest under section 234A is compensatory in nature, and hardships claimed by the assessee do not empower an appellate authority to alter the statutory provisions.

7. Consequently, the Tribunal reversed the findings of the CIT(A) and allowed the appeal of the Revenue, affirming that interest under section 234A should only be calculated based on advance-tax and tax deducted at source, excluding payments made after the end of the accounting year.