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2024 (8) TMI 740 - AT - Income TaxInterest for defaults in payment of advance tax - appeal before the ld. CIT(A) for charge of interest incorrectly u/s 234B of the Act in an order passed u/s 254 r.w.s. 143(3) r.w.s.153A - whether the assessee is eligible to receive the credit of the amount of taxes paid after the end of the assessment year and before the completion of the final determination of the demand by the AO while computing the interest payable by the assessee as per provision of section 234B of the Act or not? HELD THAT - On careful perusal of the provision of section 234B of the Act bench observed that the assessee shall be eligible to receive the relief of interest before the date of determination of total income under subsection (1) of section 143 or completion of a regular assessment, tax is paid by the assessee u/s 140A or otherwise and interest shall be calculated in accordance with the provisions of section 234B up to the date on which the tax is so paid, and reduced by the interest, if any, paid u/s 140A towards the interest chargeable under this section and thereafter, interest shall be calculated at the rate aforesaid on the amount by which the tax so paid together with the advance tax paid falls short of the assessed tax. Thus, considering that specific provision of the Act and the specific acceptance of the fact by the AO in the remand report that the assessee was not granted the credit of taxes while calculating the interest u/s. 234B of the Act and that too without referring to any adverse comment in the remand report. Therefore, considering the specific provision in law and acceptance of the error in calculation of interest u/s. 234B of the Act the ld. AO is directed to give the credit of the taxes paid by the assessee. As per the computation sheet given in the remand report and the interest based on the chart given by assessee we direct the ld. AO to give credit of payment of tax for which credit was not granted while computing the interest as provision of section 234B Assessee submitted that based on the non disputed facts the assessee is eligible to have reduction in interest u/s. 234B charged by the ld. AO for an amount for a year about or so. Based on the finding so recorded and considering the actual date of payment of taxes the ld. AO is directed to reduce the interest wrongly computed u/s. 234B of the Act and grant the refund arising out of this error in charge of interest u/s. 234B of the Act. In terms of these observations the ground no. 1 2 raised by the assessee is allowed. Denial of benefit of the interest u/s. 244A only on the ground that the net refund due and calculated by the lower authority for an amount which is less then 10 % of the total demand raised upon the assessee for an amount - On this issue the bench noted that if the interest charged by the ld. AO in excess for an amount u/s. 234B of the Act is considered based on the finding recorded by us in ground no. 1 2 then the refund amount comes which is more then 10 % of tax demand. Even the ld. CIT(A) has after considering the remand report has held that if the assessee s refund is in excess of the 10 % of the determined tax then the interest is payable to the assessee. Since the assessee is eligible to get relief u/s. 234B of the Act for an amount of Rs. 1,43,33,259/- then after that credit the resultant figure of refund is more than 10% of the tax determined the assessee is eligible to receive the interest u/s. 244A of the Act in accordance with the law and when even the ld. AO as well as ld. CIT(A) has not disputed this fact that when the refund amount is more then 10 % of tax determined the assessee is eligible to receive the refund. Based on these non-disputed facts and then the interest amount due to the assessee comes to Rs. 2,38,31,324/- which is more then 10 % of tax demand of Rs. 18,70,26,635/-. Based on these observation ground no. 3 4 raised by the assessee is allowed.
Issues Involved:
1. Validity of the order passed by the CIT(A). 2. Error in computation of interest under Section 234B. 3. Non-grant of interest under Section 244A on refund amount. 4. Failure of CIT(A) to consider the appellant's rejoinder submission on the remand report. Detailed Analysis: 1. Validity of the Order Passed by the CIT(A): The appellant challenged the order passed by the CIT(A) on 11/08/2023, claiming it to be "perverse, bad-in-law and passed in ignorance of the powers and obligations entrusted upon the appellate authority." The appellant argued that the CIT(A) failed to properly adjudicate the issues raised, thereby necessitating the quashing of the impugned appellate order. 2. Error in Computation of Interest under Section 234B: The appellant contended that the Assessing Officer (AO) did not correctly compute the interest due under Section 234B of the Income Tax Act, 1961. Specifically, the AO failed to consider the interest on Rs. 10.80 Crore from the date of deposit till the date of assessment. The appellant provided a detailed computation sheet showing that the interest charged by the AO should be reduced by Rs. 1,43,33,259/-. The Tribunal noted that the AO, in the remand report, confirmed that no interest had been provided on the amounts deposited by the appellant before the assessment order. Consequently, the Tribunal directed the AO to recompute the interest under Section 234B, considering the payments made by the appellant. 3. Non-Grant of Interest under Section 244A on Refund Amount: The appellant argued that the AO and CIT(A) erred in not granting interest under Section 244A on the refund amount. The AO had denied interest under Section 244A, stating that the refund amount was less than ten percent of the assessed tax, as per the provisions of Section 244A. However, the Tribunal observed that if the excess interest charged under Section 234B (Rs. 1,43,33,259/-) was considered, the refund amount would exceed ten percent of the assessed tax, making the appellant eligible for interest under Section 244A. The Tribunal directed the AO to grant interest under Section 244A accordingly. 4. Failure of CIT(A) to Consider the Appellant's Rejoinder Submission on the Remand Report: The appellant claimed that the CIT(A) failed to discharge his legal burden by disregarding the rejoinder submission on the remand report. The CIT(A) had stated that the matter could not be adjudicated upon because the claim for interest on seized cash under Section 244A did not emanate from the original order of the AO. The Tribunal found that the CIT(A) did not properly consider the appellant's submission and the remand report, which confirmed the AO's error in not granting interest on the deposited amounts. The Tribunal directed the AO to consider the appellant's submission and recompute the interest due. Conclusion: The Tribunal allowed the appeal, directing the AO to recompute the interest under Section 234B, considering the payments made by the appellant, and to grant interest under Section 244A on the refund amount, as the refund exceeded ten percent of the assessed tax. The Tribunal found that the CIT(A) failed to properly consider the appellant's submission and remand report, necessitating a fresh computation by the AO. The appeal was allowed in favor of the appellant.
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