2023 (10) TMI 660 - AT - Income Tax

Addition to the interest payable u/s 234B and u/s 234C - deemed income from gift - As submitted income being gift of an immovable property was received in the last quarter of the year and the appellant was not liable to pay advance tax in the third quarter of the year - HELD THAT - The assessee received the immovable property through gift and the conveyance deed is registered on 16.12.2019. The assessee received the same after the due date of third quarter. Therefore, the contentions of the assessee that since the assessee received a gift of an immovable property by way of registered conveyance deed on 16.12.2019, he is required to pay advance tax on such income in the last quarter i.e. on or before 15.03.2020 and the assessee paid advance taxes on such gift income on 09.03.2020, appears to be justifiable and as per the provisions of advance tax payment. Thus, the finding of the CIT(A) that, assessee had defaulted in payment of advance tax is not correct. In fact, as the said income accrued and received by the assessee in the last quarter of F.Y. 2019-20, the assessee has paid more than 90% of the tax payable on 09.03.2020 before the due date of fourth quarter. There is no loss of revenue in this case. Therefore, charging the interest u/s 234C of the Act is not valid. The appeal of the assessee is allowed.

Summary

Issues involved:
The appeal challenges the order passed by National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2020-21 regarding the charging of interest under section 234C of the Income Tax Act.

Summary:
The appellant contested the order of the CIT (Appeals) which upheld the charging of interest under section 234C of the ITA despite the income being a gift of an immovable property received in the last quarter of the year. The appellant argued that advance tax was not required to be paid in the third quarter as the income accrued in the last quarter. The appellant highlighted that advance tax is payable when the tax amount exceeds ten thousand rupees, and in this case, the income from the gift of the property was received in the last quarter of the financial year. The appellant emphasized that the advance tax liability cannot be estimated without the actual receipt of the gift, as the income from the gift is not a regular recurring income that can be allocated throughout the year. The appellant also referenced relevant case law to support their position.

The Tribunal noted that the appellant received the immovable property through a gift after the due date of the third quarter, and therefore, the contention that advance tax was required to be paid in the last quarter was deemed justifiable. The Tribunal found that the appellant had paid more than 90% of the tax payable before the due date of the fourth quarter, indicating no loss of revenue. Consequently, the Tribunal allowed the appeal, ruling that charging interest under section 234C of the Act was not valid.

In conclusion, the Tribunal allowed the appellant's appeal, emphasizing that the appellant had fulfilled the advance tax payment requirements by paying more than 90% of the tax payable before the due date of the fourth quarter, thereby invalidating the charge of interest under section 234C of the Income Tax Act.