2005 (7) TMI 301 - AT - Income Tax

Summary

Issues:
1. Allowability of provident fund contribution under section 43B of the IT Act within the grace period.
2. Direction to recompute interest under section 234B in view of retrospective amendment by the Finance Act, 2001.

Issue 1:
The primary issue in this case pertains to the allowability of provident fund contribution under section 43B of the IT Act within the grace period. The Assessing Officer disallowed the payment, but the CIT(A) directed the AO to allow the deduction if the payment was made within the grace period of 5 days. The assessee relied on various precedents, including the decision of the Delhi Bench of the Tribunal and the Madras High Court, supporting the treatment of payments within the grace period as timely. The Tribunal upheld the CIT(A)'s decision based on the case law cited by the assessee, emphasizing that payments made within the grace period deserve to be considered as made within the due date.

Issue 2:
The second issue revolves around the direction to recompute interest under section 234B in light of the retrospective amendment by the Finance Act, 2001. The Circular No. 14/2001 clarified that interest under sections 234A and 234B should be computed with reference to tax on the assessed income, not the returned income. The assessee acknowledged the retrospective amendment and agreed that interest under section 234B should be levied on the assessed tax. However, the CIT(A) directed the AO to recompute the interest on the revised total income. The Tribunal, considering the Supreme Court decision in the case of CIT vs. Ranchi Club Ltd., held that interest under section 234B should indeed be levied on the assessed tax due to the retrospective amendment brought about by the Finance Act, 2001. Consequently, the appeal was partly allowed on this ground.

In conclusion, the judgment addressed the issues related to the allowability of provident fund contribution within the grace period under section 43B of the IT Act and the computation of interest under section 234B in light of a retrospective amendment. The Tribunal's decision was based on precedents and statutory provisions, ensuring compliance with the relevant legal framework and judicial interpretations.