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2024 (6) TMI 802 - AT - Income TaxIssues Involved: 1. Manner of computing interest u/s 234B of the Income Tax Act, 1961. 2. Applicability of the amendment to section 234B(3) by Finance Act, 2015. Summary: Issue 1: Manner of computing interest u/s 234B of the Income Tax Act, 1961 The primary issue in this case is the computation of interest liable to be levied u/s 234B of the Income Tax Act, 1961, consequent to the appellate order dated 16/2/2016. The assessee contends that her returned income, admitting a tax liability, was processed or deemed to be processed by March 2012. Interest u/s 234B(3) should therefore be for the period following the date of processing up to the date of reassessment u/s 153A in March 2013, which would range from 12 to 29 months. However, the interest was computed at Rs. 6,45,503, which the assessee claims is excessive. The Assessing Officer (AO) calculated interest on the differential tax from the first day of the assessment year, i.e., 01/4/2010, up to the date of reassessment in March 2013, for a period of 36 months. Issue 2: Applicability of the amendment to section 234B(3) by Finance Act, 2015 The AO's order was confirmed in the first appeal, with the CIT(A) holding that the provisions of section 234B(3) as amended w.e.f 1.6.2015 are applicable to the appellant. Therefore, interest is chargeable from 1.4.2010 to 31.3.2013 for a period of 36 months. The assessee is aggrieved and is in second appeal. Judgment: The Tribunal examined the provisions of section 234B, both pre and post the amendment by Finance Act, 2015. Section 234B provides for the levy of interest on the shortfall in advance tax, reckoned with reference to the tax liability as determined either u/s 143(1) or on regular assessment. Adjustments for tax already deposited/collected and tax relief allowed u/s 89, etc., are to be deducted to arrive at the assessed tax, with reference to which interest is charged for the period of delay. In this case, the income was assessed for the first time vide order u/s 153A on 28.03.2013, which is to be regarded as a regular assessment. Therefore, the interest charged u/s 234B upon this assessment is only u/s 234B(1) for the 36-month period from April 2010 to March 2013. The only adjustment in the said interest is to be upon passing the appellate order u/s 250(6) on 16/2/2016, by allowing the assessee credit for the reduction in tax. The Tribunal held that there is no occasion to charge interest u/s 234B(3) as there was no subsequent assessment either u/s 147 or u/s 153A. The reference to section 234B(3) is wholly misplaced. Interest shall be charged on the assessed tax computed with reference to the assessee's tax liability as determined pursuant to the appellate proceedings for the 36-month period from April 2010 to March 2013. The AO is directed to ensure that the interest u/s 234B is charged strictly in terms of this order, providing the assessee an opportunity to raise objections if the computation varies. Conclusion: The assessee's appeal is decided on the aforesaid terms, and the order was pronounced on March 28, 2024, under Rule 34 of The Income Tax (Appellate Tribunal) Rules, 1963.
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