Budget proposals for the F.Y.2016-17, inter alia in relation to the provisions of section 234B of the IT Act as applicable to the ITSC - Income Tax - F.No. 370149/31/2016-TPL

F.No. 370149/31/2016-TPL Government of India Ministry of Finance Department of Revenue (Central Board of Direct Taxes) New Delhi, 28th March, 2016 OFFICE MEMORANDUM Sub : Budget proposals for the F.Y.2016-17, inter alia in relation to the provisions of section 234B of the IT Act as applicable to the ITSC-reg. Kindly refer to reference ID No. F. No. 299/56/201MF(lnv.-III) dated 20.01.2016, along with a copy of DO letter dated 08.01.2016, received from Vice-chairman of the Income tax Settlement Commission (ITSC), Kolkata on the subject mentioned above. 2. In this context, I have been directed to convey that prior to the amendment by Finance Act, 2015, in case an application was filed before the Settlement Commission under section 245C declaring an amount of income-tax, there was no specific provision in section 234B for charging interest on that additional amount. 3. Accordingly, an amendment was made in the said section by inserting a new sub-section (2A) in section 234B so as to provide that where an application under sub-section (1) of section 245C for any assessment year has been made, the assessee shall be liable to pay simple interest at the rate of one percent for every month or part of a month comprised in the period commencing on the 1st day of April of such assessment year and ending on the date of making such application, on the additional amount of income-tax referred to in that sub-section. Further; where as a result of on order of the Settlement Commission under sub-section (4) of section 245D for any assessment year, the amount of total income disclosed in the application under sub- section (1) of section 245C is increased, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period commencing on the 1st day of April of such assessment year and ending on the date of such order, on the amount by which the tax on the total income determined on the basis of such order exceeds the tax on the total income disclosed in the application filed under sub-section (1) of section 245C. These amendments have come to effect from 01.06.2015. 4. Further, there is no ambiguity insofar as applicability of the provisions of section 234B(2A) is concerned. The amendment to the provisions of section 234B was made subsequent to judgement of the Apex Court in the case of Brij Lai and Calcutta High Court in the case of GM Foods. Since the applicability of the new provision came into force from 01.06.2015, it shall be applicable to the cases pending with the ITSC as on 01.06.2015 as well . 5. As regards the issue of granting waiver of interest to the pre-01.06.2007 cases, it may be mentioned that it is an administrative decision and does not fail under the domain area of TPL division of CBDT. It may however, be clarified that no order under section 119 of the Act can be issued by CBDT to the ITSC, as ITSC is not an Income tax authority under section 116 of the Act. (Dr. T. S. Mapwal) DCIT, OSD(TPL-V)