Interest u/s 215 , 217 calculated from first day of April. - Income Tax - 921/CBDT

INSTRUCTION NO. 921/CBDT Dated : February 12, 1976 Section(s) Referred: 215 ,217 Statute: Income - Tax Act, 1961 Reference is invited to Instruction No. 422 dated 7th June, 1972. In para 3 before, it was mentioned that interest u/s 215 and 217 should be calculated from the first day of April next following the previous year upto the date of regular assessment made u/s 143 or 144. 2. A question has been raised regarding the chargeability of interest u/s 215/217 in a case where the assessment originally made u/s 144 is cancelled u/s 146 and a fresh assessment is later on made either u/s 143(3) or u/s 144. Is the interest to be calculated till the date of fresh assessment or till the date of the assessment which was cancelled u/s 146? The matter was examined in consultation with the Ministry of Law, who have given the following opinion:- "....the scheme of the Act is that there should be a regular assessment on the return filed by the assessee which could be varied or modified either by re-assessment by the ITO u/s 147 or which could be the subject-matter of an appeal before the AAC or the I.T.A.T., as a result of which the ITO will have to make a fresh order. But the regular assessment referred to in section 214 or 215 or 217 could only be with reference to the first assessment in contra-distinction with the re-assessment or modified order subsequently passed". 3. Revenue Audit have also taken the view that interest is to be charged with reference to the first assessment and later assessments were immaterial. 4. The Board have accepted the above view. Accordingly, in cases where original assessments have been cancelled u/s 146 or set-aside in appeal and fresh assessments framed, interest u/s 215 and 217 could be charged upto the date of the original assessment only.