9911796707
TMI Blog2004 (1) TMI 310X X X X Extracts X X X X X X X X Extracts X X X X ..... e balance in specified instalments during the previous year. The general rule apparent in the above scheme of payment of advance tax is that any amount collected or deducted to the credit of an assessee shall be reduced from the advance tax liability and the net amount alone need to be paid by the assessee. The interest is charged or chargeable either under section 234B or u/s 234C only with reference to that net liability towards advance tax . This is in tune with the principle that interest is compensatory in nature. Therefore, it could be seen that the benefit of carry forward and set off of tax credit available to an assessee u/s 115JAA goes to reduce the tax liability of an assessee. The liability to pay advance tax is invariably linked to the liability for payment of the assessed tax. It is when the payment of advance tax is lesser than the specified limit when compared to the assessed tax, the question of non-payment of advance tax and the question of deferment of advance tax arise in. It is to be seen therefore that the carry forward tax credit available to the assessee goes to reduce the assessed tax of an assessee and thereby as a consequence also reduces the liability to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 143(3) through the order dated 29-8-2000. A total income of Rs. 3,39,27,350 including long term capital gains of Rs. 11,97,930 was determined therein. The tax account has been worked out by the Assessing Officer as below: Tax on income other than capital gain Rs. 1,14,55,297 Tax on capital gains 2,39,586 Rs. 1,16,94,883 Less: Tax credit available under section 115JAA for carry forward from assessment year 1997-98 82,74,895 34,19,988 Less: TDS 25,79,802 8,40,186 Add: Interest under section 234C 3,605 8,43,791 Less: Advance tax 31,50,000 Refundable 23,06,209 Less: Refunded as per intimation under section 143(1) dated 8-9-1999 23,06,209 Balance NIL 3. On verification of the records, it appeared to the Commissioner of Income-tax, Kochi that the interest should have been levied under section 234B on a sum of Rs. 57,25,495. The said amount represented the assessed tax as reduced by the total of advance taxes paid by the assessee and the credit for tax deducted at source. The CIT therefore, observed that, an interest amounting to Rs. 28,91,375 has been omitted to be levied by the Assessing Officer, otherwise chargeable under section 234B. According to the Commissioner, this omission ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... can it be said that such eligible tax credit qualifies for deduction as advance tax or tax deducted/collected at source, from the tax payable on the total income for arriving at the assessed tax under section 234B/234C. In any case, the Assessing Officer has not applied his mind to all these legal considerations and given a finding. The assessee's argument in this regard is not therefore tenable. Accordingly, the assessment order was set aside and direction was given to the Assessing Officer to redo the assessment afresh. The present appeal is against the above revision order. 6. Shri Thomson Thomas, the learned Chartered Accountant appearing for the assessee-company argued the case at length. His contentions were on the basis of the following effective grounds: 1. The learned Commissioner of Income-tax ought to have considered the fact that interest under sections 234B and 234C is chargeable only when tax is payable by the assessee to the Income-tax Department and not when refund is due to the assessee by the department. 2. The ld. Commissioner ought to have considered the clarification given by the CBDT vide Circular No. 13 of 2001 dated 9-11-2001 which states that assessee a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The result is that the tax liability worked out on the total income has to be reduced first by the credit under section 115JAA(4). It is from the remainder that credit is to be given towards the payment of advance tax and credits available under TDS. 10. The learned Chartered Accountant further explained the three steps involved in computing assessed tax under section 234B, such as computation of total income at the first instance, computation of tax on total income at the second instance and thirdly, deduction of tax deducted at Source and collected at source from the tax determined in the second step above. According to the learned Chartered Accountant, intervention of tax credit allowable under section 115JAA is automatic by the operation of sub-section (4). In the case of the assessee, the above steps have been correctly followed in the assessment order and therefore there is no error or prejudice caused, as pointed out by the Commissioner of Income-tax. 11. As regards the computation of interest under section 234C, the learned Chartered Accountant relied on the Explanation to sub-section (1) thereof, and stated that tax chargeable on the total income means, the tax reduced b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 14. The learned Chartered Accountant therefore submitted that the revision order passed by the CIT may be set aside. 15. Smt. Sosamma Mathew, the learned Departmental Representative appearing for the Revenue, defended the revision order passed by the Commissioner of Income-tax. The learned departmental representative submitted that as per the language used in Explanation 1 to section 234B, assessed tax does not include any items other than the tax deducted or collected at source in accordance with the provisions of Chapter XVII on any income, which is subject to such deduction or collection and which is taken into account in computing such total income. The learned departmental representative submitted that interest under section 234B is levied for the deficiency in the payment of advance tax during the previous year. The said amount of advance tax could be reduced only by the tax deducted or collected at source in the said previous year. The benefit available to an assessee as a set off of tax credit under section 115JAA(1) is not in the nature of tax deducted or collected at source. She contended that the same ratio applies to the levy of interest under section 234C. She there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... carried forward tax credit in an year when tax becomes payable on the total income computed in accordance with the provisions of the Act other than section 115JAA. 20. Therefore, it could be seen that the benefit of carry forward and set off of tax credit available to an assessee under section 115JAA goes to reduce the tax liability of an assessee. The liability to pay advance tax is invariably linked to the liability for payment of the assessed tax. It is when the payment of advance tax is lesser than the specified limit when compared to the assessed tax, the question of non-payment of advance tax and the question of deferment of advance tax arise in. It is to be seen therefore that the carry forward tax credit available to the assessee goes to reduce the assessed tax of an assessee and thereby as a consequence also reduces the liability towards payment of advance tax. Therefore, even if the tax credit available to an assessee under section 115JAA is not specifically mentioned in Explanation 1 to section 234B, it has to be necessarily seen that the tax credit need to be considered while quantifying the net amount of advance tax payable by an assessee during a particular previous ..... X X X X Extracts X X X X X X X X Extracts X X X X
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