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TMI Blog2006 (2) TMI 247X X X X Extracts X X X X X X X X Extracts X X X X ..... this interest in the return of income for the relevant assessment year, i.e., 1999-2000, as income. The AO processed the return under s. 143(1)(a) of the Act and charged interest under ss. 234B and 234C of the Act. Since the advance tax paid by the assessee was less on the abovementioned income-tax refund, the interest under s. 234C was charged for which the assessee has received the communication regarding the adjustment on 26th March, 1999. Aggrieved against the charging of interest, the assessee preferred an appeal before the CIT(A) who confirmed the action of the AO and dismissed the appeal in limine. Aggrieved, the assessee is in second appeal before us. 4. First of all, Shri G. Baskar, the assessee's counsel argued that this appeal is maintainable as the assessee disputes the very levy of interest under s. 234C of the Act and not the quantum. For this, he relied on the judgment of the Hon'ble apex Court in the case of Central Provinces Manganese Ore Co. Ltd. vs. CIT (1986) 58 CTR (SC) 112 : (1986) 160 ITR 961 (SC). Further, he relied on the decision of the Hon'ble Madras High Court in the case of CIT vs. Veppalodai Salt Corporation (1988) 68 CTR (Mad) 125 : (1988) 171 ITR 3 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Karnataka High Court in the case of National Products vs. CIT 1976 CTR (Kar) 179 : (1977) 108 ITR 935 (Kar) wherein it has held as under: "All decided cases except one have uniformly taken the view that levy of interest under s. 18A(6) or s. 18A(8) of the 1922 Act or levy of interest under s. 215 of the Act is not appealable but in the appeal against a regular assessment, it is open to the assessee to take every contention which, if accepted, must result in the ITO holding that there was no liability to pay advance tax and, therefore, there was no liability to pay interest. In other words, it is open to an assessee to contend in the appeal against an order of assessment that he is not liable to pay any advance tax at all or the amount of advance tax determined as payable by the ITO is not correct; but if the assessee does not dispute the amount of advance tax determined as payable by the ITO, he merely cannot object to the levy of penal interest or question its quantum...... The levy of penal interest under s. 139 or s. 215 is made in the regular assessment order; the demand issued pursuant to the assessment order is for the total amount of liability imposed inclusive of tax an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s considered the issue that the appeal is maintainable if the assessee disputes levy of interest itself and not merely on its quantum. Respectfully following the decision of the Hon'ble apex Court and the Hon'ble Madras High Court in the case cited supra, we hold that an appeal lies against an order charging of interest under s. 234C of the Act as the assessee limits itself to the ground that it is not liable to pay levy at all. 8. Since, the issue of maintainability of the appeal is decided, we have gone through the provisions of s. 234C of the Act and the case law of the Hon'ble apex Court relied on by the learned Departmental Representative wherein the Hon'ble apex Court has dealt with the issue of nature of this interest as statutory and mandatory. The Hon'ble apex Court has decided this issue as under: "If the scheme of levy of interest is thus to be analyzed on the anvil of the provisions referred to hereinabove, it shows that the interest contemplated under ss. 234A, 234B and 234C is mandatory in nature and the power of waiver or reducing having not been expressly conferred on the Commission, the same indicates that so far as the payment of statutory interest is concerned, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... advance tax on such part of the income during the previous year. To collect tax even on such taxing event which occurred after the 15th March, the proviso to s. 234C envisages that, the assessee pay advance tax in respect of such capital gains earned by the 31st March. However, it does not result in creating any obligation to pay advance tax on any capital gains prior to the date it accrues." 9. We have gone through the provisions of s. 207(1) of the Act which defines the liability to the payment of advance tax. Such liability is in respect of income referred to in s. 208 of the Act. The Hon'ble apex Court in the case of Purushottamdas Thakurdas vs. CIT (1963) 48 ITR 206 (SC) has observed while dealing with the s.18A of the 1922 Act that this section was inserted in the 1922 Act in 1944 while dealing with advance payment of tax. The Hon'ble apex Court has dealt with historical background and found that the advance tax was introduced as a war measure probably to combat inflation, but like many other innovations in taxation legislation it has outlived the exigency which necessitated it. Even the section applies to those assessees whose total income in the latest assessment, and als ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... only on 26th March, 1999 and the last instalment of advance tax was paid over by that date, 15th March, 1999. The assessee could not anticipate the receipt of refund of income-tax which event was after the last instalment of advance tax. We have noticed that the liability to pay the interest arises only on income arrived at by the assessee. The income which regularly occurs to the assessee can be estimated by any given point of time upto that period and the income which accrues or arises on completion of a particular transaction only and not out of regular and current activity, obviously cannot be the subject-matter of estimate before the event occurs. In view of this, considering the impossibility for the assessee who estimated the income arising on a particular transaction which is not occurred or come into existence then it is impossible to pay advance tax instalment on that particular income and that particularly, if that occurs after the last instalment. The Hon'ble Rajasthan High Court has very beautifully dealt with the issue and the view lies in that judgment which solves this issue, reads as under: "Therefore, he has no occasion to make payment of any advance tax on such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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