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TMI Blog2004 (9) TMI 583X X X X Extracts X X X X X X X X Extracts X X X X ..... 961. The assessee is a Co-operative Society engaged in the activities of marketing and agricultural produce. It derives income which is partly taxable and partly enjoys deduction under section 80P of the Income-tax Act, 1961. The assessee had claimed deduction under section 80G at the rate of 100 per cent. Since there is no dispute about the eligibility of the assessee for deduction under section 80G, the Assessing Officer allowed the same but restricted the deduction proportionately vis-a-vis the taxable income and non-taxable income. The Commissioner of Income-tax (Appeals) had decided the issue in favour of the assessee. It is the case of the Revenue that since the contribution/donation was debited to the Profit Loss account, the Com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee had failed to pay the advance tax in accordance with the provisions of the Act and, therefore, the interest under section 234B was rightly imposed by the Assessing Officer. It was further contended that the levy of interest under section 234B has been held to be mandatory by the Hon ble Supreme Court in the case of CIT v. Anjum M.H. Ghaswala [2001] 252 ITR 1. Reliance was also placed on the decision of Bombay High Court in the case of CIT v. Kotak Mahindra Finance Ltd. [2004] 265 ITR 119 2 , wherein it has been held that the levy of interest under sections 234B 234C is compensatory in nature and the Assessing Officer has no jurisdiction not to impose the interest. The learned Departmental Representative further point ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h Court was against the assessee, yet there were other decisions of Allahabad/Uttranchal High Court in favour of the assessee on the basis of which exemption was granted to the assessee. The learned counsel pointed out that under section 208, the assessee was required to pay advance tax on the current income and section 209 of the Act provides that the assessee shall first estimate his current income and income-tax thereon shall be calculated at the rate in force in the financial year. The assessee had made a fair estimate of the advance tax payable on the basis of accepted claim of the assessee by the Department and, therefore, there was no default committed by the assessee, that attracted provisions of section 234B. The learned counsel fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le and non-taxable income. The Legislature has introduced section 14A to put at rest the aforementioned controversy. The section 14A reads as under : "For the purposes of computing the total income under this Chapter, no deduction shall be allowed in respect of expenditure incurred by the assessee in relation to income which does not form part of the total income under this Act." 8. Section 14A is attracted in respect of expenditure incurred by the assessee which does not form part of the total income of the assessee. However, in this case, the issue does not relate to disallowance of any expenditure but donation made qualifying deduction under section 80G. It should, therefore, be relevant to quote section 80G : "(1) In computing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee was less than the amount required to be paid in advance tax. Interest was accordingly levied under section 234B. The Commissioner of Income-tax (Appeals) has deleted the same. On consideration of the rival contentions, we are of the view that whereas the assessee may have reasonable cause for not paying the advance tax, since provisions of section 234B are mandatory, the Assessing Officer has no option but to levy the same. The issue as to whether the past history of the case and various decisions of High Courts justified the assessee not to pay advance tax could be relevant for waiver of interest for the purpose of which the assessee may take appropriate steps if so advised. So, however, while framing the assessment, the Assessing O ..... X X X X Extracts X X X X X X X X Extracts X X X X
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