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TMI Blog2005 (11) TMI 388X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to section 140A is in the nature of clarification for the purpose of appropriation of amount between principal and interest and not for the purpose of calculation interest under sections 234B and 234C". 3. The common ground based on identical set of facts, therefore, same are decided by this common order. 4. Briefly stated facts of the case in assessment year 1992-93 are that the returned income was processed under section 143(1)(a) of the Income-tax Act, 1961. Interest under section 234B was levied. Subsequently, the Assessing Officer found that the interest was short levied by Rs. 1,21,028. He allowed the appellant an opportunity of being heard and after duly hearing the appellant, he enhanced the interest levied under section 234B. The appellant filed the appeal against the said order. Subsequently, the assessment was completed under section 143(3) of the Income-tax Act, 1961 and the interest charged under section 234B was enhanced. 5. The dispute under consideration is method/manner of calculation of interest under section 234B. The calculation made by Assessing Officer is as under:- "Tax at the rate of 50% Rs. 50,80,495 Surcharge at the rate of 15% Rs. 7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been filed against the manner in which the interest chargeable under section 234B was calculated by the Assessing Officer. The ld. counsel further submitted that the appeal against the manner in which interest under section 234B is charged is appealable in view of Supreme Court judgment in the case of Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 9611. It has further been submitted that the interest under section 234B was to be calculated after giving due credit for the payment made under section 140A. The learned counsel further submitted that the explanation provides that where the payment is made under sub-section (1) of section 140A, the same is required to be made before the due date of the filing of return. It, therefore, follows that while filing the income-tax return the amount of tax payable under section 140A or interest payable under sections 234A to 234C is not paid in full and then the difference when paid subsequent to the due date of the filing of return, such payment will be appropriated first towards interest and then towards the principal. The explanation does not over-ride section 234B(2). Section 234B(2) gives credit in respect of the payment m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . The Sr. DR supported the orders of lower authorities and submitted that the assessee has given a new interpretation to the situation whereas the provisions are very clear that the payment first is to be adjusted towards interest payable and balance, if any, shall be adjusted towards the tax payable. The ld. DR urged that the order of CIT(A) is in accordance with law, therefore, same may be confirmed. 8. We have heard the ld. representatives of the parties and perused the record. The controversy under consideration relates to interpretation of Explanation to sub-section (1) to section 140A which provides that where the assessee pays only part of the amount due at the time of filing the return, such payment shall first be adjusted towards interest payable, and balance if any, shall be adjusted towards the tax payable. Now the crux of the matter is, this adjustment is to be made, whether at the time of making ad hoc payment or at the time of filing the return of income. The revenue is of the view that it should be adjusted at the time of ad hoc payment, and the assessee's case that it should be adjusted at the time of filing return i.e., when payment under section 140A is due. For ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 147 or section 153A, the assessment so made shall be regarded as a regular assessment for the purposes of this section. Explanation 3.-In Explanation 1 and in sub-section (3) "tax on the total income determined under sub-section (1) of section 143" shall not include the additional income-tax, if any, payable under section 143. (2) Where, before the date of determination of total income under sub-section (1) of section 143 or completion of a regular assessment, tax is paid by the assessee under section 140A or otherwise,- (i) interest shall be calculated in accordance with the foregoing provisions of the section up to the date on which the tax is so paid, and reduced by the interest, if any, paid under section 140A towards the interest chargeable under this section; (ii) thereafter, interest shall be calculated at the rate aforesaid on the amount by which the tax so paid together with the advance tax paid falls short of the assessed tax. 9. Under the old provisions of sub-section (1) of section 140A, the assessee was required to pay tax on the basis of the return, after taking into account taxes already paid at the time of filing the return. Such tax, known as the self- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l calculation of interest but falls under section 234B(2). This sub-section (2) of section 234B provides the calculation of interest where tax is paid by the assessee under section 140A or otherwise before the date of determination of total income under section 143(1)/completion of a regular assessment. The interest shall be calculated as provided general calculation in section 234B(1). The important thing provides is that simple interest under section 234B(1) is to be calculated at the prescribed rate. The difference in calculation interest in that section 234B(1) and in section 234B(2) is that in section 234B(2) the simple interest is to be calculated up to the date on which the tax is so paid. Accordingly interest calculation in the case under consideration should be as under:- Total amount of tax payable u/s 140A Amount paid Amount on which int. payable Period Rate of Interest p.m. Amount Int. 33,39,956 33,00,000 dt. 29-9-1992 33,39,956 April, 92 to Sept., 92 2% 4,00,794 39,956 39,956 dt. 29-12-1992 39,956 Oct., 92 to Dec., 92 2% 2,446 Int. u/s 234B Total Rs. 4,03,240 12. Now we shall examine section 140A, which is to be ta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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