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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 ..... aid by the assessee under section 140A or otherwise before the date of determination of total income u/s 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 u/s 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. At the time of filing return of income, Explanation to section 140A is required to consider. The newly inserted (with effect from 1-4-1989) Explanation to section 140A(1) takes care of a situation where the amount paid by the assessee u/s 140A(1) falls short of the aggregate of the tax and interest as mentioned therein. In such a situation, the amount, so paid is first to be adjusted towards the interest payable and the balance, if any, is to be adjusted towards the tax payable. Since the assessee has made short payment, therefore, interest is leviable on Rs. 5,81,520 in accordance with section 234B(2)( ii ). This provision is reproduced as above. Thus, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment 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. 7,62,075 Rs. 58,42,569 Less : T.D.S. Rs. 1,82,573 Rs. 56,59,996 Less : Advance tax Rs. 23,20,000 S.A. payment made on 29-9-1992 Rs. 33,00,000 Less : Adjusted towards interest payable on return under section 234B (up to September, 1992) Rs. 400,800 Under section 234C Rs. 1,78,288 Rs. 5,79,088 Rs. 27,20,912 S.A. payment made on 29-9-1992 Rs. 39,956 Less : Adjusted toward ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 made under section 140A till due date and the explanation comes into operation only in respect of the payment after due date. This view is supported by Circular No. 549, dated 31-10-1989 (182 ITR 1) (Statutes). Para 4.16 of the said circular (on page No. 18 of the said report) reads as under :- For delay in filing the return of income and for the delay or default in payment of advance tax, mandatory interest is now payable under the provisions of new sections 234A to 234C inserted by the Amending Act, 1987. Further, under the new scheme of assessment also being introduced by the Amending Act, 1987, (refer para 5.2 of these Explanatory Notes), if the tax and interest due on the basis of returned income have been correctly pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed 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 this purpose we have to see relevant provisions of Income-tax Act which are as under:- 140A. Self-assessment. (1) Where any tax is payable on the basis of any return required to be furnished under section 139 or section 142 or section 148 or section 153A, as the case may be, section 158BC, after taking into account the amount of tax, if any, already paid under any provision of this Act, the assessee shall be liable to pay such tax together with interest payable under any provision of this Act for any delay in furnishing the return or any default or delay in payment of advance tax, before furnishing the return and the return shall be accompanied by proof of payment of such tax and interest. Explanation. Where the amount paid by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... geable 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-assessment tax, was to be paid before filing the return and proof of payment thereof was to be attached with the return. The old provisions covered the limited aspect to paying, at the time of filing the return, the tax only and not the interest payable by the assessee for late filing of return or for default or delay in payment of advance tax. 10. For delay in filing the return of income and for delay or default in payment of advance tax, mandatory interest is now payable under the provisions of new sections 234A to 234C inserted by the Amending Act, 1987. Further, under the new scheme of assessment also being introduced by the Amending Act, 1987 (refer para 5.2 of these Explanatory Notes), if the tax and interest due on the basis of returned income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration 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 taken into consideration while filing the return. In accordance with section 140A, an assessee is required to pay tax under section 140A where any tax is payable on the basis of any return required to be furnished (section 139 or section 142 or as the case may be, section 158BC) after taking into account the amount of tax, if any, already paid under any provision of this Act. Thus, at the time of filing return the tax payable under section 140A is due and required to calculate tax payable on the basis of the return to be furnished as under : Section 139 or (with effect from 27-9-1991) section 142 or section 148 or (with effect from 1-6-1999) section 158BC. After taking into account the amount of tax, if any, already paid under any provision of this Act. In the case under consideration return is filed on 30-12- ..... X X X X Extracts X X X X X X X X Extracts X X X X
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