9911796707
TMI Blog2023 (2) TMI 513X X X X Extracts X X X X X X X X Extracts X X X X ..... ed to as "the Act") relevant to the Assessment Year 2011-12. 2. The Assessee has raised following grounds of appeals: "1. That the learned CIT(Appeals) has grievously erred in law and on facts in upholding the action of the learned A.O. in charging the interest u/s 234A and 234B beyond the date on which self-assessment tax including interest u/s 234A, 234B and 234C up to that date is already paid. 2. That the learned CIT(Appeals) has grievously erred in law and on facts in not appreciating the contention of the appellant that interest u/s. 234A and 234B are compensatory in nature and not penal in nature and they are levied to compensate revenue in order to avoid it from being deprived of payment of tax. 3. That the appellant craves ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 234B of the Act, among other grievances, has moved an application dated 2 January 2019 under section 154 of the Act to rectify the same. As per the assessee, he has paid the self-assessment tax along with interest dated 19 March 2015 amounting to Rs. 71,070.00 and therefore there should not have been charged any interest under section 234A and 234B of the Act. 7. However, the AO disagreed with the contention of the assessee by observing as under: "iv. The assessee has made payment of Rs. 71,070/- on 19/03/2015. As per the Explanation appended below section 140A of the Act, the self assessment tax paid is required to be first adjusted towards the interest payable by him and the balance shall be adjusted towards the tax payable. According ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng u/s 147. Section 234B(2) mandates that credit for self-assessment tax paid before the completion of assessment would be allowed. Explanation to Section 140A mandate that self-assessment tax is first to be adjusted against interest and then against the tax. 6.3 Since the levy of interest under section 234A and 234B of the Act is mandatory in nature being fastened by the statute automatically, in my considered opinion, the AO has no authority to restrict/curtail the same. Thus, the A.O. has correctly charged the interest as per the stated provisions of the Act, and the request of the appellant for curtailing the interest u/s 234A/234B upto the date of payment of self-assessment tax, being beyond the scope of section 154, has not been al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 34A and 234B up-to the date of passing the order under section 147 of the Act dated 29/11/2018 whereas as per the assessee interest shall be chargeable up-to the payment of self-assessment tax paid 19-3-2015. 16. As per the facts discussed above the issue before us is to decide whether the interest under the provisions of section 234A and 234B are compensatory or penal in nature. The scheme and the purpose of Income Tax Act is to realize direct taxes. It is not correct to refer to the levy of such interest as a penalty. Having regard to the reason for the levy and the circumstances in which it is imposed, it is clear that interest is levied by way of compensation and not by way of penalty. It is, therefore, fairly manifest that the amount ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ering the submissions made by them, we agree with the learned counsel for the revenue that the levy undersection234B of the said Act is compensatory in nature and is not in the nature of penalty. We may also note the decision of the Bombay High Court in the case of CIT v. Kotak Mahendra Finance Ltd. [2004] 265 ITR 119, wherein the Bombay High Court observed that it was well-settled that interestundersection234B was compensatory in character and that it was not penal in nature. Another decision which would be relevant is of a Division Bench of this Court in the case of Dr. Prannoy Roy v. CIT [2002] 254 ITR 755. In that case, the provisions of section234A were in issue. The question before the court was whether interest could be charged under ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
