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TMI Blog2010 (1) TMI 37X X X X Extracts X X X X X X X X Extracts X X X X ..... and pay the same in the manner stipulated in Section 209 and 210 of the Act – there is default in payment of advance tax – interest u/s 234B is payable – ITAT order reversed - decided in favor of revenue - 119 of 2002, 247 of 2003 - - - Dated:- 22-1-2010 - MR. A.K. SIKRI and MR. SIDDHARTH MRIDU, JJ. Through : Mr. N.P. Sahini and Mr.P.C. Yadav, Advocates. Through: Mr. V.P. Gupta and Mr. Basant Kumar, Advocates Through: Mr. Sanjeev Sabharwal, Advocate. Through: Ms. Kavita Jha, Advocate. JUDGEMENT A.K. SIKRI, J. In both these appeals, the identical question of law was framed, which relates to charging of interest under Section 234B of the Income Tax Act (hereinafter referred to as the Act‟). For answering this questions, we can take note of the facts of ITA No.119 of 2002. 2. The respondent assessee was incorporated on 19.10.1988 to manufacture and import and export silco and donatives thereof. It filed its return for the first time on 31.12.1990 which related to the assessment year 1990-91 declaring Nil‟ income. In this return the aggregate interest of Rs.6,48,190/- received by the assessee on certain deposits was set off against in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a, stipulates that where an assesssee, who is liable to pay advance tax under Section 208, has failed to pay such tax, the assessee shall be liable to pay simple interest @ 1% for every month or part of a month comprised in the period from the first day of April next following such financial year to the date of determination of total income under sub-Section (1) of Section 143 and where a regular assessment is made, to the date of such regular assessment. In the present case, as per the ITAT, in the assessment order passed for the year 1991-92 only direction given was to "charge interest" and no Section under which interest is chargeable was specified. For this reason, the Tribunal held that since there was no specific direction to charge interest under Section 234B, levy of interest was not permissible under the provision in view of the judgment of Patna High Court in the case of CIT v.Ranchi Club Limited, 222 ITR 44 affirmed by the apex court in Smt. Tejkumari v. CIT, 247 ITR 210. Other reason for deleting the interest was that the assessee held bona fide belief that no advance tax was payable under Section 208 of the Act. 6. Mr. Sahni, learned counsel appearing for the Revenue ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... direction for charging of interest under Section 234B of the Act inasmuch as the assessment order was like court order and ITNS 150 (Tax Computation Form) is like a decree as held in Uday Mishthan Bhandar v. CIT, 222 ITR 44. Dilating on this submission, he argued that the Assessing Officer was required to determine various points for charging interest under the aforesaid provision, namely, (a) the assessee was liable to pay advance tax under Section 208 and had failed to pay such tax or advance tax paid is less than 90% of assessed tax; (b) the assessee was liable to pay advance tax under Section 208 of the Act read with Section 209(1)(a) on estimated current income. Income-Tax calculated thereon is to be reduced by the amount of tax, which would be deductible or collectable at source. A person liable to pay advance tax is supposed to pay the same on or before each of the due date specified under Section 211. Therefore, a finding was also required to be recorded that the tax was not paid by the stipulated due dates. Since the assessee is to pay the advance tax under Section 208 of the Act, equal to the amount of tax calculated on his estimated current income, it is also to be reco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 234B of the Act specifically, would not make any difference. Admittedly, the specific direction was given to "charge interest" and then simultaneously on the same date, in computation sheet, interest under Section 234B is added. Reading the two documents together, it can safely be inferred that the Assessing Officer meant that such interest is to be charged under Section 234B of the Act. Not mentioning this Section in particular in the assessment order, therefore, would not be of much consequence. 11. Further as no advance tax was paid at all by the assessee during the assessment year in question, argument that the Assessing Officer was required to determine various aspects before charging the interest under Section 234B, as pointed out by the learned counsel, would not be applicable in the instant case. 12. With this, we proceed to determine as to whether non-payment of the advance tax under the bona fide belief that it was not payable would exonerate the assessee of its liability to pay interest under Section 234B of the Act. As pointed out above, the Tribunal has set aside the orders holding that no interest could be charged under Section 234B of the Act only on the ground ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income 1928. Explanation 2: Where, in relation to an assessment year, an assessment is made for the first time under section 147, 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." 14. From the facts already narrated above, it cannot be disputed that it ultimately turned out that tax was payable on the interest income earned by the assessee and thus, the assessee was liable to pay advance tax as well under Section 208 of the Act, inasmuch as the tax payable on the said income earned was more than ten thousand rupees. In normal course, therefore, he was to compute the said advance tax and pay the same in the manner stipulated in Section 209 and 210 of the Act. Thus, we have to hold that there is a default in payment of advance tax. This leaves us with th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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