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TMI Blog2006 (11) TMI 234X X X X Extracts X X X X X X X X Extracts X X X X ..... us payments on which tax was deductible at source as per the provisions of section 195 of the Act. The assessee-company filed return of income in respect of assessment year 1998-99 declaring nil income on the ground that the payments received by one NRI company from other NRI companies cannot be brought to the charge of tax under the provisions of Income-tax Act, 1961. This claim was rejected by the Assessing Officer with the result that the payments received by the NRI were assessed in the hands of the assessee-company as representative assessee of the NRI. The Assessing Officer also levied interest under sections 234A and 234B. The assessment made by the Assessing Officer was carried in appeal before the CIT(A), who confirmed the quantum of the assessed income but deleted the interest charged under both the sections as mentioned above with the following observations:- "Insofar as objection to the levy of interest under sections 234A and 234B for want of any specific direction in the assessment is concerned, I do not agree with the appellant because on a specific query by me, it was admitted by the AR that a duly signed form ITNS No. 150 was also served on the appellant along wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... interest is leviable for the default of not filing the return of income in time and levy of such interest is mandatory. With regard to the interest under section 234B, the matter was restored to the Assessing Officer for determining the extent of such income on which tax was deductible at source. The learned DR also referred to ITAT, Delhi Special Bench decision in the case of Motorola Inc. v. Dy. CIT [2005] 95 ITD 269. In this case also, the Special Bench was concerned with the question regarding levy of interest under sections 234A and 234B, in a case where tax at source was deductible under section 195 of the Act. It was held by the Special Bench that the charging of interest under both the sections as mandatory and the Assessing Officer has no power to reduce or waive such interest. However, with regard to levy of interest under section 234B, it was held by the Special Bench that no such interest can be chargeable, in a case where on the relevant income, tax is deductible at source. 5. The learned, DR therefore, submitted that the learned CIT(A) was not justified in deleting interest charged under section 234A of the Act. With regard to the interest under section 234B, the le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he liability to pay such amount by way of advance tax. Therefore, the question of charging interest under sections 234A, 234B and 234C do not arise at all and consequently the same are cancelled." 8. With regard to charging of interest under section 234A, the learned counsel also placed reliance on the following cases: (1) Dr. Prannoy Roy v. CIT [2002] 254 ITR 755 (Delhi) (2) Milan Enterprise v. Asstt. CIT [2005] 95 ITD 18 (Mum.). 9. We have given a careful consideration to the rival submissions and we have gone through the relevant facts as also the precedents cited before us. We first deal with the question regarding charging of interest under section 234A. Interest under section 234A is chargeable where the return of income is not furnished before the due date. Such interest is chargeable on the amount of the tax on the total income as determined under section 143(1) or on regular assessment as reduced by the advance tax paid and any tax deducted or collected at source. Thus, such interest is leviable when return of income is filed late by the assessee and the calculation of interest is based upon the tax after allowing credit for the advance tax and tax, which is deduct ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arged interest for the return filed by assessee after a delay of 11 months under section 234A of the Income-tax Act, 1961. In a revision petition filed by the assessee under section 264, the Commissioner held that deduction of tax paid was not provided in section 234A, as it compensates delay or default in filing the return of income and not the tax. On a writ petition: Held , allowing the petition, that the petitioner had paid the tax before the due date for filing the return for the year in question. The revenue had not suffered any monetary loss for the non-filing of the return by the petitioner. Sections 234A, 234B and 234C were enacted to see that the income-tax return was filed within the prescribed time. If the return was not filed within the time prescribed, the Assessing Officer would not only be entitled to issue an appropriate notice directing the assessee to file a return but also in a case of this nature take recourse to the provisions of sections 147 and 148 of the Act. Therefore, interest under section 234A would be payable only in a case where tax had not been deposited prior to the due date of filing of the return." 10. From the above, it is seen that even tho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Hon'ble Calcutta High Court was concerned about levy of penalty under section 273(1)(b) and the definition of assessed tax contained under section 215(5) for the purpose of calculating the penalty leviable. The ratio of this decision may be reproduced below from the head note;- "While computing the assessed tax as defined under section 215(5) of the Income-tax Act, 1961, for the purpose of determining the quantum of minimum penalty imposable for the default falling under section 273(1)(b), tax deductible at source and deducted within the financial year has to be taken into consideration. The assessee is not liable to pay any advance tax on the income which is subject to deduction of tax at source. The advance tax is paid in a financial year, the credit for the tax so paid in advance is given to the assessee at the time of regular assessment in the assessment year immediately following the year in which the advance tax is paid. It is, therefore, clear that tax deductible in the context of section 215(5) means tax deducted at source. The amount of tax so deducted at source under the provisions of sections 192 to 195 is, so far as the affected person is concerned, to be treated as ..... 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