TDS credit must reduce assessed tax from the start of interest calculation, not from the payer's deduction date.

Interest under sections 234A and 234B must be computed on assessed tax after reducing tax deducted at source from the start of the interest period, because the statutory scheme does not permit deferring TDS credit until the payer's actual deduction date. The Tribunal noted that interest was otherwise chargeable, but the dispute concerned only the timing of TDS adjustment in the calculation. Since the income was taxable for the relevant years and TDS was ultimately deducted, the reduction had to operate for the full period for which interest was charged. The lower authorities' approach was therefore incorrect to the extent it postponed TDS relief, and the appeals were allowed.

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Issues: Whether, for computing interest under sections 234A and 234B, the tax deducted at source had to be reduced from the assessed tax from the first date from which interest was charged, instead of only from the actual date on which the deductor deducted tax.

Analysis: The Tribunal noted that interest under sections 234A and 234B was already chargeable in the assessee's case, but the dispute was confined to the date from which the TDS amount was to be given effect in the interest calculation. The statutory scheme of sections 234A and 234B requires interest to be computed on the assessed tax after reducing tax deducted at source. The provisions do not create any exception that postpones the benefit of TDS reduction until the actual date of deduction by the payer. Since the income was made taxable for the relevant assessment years and TDS was ultimately deducted, the adjustment had to operate for the entire period for which interest was charged.

Conclusion: The TDS had to be reduced from the assessed tax from the first relevant date for the purpose of calculating interest under sections 234A and 234B, and the assessee succeeded on this issue.

Final Conclusion: The interest computation adopted by the lower authorities was incorrect to the extent it deferred TDS adjustment to the actual deduction date, and the appeals were allowed.

Ratio Decidendi: For computing interest under sections 234A and 234B, assessed tax must be reduced by TDS from the commencement of the interest period, because the provisions do not authorize postponement of TDS credit to the actual date of deduction by the payer.

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