Section 234A interest is compensatory and cannot be levied when tax has already been paid before return filing.

Interest under section 234A of the Income-tax Act, 1961 is compensatory and is attracted only where tax remains payable for the default in filing the return. Where the assessee had already paid the tax, no monetary loss arose to the Revenue on that account, so section 234A interest could not be levied. Liability for delayed deposit of self-assessment tax under section 140A remained separate and was accepted, leaving the assessee liable only for that interest.

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Issues: Whether interest under section 234A of the Income-tax Act, 1961 was leviable when the assessee had already paid the tax and the delay was only in filing the return, apart from liability for delayed payment under section 140A of the Income-tax Act, 1961.

Analysis: The Court followed the earlier Delhi High Court view that section 234A must be construed according to its language and object and not as a penal provision. It held that interest is compensatory in nature and is attracted only where there is tax payable on the relevant default. As the assessee had already paid the tax, the Revenue had not suffered a monetary loss on that count. The only interest payable was for delayed deposit of tax under section 140A, and that liability was accepted.

Conclusion: Interest under section 234A was not leviable on the facts, and the assessee's liability was confined to interest for late payment under section 140A.

Ratio Decidendi: Interest under section 234A of the Income-tax Act, 1961 is compensatory and cannot be charged where the tax due has already been paid, the only surviving liability being interest specifically payable for delayed self-assessment tax under section 140A.

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