Interest under section 139(1) is appealable when the assessee disputes assessed income and the interest follows that dispute.

An appeal lies against interest charged under section 139(1) where the assessee disputes or denies liability to be assessed in part, because a successful challenge to the assessed income can reduce the consequential interest. A mere objection to the quantum of interest alone is insufficient; the maintainability of the appeal depends on whether the assessee's grievance goes to the underlying assessment and not only to the interest computation.

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Issues: Whether an appeal to the Appellate Assistant Commissioner was competent against the levy of interest under section 139(1) of the Income-tax Act, 1961, when the assessee had disputed part of the assessed income.

Analysis: The assessment was completed under section 143(3) and the assessee succeeded before the appellate authority in getting a substantial addition deleted, while the levy of interest under section 139(1) was left undisturbed on the view that no appeal lay against interest alone. The governing principle was that an appeal is maintainable where the assessee challenges, disputes, or denies liability to be assessed to some extent, because success on that contention would reduce the consequential interest charged; a mere challenge to the quantum of interest by itself is not enough.

Conclusion: The appeal against the levy of interest under section 139(1) was competent. The question was answered in the affirmative and in favour of the assessee.

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