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Issues: Whether interest under section 234B of the Income-tax Act, 1961 was leviable on the assessee in respect of enhanced compensation and related interest received on compulsory acquisition of agricultural land.
Analysis: The assessability of the enhanced compensation component had been unsettled until the law was clarified by the Supreme Court, and the assessee had adopted the spread-over basis consistently with then-existing judicial support. In that background, the assessee's non-payment of advance tax on the disputed amount could not be treated as an attributable default. Since the alleged shortfall arose from a bona fide and legally supportable position on the year of taxability, the basis for charging interest under section 234B was not made out.
Conclusion: The levy of interest under section 234B was deleted and the issue was decided in favour of the assessee.
Final Conclusion: The appeal succeeded to the extent of deleting the interest levy under section 234B, leaving the assessee with relief on the sole substantive issue adjudicated in this order.
Ratio Decidendi: Where the default in advance tax payment is caused by a bona fide and unsettled legal position on the taxability or timing of taxation of income, interest under section 234B cannot be sustained as an attributable default of the assessee.
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