Interest Under Section 234C Invalid; Tribunal Sides with Appellant on Advance Tax for Gifted Property

The Tribunal allowed the appellant's appeal, ruling that charging interest under section 234C of the Income Tax Act was not valid. The appellant received an immovable property as a gift in the last quarter and paid more than 90% of the tax payable before the due date of the fourth quarter. The Tribunal found the appellant's argument justifiable, as the advance tax liability could not be estimated without the actual receipt of the gift, and there was no loss of revenue.

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Issues involved:
The appeal challenges the order passed by National Faceless Appeal Centre (NFAC), Delhi for the assessment year 2020-21 regarding the charging of interest under section 234C of the Income Tax Act.

Summary:
The appellant contested the order of the CIT (Appeals) which upheld the charging of interest under section 234C of the ITA despite the income being a gift of an immovable property received in the last quarter of the year. The appellant argued that advance tax was not required to be paid in the third quarter as the income accrued in the last quarter. The appellant highlighted that advance tax is payable when the tax amount exceeds ten thousand rupees, and in this case, the income from the gift of the property was received in the last quarter of the financial year. The appellant emphasized that the advance tax liability cannot be estimated without the actual receipt of the gift, as the income from the gift is not a regular recurring income that can be allocated throughout the year. The appellant also referenced relevant case law to support their position.

The Tribunal noted that the appellant received the immovable property through a gift after the due date of the third quarter, and therefore, the contention that advance tax was required to be paid in the last quarter was deemed justifiable. The Tribunal found that the appellant had paid more than 90% of the tax payable before the due date of the fourth quarter, indicating no loss of revenue. Consequently, the Tribunal allowed the appeal, ruling that charging interest under section 234C of the Act was not valid.

In conclusion, the Tribunal allowed the appellant's appeal, emphasizing that the appellant had fulfilled the advance tax payment requirements by paying more than 90% of the tax payable before the due date of the fourth quarter, thereby invalidating the charge of interest under section 234C of the Income Tax Act.

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