2003 (1) TMI 253 - AT - Income Tax

Tribunal upholds CIT(A)'s decision on interest charges, waiver justified by income timing

INCOME TAX OFFICER. Versus DR. MANJIT SINGH SEKHON.

INCOME TAX OFFICER. Versus DR. MANJIT SINGH SEKHON. - TTJ 091, 393, Issues:- Appeal against deletion of interest charged under section 234B of the IT Act by CIT(A)- Interpretation of provisions of section 273A(5) of the IT Act- Applicability of CBDT circular on waiver of interest- Comparison of relevant case laws cited by both parties- Justification for deleting interest charged under section 234BAnalysis:1. The appeals were filed by the Revenue against the CIT(A)'s order deleting interest charged under section 234B of the IT Act for the assessment years 1989-90 to 1993-94. The issue revolved around the accrual of interest on compensation received by the assessee following a legal dispute over land acquisition.2. The primary contention was whether the CIT(A) was justified in deleting the interest under section 234B, considering the waiver of interest by the Chief CIT under section 273A(5) of the IT Act. The AO initiated proceedings to tax yearly interest based on Supreme Court judgments on accrual basis. The CIT(A) admitted the appeals and ruled in favor of the assessee for some assessment years.3. The assessee disputed the liability of interest under section 234B, citing various judgments and the timing of income accrual. The CIT(A) upheld the AO's order for one assessment year but deleted interest for others, leading to the Revenue's appeal. The Chief CIT partially waived interest based on a CBDT circular.4. The Departmental Representative argued against the CIT(A)'s decision, citing judgments related to waiver of penalties and interest. The assessee's counsel supported the CIT(A)'s order, emphasizing the CBDT circular's instructions on interest waiver and a previous Tribunal decision on similar grounds.5. The Tribunal dismissed the appeal for the assessment year where the interest charge was upheld by the CIT(A). For other years, it analyzed the provisions of section 273A(5) and the CBDT circular, concluding that the waiver of interest was not under section 273A. The Tribunal also differentiated the cited case laws from the present case.6. Relying on a previous Tribunal decision, the Tribunal held that the CIT(A) was justified in deleting the interest charged under section 234B for the relevant assessment years. Consequently, all grounds of the Revenue's appeals were dismissed, confirming the CIT(A)'s consolidated order.7. In conclusion, the Tribunal dismissed all the Revenue's appeals, upholding the CIT(A)'s decision to delete interest charged under section 234B for the assessed years based on the timing of income accrual and waiver of interest by the Chief CIT.