Advance tax on Cash Compensatory Support (CCS) made taxable retrospectively; interest under ss. 234B/234C held not chargeable.

The dominant issue was whether interest under ss. 234B and 234C could be levied for failure to pay advance tax on Cash Compensatory Support (CCS) when CCS became taxable only by a retrospective amendment. Relying on CBDT instructions indicating that interest should not be charged where liability arises due to retrospective amendment, and noting the bona fide inability to anticipate such liability, the Tribunal held that no advance-tax default could be attributed to the assessee for CCS; accordingly, interest under ss. 234B/234C was not chargeable on the CCS component. The matter was remitted to the AO to recompute interest after excluding CCS, and the appeal was allowed.

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Issues Involved:
The appeal concerns interest levied u/s 234B and 234C on cash compensatory support (CCS) received by the assessee, which was initially treated as a capital receipt but later became taxable due to retrospective legislative amendments.

Summary:
The assessee appealed against the interest levied u/s 234B and 234C on CCS received, initially considered capital but later deemed taxable. The Assessing Officer and CIT (Appeals) upheld the interest charges, citing the clear provisions of law and the assessee's failure to pay advance tax. The assessee argued a bona fide belief based on precedents and timing of amendments. The Tribunal found in favor of the assessee, noting the Special Bench decision's availability at the time of non-payment of advance tax. The Tribunal referenced a High Court decision advising against injustice in such cases and highlighted CBDT instructions allowing waiver of penal interest in similar circumstances. Consequently, the Tribunal ruled that no interest u/s 234B or 234C should be charged, directing a recalculation by the Assessing Officer excluding the CCS amount. The appeal of the assessee was allowed.

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