Interest under Section 234B charged for 36 months on first assessment under Section 153A from April 2010 to March 2013

ITAT Cochin held that interest under section 234B(1) on assessment under section 153A dated 28.03.2013 should be charged for 36 months from April 2010 to March 2013, being the first assessment. Section 234B(3) applies only when assessment under section 147/153A is not made for first time. Appellate order under section 250(6) only adjusts interest amount based on revised tax liability under section 234B(4), not the charging period. AO directed to compute interest accordingly for the specified 36-month period.

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Issues Involved:
1. Computation of interest under section 234B of the Income Tax Act, 1961.
2. Applicability of the amendment to section 234B(3) by Finance Act, 2015.
3. Rectification of interest computation under section 154.

Detailed Analysis:

1. Computation of Interest under Section 234B:

The primary issue in this case is the manner of computing the interest liable to be levied under section 234B of the Income Tax Act, 1961. The assessee argued that the interest under section 234B(3) should be computed from the date of processing the return up to the date of reassessment under section 153A, which in this case would range from 12 to 29 months. The Assessing Officer (AO), however, computed the interest from the first day of the assessment year (01/04/2010) up to the date of reassessment in March 2013, for a period of 36 months.

2. Applicability of the Amendment to Section 234B(3) by Finance Act, 2015:

The assessee contended that the amendment to section 234B(3) by the Finance Act, 2015, effective from 01/06/2015, would not be applicable to her case. The CIT(A) held that the provisions of section 234B(3) as amended w.e.f 01/06/2015 are applicable, and interest is chargeable from 01/04/2010 to 31/03/2013 for a period of 36 months. This position was upheld by the appellate tribunal, which noted that the amendment aligns the computation of interest under section 234B(3) with that under section 234B(1).

3. Rectification of Interest Computation under Section 154:

The AO initially computed interest for a period of 42 months instead of the actual 36 months. This was rectified under section 154, and the rectification was confirmed by the CIT(A). The tribunal observed that the interest charged under section 234B(1) is for the period from April 2010 to March 2013, as the assessment under section 153A on 28/03/2013 is to be regarded as a regular assessment. The tribunal clarified that there was no subsequent assessment under sections 147 or 153A, and thus no occasion to charge interest under section 234B(3).

Conclusion:

The tribunal concluded that interest should be charged on the assessed tax computed with reference to the assessee's tax liability as determined pursuant to the appellate proceedings for the 36-month period from April 2010 to March 2013. The assessee's appeal was found to be without basis on facts or in law. The AO was directed to provide an opportunity to the assessee to raise objections, if any, and to ensure that the interest under section 234B is charged strictly in terms of this order to avoid further litigation.

Order:

The assessee's appeal was decided on the aforesaid terms, and the order was pronounced on March 28, 2024, under Rule 34 of The Income Tax (Appellate Tribunal) Rules, 1963.

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