TaxTMI 
TaxTMI 
TaxTMI 
2004 (1) TMI 310
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.... Less: TDS 25,79,802 8,40,186 Add: Interest under section 234C 3,605 8,43,791 Less: Advance tax 31,50,000 Refundable 23,06,209 Less: Refunded as per intimation under section 143(1) dated 8-9-1999 23,06,209 Balance NIL 3. On verification of the records, it appeared to the Commissioner of Income-tax, Kochi that the interest should have been levied under section 234B on a sum of Rs. 57,25,495. The said amount represented the assessed tax as reduced by the total of advance taxes paid by the assessee and the credit for tax deducted at source. The CIT therefore, observed that, an interest amounting to Rs. 28,91,375 has been omitted to be levied by the Assessing Officer, otherwise chargeable under section 234B. According to the Commissioner, this omission has been caused for the reason that the Assessing Officer wrongly treated the tax credit carried forward under section 115JAA as equivalent to advance tax. It also appeared to the Commissioner that on the same footing, the Assessing Officer has short levied interest under section 234C to the extent of Rs. 3,91,336. 4. Therefore, the Commissioner of Income-tax found that the assessment order has been erroneo....
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.... Accordingly, the assessment order was set aside and direction was given to the Assessing Officer to redo the assessment afresh. The present appeal is against the above revision order. 6. Shri Thomson Thomas, the learned Chartered Accountant appearing for the assessee-company argued the case at length. His contentions were on the basis of the following effective grounds: 1. The learned Commissioner of Income-tax ought to have considered the fact that interest under sections 234B and 234C is chargeable only when tax is payable by the assessee to the Income-tax Department and not when refund is due to the assessee by the department. 2. The ld. Commissioner ought to have considered the clarification given by the CBDT vide Circular No. 13 of 2001 dated 9-11-2001 which states that assessee are liable for payment of advance tax having regard to the provision contained in section 115JB. Hence it is clear that when MAT credit is available under section 115JAA, assessees are not liable for payment of advance tax having regard to the provisions contained in section 115JAA. 7. The learned Chartered Accountant contended that interest under section 234B is to be charged on the amount of ....
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....computation of total income at the first instance, computation of tax on total income at the second instance and thirdly, deduction of tax deducted at Source and collected at source from the tax determined in the second step above. According to the learned Chartered Accountant, intervention of tax credit allowable under section 115JAA is automatic by the operation of sub-section (4). In the case of the assessee, the above steps have been correctly followed in the assessment order and therefore there is no error or prejudice caused, as pointed out by the Commissioner of Income-tax. 11. As regards the computation of interest under section 234C, the learned Chartered Accountant relied on the Explanation to sub-section (1) thereof, and stated that tax chargeable on the total income means, the tax reduced by the amount of tax deducted or collected at source. Therefore, here also the Assessing Officer has to provide for the set off in respect of tax credit under section 115JAA(1). 12. Section 115JAA comes under Chapter XII-B of the Income-tax Act, 1961. The learned Chartered Accountant pointed out that the above chapter deals with special provisions relating to certain companies. There....
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....o section 234B, "assessed tax" does not include any items other than the tax deducted or collected at source in accordance with the provisions of Chapter XVII on any income, which is subject to such deduction or collection and which is taken into account in computing such total income. The learned departmental representative submitted that interest under section 234B is levied for the deficiency in the payment of advance tax during the previous year. The said amount of advance tax could be reduced only by the tax deducted or collected at source in the said previous year. The benefit available to an assessee as a set off of tax credit under section 115JAA(1) is not in the nature of tax deducted or collected at source. She contended that the same ratio applies to the levy of interest under section 234C. She therefore submitted that the Commissioner of Income-tax is justified in law in directing the Assessing Officer to work out the interest liability without first reducing the set off of credit from the tax computed on the total income of the assessee. 16. We heard both sides in detail and considered the matter. Interest under section 234B is levied for the defaults in payments of a....
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....ay advance tax is invariably linked to the liability for payment of the assessed tax. It is when the payment of advance tax is lesser than the specified limit when compared to the assessed tax, the question of non-payment of advance tax and the question of deferment of advance tax arise in. It is to be seen therefore that the carry forward tax credit available to the assessee goes to reduce the assessed tax of an assessee and thereby as a consequence also reduces the liability towards payment of advance tax. Therefore, even if the tax credit available to an assessee under section 115JAA is not specifically mentioned in Explanation 1 to section 234B, it has to be necessarily seen that the tax credit need to be considered while quantifying the net amount of advance tax payable by an assessee during a particular previous year. 21. There is no doubt that the tax credit available to an assessee reduces the quantum of "assessed tax". It is to be seen that even the payment of advance tax is an advance payment of assessed tax. The final liability in an assessment is always the assessed tax. Therefore, if the tax credit available to an assessee under section 115JAA reduces the liability of....