2010 (7) TMI 394

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.... the issue of charging of interest under section 234B of the Income-tax Act, 1961 for fresh adjudication to the file of the Commissioner of Income-tax (Appeals) having decided the issue in favour of the appellant in view of the judgment of CIT v. Haryana State Co-operative Supply and Marketing Federation Ltd. [2007] 34 IT Rep. 441 (P&H) with a rider that once the assessee is found to have defaulted in payment of advance tax on the basis of law as prevalent in the relevant financial year, its subsequent variation on account of further disallowances suffered because of changed legal position would still empower the Assessing Officer to charge interest under section 234B of the Act, which is illegal, perverse and leads to allowing a second inn....

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.... found due.   3. We have heard learned counsel for the parties and perused the record.   4. Learned counsel for the assessee submitted that the Tribunal is in error in holding that even if the assessee on a bona fide calculation found that no advance tax was payable, still the liability of interest under section 234B of the Act will be attracted. He relied upon the following judgments:   (i) CIT v.HaryanaStateCo-operative Supply and Marketing Federation Ltd. [2007] 34 IT Rep. 441 (P&H);   (ii) CIT v. Kanti Kumar Sharma [1989] 179 ITR 114 (P&H);   (iii) United Commercial Bank v. CIT [1982] 137 ITR 434 (Cal);   (iv) Saurashtra Packaging P. Ltd. v. CIT [1993] 204 ITR 443 (Guj); and   (v) ....

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....234B of the Act on the amount of income assessed under section 143(1) or 143(3) of the Act and not on the basis of income declared in the return by the assessee. The relevant observations read as under (page 152) :   "9. It is no doubt true that prior to the amendment brought by the Finance Act, 2001, which has been made effective retrospectively from April 1, 1989, the interest under section 234B of the Act was chargeable with reference to the total income as had been declared by the assessee in its return and not on the assessed income. Explanation 1 to section 234B of the Act was amended by the Finance Act, 2001. It reads thus :   `Explanation 1.-In this section, "assessed tax" means the tax on the total income determined....