2020 (2) TMI 1695

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....tate Development and Construction of residential as well as commercial projects. The assessee filed the return of income on 31.08.2014 declaring total income of Rs.10,44,53,300/-. During the year under consideration, the assessee also had income from house property, income from business and income from other sources. The case was selected for scrutiny. The Assessing Officer made disallowance (1) on account of application of section 14A of the Income tax Act, 1961 (hereinafter referred to as "the Act") read with Rule 8D(2)(iii) of the Income-tax Rules, 1962 (hereinafter referred to as "the Rules") and (2) charged interest u/s 234A and 234B of the Act qua the self assessment payments u/s 140A of the Act. 3. In the first appellate proceedin....

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.... was done for the earlier year that only common expenses should be considered and the expenses incurred exclusively in relation to taxable income, should be reduced. The assessee submitted such calculation which has been reproduced at page 12 of the impugned order, thereby working out a sum of Rs.13,297/- as relatable to both exempt and taxable streams of income. Similar to his action for the preceding year, the ld. CIT(A) not only sustained the disallowance as made by the AO but also enhanced the disallowance u/s 14A by such an amount of Rs.13,297/-. The assessee is aggrieved by the confirmation as well as enhancement of the addition. 8. Having heard both the sides and gone through the relevant material on record, we find that thi....

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....evant material on record. It is an undisputed position that the assessee filed return belatedly and hence, is liable to be visited with interest u/s.234A of the Act. The case of the assessee is that the amount of self-assessment tax paid by him prior to the filing of return should be reduced in the process of calculation of interest under this section. We want to clarify at the outset that the dispute in the extant appeal is only regarding the calculation of interest and not for the duration for which the interest is so chargeable. Section 234A though provides certain amounts of taxes etc. under sub-section (1) to be reduced from the amount of tax on total income determined under regular assessment for the purpose of calculation of interest....

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....uch direction for reducing the amount of self assessment tax paid by the assessee after the due date but before the actual filing of return. It is the case of the assessee that similar direction ought to have been given for such later interest payment as well. We find force in the argument of the ld. AR. It is a settled legal position that payment of interest u/s.234A is a compensation to the Revenue for deprivation of the amount of tax due, for the period it is not paid. The Hon'ble Supreme Court in Pranoy Roy (supra) dealt with a situation in which the amount of self-assessment tax was paid before the due date u/s. 139(1). There was no amount of self assessment tax paid after the due date. The Hon'ble Court, therefore, directed to reduce ....