TaxTMI 
TaxTMI 
2010 (1) TMI 37
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....on certain deposits was set off against interest paid on deferred payment facility amounting to Rs.12,03,993/-. The Assessing Officer refused to allow this set off in his assessment order dated 26.2.1992. His view was that the interest income earned by the assessee during the period of construction is chargeable to tax under the head "Income from other sources". The interest paid, on the other hand, was not directly relatable to interest received by the assessee and therefore, interest income could not be set off against interest paid. The AO also, inter alia, gave direction for charging interest under Sections 234B and 234 of the Income Tax Act, similar direction to charge interest under Section 234B of the Act was given by the Assessing Officer while passing the assessment order in respect of the year 1991-92 under similar circumstances. 3. The assessee filed appeals before the CIT(A) against the orders of the AO in respect of both these assessment years, who dismissed these appeals. The assessee approached the Income-Tax Appellate Tribunal (ITAT) by filing further appeal. In these appeals the assessee also took the plea that provisions of Section 234B were not applicable in t....
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....ni, learned counsel appearing for the Revenue, submitted that interest under Section 234B was chargeable on account of non-deposit of the advance tax, which was compensatory in nature. Therefore, whether it was a bona fide mistake or otherwise, was immaterial. The moment there was "default" in making payment of advance tax, provisions of Section 234B stand attracted and interest become payable. He submitted that the law as contained in section 234B of the Act has undergone a change through Finance Act 1987 with effect from 01.04.1989 making it mandatory for the assessing authority to charge the interest chargeable under section 234A, 234B and 234C of the Act. The expression „shall‟ used in the said section cannot be construed as „may‟. In fact, this issue has been examined at length by the Five Judges Constitutional Bench of the apex court in the case of Anjum M.H. Ghawswala & Others reported in 252 ITR 1 (though in the context of power of Settlement Commission to reduce or waive the interest) and it is held that the assessing authority has no power to reduce or waive interest statutorily payable under the said sections. As regards non-mentioning of Section ....
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....ted on his estimated current income, it is also to be recorded that such estimate was not bona fide. 8. His further submission was that period for which interest is chargeable was also required to be determined which exercise was not undertaken in the present case. Learned counsel made a fervent plea to the effect that the judgment of the Supreme Court in Anjum M.H. Ghawswala (supra) was not applicable as that case related to the powers of the Settlement Commission to waive the interest charged and in that context the Supreme Court held that interest is mandatory and cannot be waived by the Settlement Commission. According to him, this case did not relate to the modality of charging interest. On this aspect, he submitted, the judgment of the Supreme Court in CIT v.Ranchi Club Limited (supra), as affirmed by Smt. Tejkumari v. CIT (supra) was clearly applicable. On the same analogy the learned counsel tried to distinguish the judgment of the Supreme Court in Kalyan Kumar Roy v. Commissioner of Income Tax (supra). 9. We have given our due consideration to the aforesaid submissions of the counsel on the either side. The important fact which is to be borne in mind in the present c....
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....ld be charged under Section 234B of the Act only on the ground that the assessee had held a belief, which on the face of it, is a bona fide belief that it had no tax chargeable to tax and relied upon the judgment of Patna High Court in CIT v. Ranchi Club Limited (supra), which has been affirmed by the Supreme Court in Smt. Tejkumari v. CIT (supra). 13. In CIT v. Ranchi Club Limited (supra) the question was as to whether levy of interest under Section 234A was justified. Liability under this provision arises where the assessee fails to file the return of income either under Section 139(1) or (4) or Section 142(1) of the Act pursuant to the notices issued there under or files the same after the due date. In this context, the Patna High Court was of the opinion that where return is filed within time, but a particular item of income is in dispute as being includible within tax income or not, the mere issue of notice under Section 142 will not confer jurisdiction upon the authority to levy interest under Section 242A of the Act. Section 234B of the Act, on the other hand, authorizes the Revenue to charge interest in case no advance tax is paid or short paid. Sub-Section (1) thereof r....