AI Drafter 
TaxTMI 
TaxTMI 
2025 (8) TMI 744
X X X X Extracts X X X X
X X X X Extracts X X X X
....s for payment of advance tax. 2. The Ld. AO and Ld. CIT(A) 56 erred in law and in facts in charging interest u/s. 234B amounting to Rs. 20,15,970/- on account of deficit in advance tax because of retrospective amendment which could not be anticipated at the time of payment of advance tax. 3. The Ld. AO and Ld. CIT(A) 56 erred in rejecting the appellant's application for rectification under section 154 and also failed to follow the direction of the Hon. CIT(A) 15 in Appeal No. CIT(A)-15/Аrr.98/2014-15 vide his Order dtd 04/09/2014 directing the AO that "The request made by the appellant is genuine. Accordingly, the AO is directed to dispose of the petition of the appellant u/s. 154 pending with him expeditiously". 4. The Ld. CIT(A) - 56 erred in placing reliance on the decision of the Supreme Court in the case of Anjum M. H. Ghaswala & Others 252 ITR 1 (SC) ignoring the fact that no default was committed by the appellant in payment of advance tax on the due dates. 3. Facts of the case are that the assessee filed its return of income for AY 2008-09 on 27.09.2008 offering income at Rs. 29,686/-. The assessee's case was selected for scrutiny and ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rther held that charging of u/s 234B are mandatory as per the decision of Hon'ble Supreme Court in the case of Anjum M.H. Ghaswala & Others reported in 252 ITR 1 (SC). In view of the above, the appeal of the assessee was dismissed. 4. Before us, the ld.DR has supported the orders of authorities below while the ld.AR of the assessee has vehemently agitated the action of the ld.CIT(A). It is contented that the assessee is a partnership firm engaged in the business of manufacturing and exporting of diamond studded gold jewellery. The unit of the assessee is situated in Seepz and it is claiming exemption u/s 10A of the Act. During the year, it had income of Rs. 29,686/- under the head Income from Business and Profession after claiming exemption u/s 10A. It had worked out the interest liability u/s 234B on the basis of above mentioned income and paid the same along with self-assessment tax pertaining to above mentioned assessment year. It paid advance tax by estimating its income during the previous year 2007-08 in accordance with the then prevailing legal position and the provisions of the Act and hence there was no failure/ default on the part of the appellant in payment of adv....
X X X X Extracts X X X X
X X X X Extracts X X X X
....f income on 27/09/2008. Hence, interest was held to be correctly charged. The CIT (A) held that the charge of interest u/s 234B was mandatory and hence, was correctly levied. 4.4 The ld.AR has further argued that the finding of the AO that the provisions were existing at the time of filing of the return of income are factually incorrect. While the return of income was filed on 27/09/2008, the amendment was introduced only by the Finance Act, 2012.The observation of the AO that the 'amendment was clarificatory in nature' is out of context since the issue before the AO was not whether the amendment could be applied to the assessment year in question or not. The question was whether interest could be levied even when there was no default of the assessee while computing and paying advance tax on the basis of the provisions existing at the relevant time. The observation of the CIT (A) that charging interest u/s 234B is mandatory is also out of context since it fails to take into consideration the peculiar circumstances of a retrospective amendment The question really is whether an assessee could be burdened with interest for non-payment of advance tax when there was no provision for ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....as on account of this retrospective amendment is also clear from the fact that the ld.CIT (A) has upheld the adjustment relying on the said retrospective amendment. In such a situation, the assessee cannot be branded as a defaulter in payment of advance tax so as to attract interest u/s 234B of the Act. In this regard, it would be worthwhile to refer to the following decisions of various High Courts which support the contentions of the assessee. The Hon'ble Calcutta in the case of Emami Limited reported in 337 ITR 470 [Cal] held as follows: "11. A mere reading of those provisions leaves no doubt that the advance tax is an amount payable in advance during a year in accordance with the provisions of the Act in res total income of the assessee which would be chargeable the assessment year immediately following that financial year. Thus, in order to hold an assessee liable for payment of advance liability to pay such tax must exist on the last date of advance tax as provided under the Act or at least on the financial year preceding the assessment year in such liability arises subsequently, when the last date of payment of advance tax or even the last date of the financial ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is not warranted. The following observations of the Hon'ble Bombay High Court are relevant : "17. In the present case, what the assessee has pointed out is that some of the amounts included in the book profits as per Explanation) to section 115JB were brought in by the Finance Act, 2008 with retrospective effect from 1st April, 2001. The assessee cannot be held be liable for failing to make a provision for payment of advance tax which was not possible on the last date as per the law then prevailing. Thus clause (h) which is reproduced above having been brought in with retrospective effect but by Finance Act 2008, the advance tax computation by the assessee for the year 2006-07 cannot be faulted and it cannot be said that the assessee is in default and therefore, there is any liability to pay interest in terms of section 234B of the Income-tax Act, 1961. 18. In the present case of Star India (P.) Ltd. v. CCE [2006] 280 ITR 321/150 Taxman 728 the Hon'ble Supreme Court held to be liable for failing to that the service of "broadcasting" was made a taxable service with effect from July 16, the Finance Act, 2001. The appellant disputed its liability to payment ....