2025 (12) TMI 1169

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....ent: Ms. R Anitha, Addl. CIT ORDER PER MANU KUMAR GIRI, JM: The captioned appeal by the assessee is arising out of the order of the Ld. Commissioner of Income Tax (Appeals) ADDL/JCIT(A) AGRA dated 31.07.2025 for AY 2021-22, wherein the levy of interest under section 234A for the month of March 2022 has been upheld. The assessee contests only the levy of such interest despite having fully ....

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....rest up to that date was correctly charged. 4. The ld.AR for the assessee contended that interest under section 234A being compensatory in nature cannot be levied for March 2022 when no tax remained unpaid as on 01.03.2022. He further submitted that CBDT Circular No. 2/2015 and the judgment of the Hon'ble Supreme Court in Prannoy Roy & Anr. vs. CIT (309 ITR 231) clearly hold that interest under....

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....er and pleaded for the dismissal of the appeal. 6. We have considered the rival submissions and perused the material on record. The undisputed fact is that the assessee discharged its entire self-assessment tax liability on 26.02.2022. Therefore, on 01.03.2022, the period for which the impugned levy has been made, there was no outstanding tax. Section 234A imposes compensatory interest only whe....

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....on of payments where composite liabilities exist. In the present case, however, the assessee's tax liability itself stood fully discharged before even the month for which interest has been levied. Once no tax remained outstanding after 26.02.2022, the statutory provision for appropriation is rendered inapplicable for the period thereafter. In our considered view, levy of interest under section....