TaxTMI 
TaxTMI 
2026 (5) TMI 325
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....assessee filed its return of income electronically on 12.02.2021 declaring total income at Rs. 0/-. 3. The case was selected for limited scrutiny under CASS and notice under section 143(2) was issued on 29.06.2021, followed by notice under section 142(1) dated 22.11.2021. In response, the assessee furnished details through the e-proceeding portal. The case was selected for scrutiny on the issues of "Introduction/Addition of high value intangible asset during the year" and "High liabilities as compared to low income/receipts". 4. The assessee, during the course of assessment proceedings, submitted that it had claimed deduction under section 10AA amounting to Rs. 18,65,282/- in respect of export of software services from its eligible SEZ units and had filed the return declaring total income at Rs. Nil after such deduction. The assessee also furnished requisite details, including documents and submissions through the e-proceeding portal, which were examined by the Assessing Officer. 5. The Assessing Officer, after verification of the details submitted by the assessee and considering the explanation furnished, recorded that "on verification of the details submitted by the asse....
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....by the assessee. This ground was allowed. Thus, the appeal of the assessee was partly allowed by the CIT(A). 10. Aggrieved by the order of the CIT(A), the assessee is in further appeal before us and has raised the following grounds of appeal: 1. The learned AO / CIT(A) erred in determining the aggregate income tax liability of the Appellant for AY 2020-21 at Rs. 24,32,094/- instead of Rs. 23,89,937/- as declared in the Return of Income filed by the Appellant. 2. The learned AO / CIT(A) erred in levying interest u/s 234C of Rs. 90,032 for non-payment of advance taxes for the 1st and 2nd instalment (i.e. June 2019 and September 2019) without appreciating the fact that the Appellant has commenced business operations only from 1st October 2019 and consequently there was no requirement to pay advance tax for the first and second instalment and interest ought not to be levied as per the sub-clause (c) of the second proviso to section 234C. The Appellant craves leave to add to, amend, alter, modify or withdraw any or all the Grounds of Appeal before or at the time of hearing of the Appeal, as they may be advised from time to time. 11. During the course of ....
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....second instalments of advance tax. 17. Section 234C of the Act provides for levy of interest for deferment of advance tax where an assessee, who is liable to pay advance tax under section 208, fails to pay such tax or where the advance tax paid on the due dates is less than the prescribed percentage of the "tax due on the returned income". The provision prescribes specific percentages of tax payable on or before 15th June, 15th September, 15th December and 15th March, and mandates levy of interest at the rate of one per cent per month on the shortfall. However, a careful reading of section 234C also shows that the levy is not absolute in all situations. The proviso to section 234C(1) specifically carves out exceptions where the shortfall in advance tax is on account of inability to estimate certain categories of income. In particular, clause (c) of the proviso provides that no interest shall be leviable where the shortfall is on account of under-estimate or failure to estimate income under the head "Profits and gains of business or profession" in cases where such income accrues or arises for the first time, provided the tax thereon is paid in the remaining instalments or by 31st....
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....f advance tax instalments. The assessee had submitted that since the business itself commenced only in October 2019, there was no possibility of estimating income for the earlier instalments falling due in June and September. The learned CIT(A), however, distinguished the aforesaid decision by observing that in the cited case, the income had arisen on account of an unexpected gift received during the year and, therefore, could not have been foreseen, whereas in the present case the income was from an ongoing business and the assessee "would have anticipated its turnover for the year even if it was inoperative for the first six months". The learned CIT(A) further held that interest under section 234C is consequential in nature and that waiver of such interest lies within the jurisdiction of higher authorities and not the CIT(A). 21. We have carefully considered the reasoning given by the learned CIT(A) in distinguishing the decision relied upon by the assessee. In our considered view, the distinction drawn by the learned CIT(A) is not sustainable in law. The underlying principle laid down in the judicial precedent relied upon by the assessee is that interest under section 234C ca....