Interest U/s. 234A to 234C Not Payable If Assessment Order Silent

Even if any provision of law is mandatory and provides for charging of tax or interest, the view taken in CIT vs. Ranchi Club Ltd 247 ITR 209 (SC) is that such charge by the assessing officer should be specific and clear and assessee must be made to know that the assessing officer has applied its mind and  has ordered charging of interest. The mandatory nature of charging of interest and the actual charging of interest by application of mind and the mention of the proviso of law under which such interest is charged are two different things.

In the present case although it is stated by Shri Mahajan that in the demand notice there was charging of interest, there is no such pleading or ground taken, nor do we find that any such point was raised in the Tribunal.

HIGH COURT OF ALLAHABAD

Income Tax Appeal No.81 of 2002
Commissioner of Income-Tax-II, Kanpur Vs. M/s Deep Awadh Hotels (P.) Ltd., Kanpur

Income Tax Appeal No.82 of 2002
Commissioner of Income Tax-II, Kanpur Vs. M/s Deep Awadh Hotels (P.) Ltd., Kanpur

Date of pronouncement- 03.08.2011

Hon. Sunil Ambwani, J. Hon. Pankaj Mithal, J.

We have heard Shri A.N. Mahajan, learned counsel for the department. Shri Ashish Bansal appears for the assessee.

In both the income tax appeal Nos.8 1 and 82 of 2002 the department has raised following substantial questions of law to be considered by the Court:-

“1. Whether on the facts and in the circumstances of the case, the Income Tax Appellate Tribunal was correct in law in holding that the ass essee was an Industrial Undertaking for the purpose of business of manufacture or production of any article or thing and consequently entitled to investment allowance under section 32A (1) of the Income Tax Act, 1961?