Case Law Details

Case Name : Abhishekh Cotspin Mills Ltd. Vs ACIT (ITAT Pune)
Appeal Number : ITA No. 02/PN/2014
Date of Judgement/Order : 12/06/2015
Related Assessment Year : 2006-07
Courts : All ITAT (4788) ITAT Pune (139)

Brief of the Case: In the case of  Abhishek Cotspin Mills Ltd. v ACIT it is held by ITAT Pune that whenever the Assessee declares the returned income which is higher than the actual Asseessed Income, then  interest would be charged under section 234C on the assessed Income and In case assessed income is higher than returned Income Than such Interest will be charged on returned Income.

Facts of the Case:  The assessee filed its return of income of Rs.14,93,01,700. The AO completed the assessment on a total income of Rs.15,03,07,250/-, which was reduced to Rs.11,32,07,271. Accordingly, the tax liability was reduced from Rs.5,05,93,420 to Rs.3,81,05,556. Therefore, the assessee moved an application under section 154 for re-computing the interest under section 234C of the I.T. Act and allow interest under section 244A of the Act on the self assessment tax paid which was rejected by the AO on the ground that the assessee filed its return of income on 13.10.2006 declaring total income of Rs.14,93,01,700 and interest under section 234C of the I.T. Act is chargeable on the income returned. Also, he rejected the interest under section 244A.

Contention of Assessee : even after serving the notice by the department, no representative was appeared on behalf of the assessee. thus the matter has been decided on the basis of the material and fats available on record.

Held by CIT(A):  ld. CIT(A) upheld the order of AO and held that interest is chargeable on the returned income. The ld. CIT(A) relied on the Explanation to section 234C of the I.T. Act. Then for section 244A of the I.T. Act, he observed that the assessee is not entitled to interest under section 244A of the I.T. Act if the refund has arisen out of payment made on account of self assessment tax. The assessee is entitled to interest under section 244A of the I.T. Act only if the refund has arisen out of payment made under sections 115WJ, 199, 206C or advance tax.

Judgement of Hon’ble Tribunal:  The Hon’ble Tribunal while relying on the decision of the Hon’ble Bombay High Court in the case of Stockholding Corporation of India Vs. CIT & Ors. in W.P No.823 of 2000, and held that the assessee is entitled to interest under section 244A of the I.T. Act from the date of payment of tax on self assessment to the date of refund of the amount.

Regarding section 234C of the I.T. Act the Assessing Officer has completed the assessment at Rs.15,03,07,250 which has got reduced to Rs.11,32,07,271. Although the assessee has computed the interest under section 234C of the I.T. Act at Rs.23,80,997/- on the basis of the returned income, however, the assessed income has been determined at a figure which is below the returned income. Had the assessed income been more than the returned income, there would have been no issue since interest under section 234C of the I.T. Act is to be computed on the basis of returned income. However, the question that arises is as to what will happen if the assessed income is below the returned income.

The Hon’ble Tribunal held that interest under section 234C of the I.T. Act has to be calculated on the returned income. As per Explanation to section 234C(1) of the I.T. Act, “tax due on returned income” means the tax chargeable on the total income declared in the return of income furnished by the assessee for the relevant assessment year. As per the provisions of the Act, the assessee is liable to interest under section 234C of the I.T. Act for deferment of advance tax on the returned income. The law is not at all clear regarding the chargeability of interest under section 234C of the I.T. Act in a case where the assessment is completed at a figure below the returned income. Further, the Hon’ble Tribunal observed that, merely because the assessee has declared higher income due to some error or mistake, the assessee shall not be liable to pay interest under section 234C of the I.T. Act on the returned income when the assessed income falls below the returned income.

Accordingly, the impugned order was set aside and AO was directed to re-compute the interest under section 234C of the I.T. Act on the assessed income.

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Type : Judiciary (10935)

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