Interest U/s. 234C for newly formed Firms and Companies for the period when they were not in existence
Issue/Justification
As per the provisions of section 207 and section 211, the assessee is liable to pay the advance tax on the `Current Income’ of the assessee. This presupposes the existence of the assessee. In view of this, interest under section 234C cannot be charged for the instalments of advance tax due before the date of coming into existence of a Firm or a Company. In spite of this, the Departmental Software processing the ITR does not take care of such a situation and interest under section 234C is being charged in a routine manner.
Suggestion
It is suggested that the Departmental Software needs to be suitably amended so that firm and companies are not required to pay interest on the short payment of instalment of advance tax under section 234C for the period when they were not in existence.
(SUGGESTIONS FOR RATIONALIZATION OF THE PROVISIONS OF DIRECT TAX LAWS)
