TMI Blog1994 (5) TMI 42X X X X Extracts X X X X X X X X Extracts X X X X ..... had been given by the Assessing Officer. It was also pointed out that if the payment of Rs. 2,21,822 made on 28-1-1991 is taken into account then there is no shortfall in the payment of advance-tax for the purposes of section 234B. The working was given as under : 90% of advance-tax after adjustment of TDS Rs. 7,69,491 Less: Advance tax paid Rs. 3,21,842 Plus Rs. 6,06,000 2. It had further been brought to the notice of the Assessing Officer that if the payment of Rs. 2,21,822 made on 28-1-1991 is taken into account, interest under section 234C would get reduced. The Assessing Officer vide impugned order accepted the plea of the assessee regarding the interest under section 234B. With regard to the interest under section 234C the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able was Rs. 8,29,890. Assessee was required to pay 20% of the advance-tax payable, by 15th September, 1990. Since assessee did not pay any amount on account of advance-tax even up to 15-12-1990 i.e., the due date for second instalment of advance-tax, interest @ 1.5% per month of default subject to maximum of three months was chargeable. Such interest works out to Rs. 7,469. There is no dispute either about the levy of interest or about the calculation relating to this period. 7. Assessee was required to pay 50 per cent of the advance-tax of Rs. 4,14,945 by 15-12-1990. No payment of advance-tax had been made till 28-1-1991. On 28-1-1991 assessee admittedly had made a payment of advance-tax of Rs. 2,21,842. Assessee is not disputing the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en, the assessee shall be liable to pay simple interest at the rate of one and one-half per cent per month of the shortfall from for a period of three months on the amount of the shortfall from twenty (thirty) per cent or, as the case may be, fifty (sixty) per cent of the tax due on the returned income." (w.e.f. 1-6-1992 20% has been substituted by 30% and 50% has been substituted by 60 per cent). It is evident from the section quoted above that interest chargeable is @ 1.5 per cent per month of the shortfall from for a period of three months on the amount of the shortfall. 9. Sections 234A, 234B and 234C were inserted by the amending Act of 1987. These provisions replaced the old provisions which gave the assessing authority discret ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 234C. It is pertinent question which we would like to answer. As already pointed out assessee was required to pay 20 per cent of the tax due on the returned income by 15-9-1990. 50 per cent of the tax due was payable by 15-12-1990. Now as in this case assessee has committed default in the payment of 20 per cent of the advance-tax by 15-9-1990 as well as in the payment of second Instalment which was due by 15-12-1990. If the restriction for the levy of interest for a maximum period of three months had not been provided then it would result in the levy of interest twice and in some cases thrice for the same default. This is explained with the help of the following example in assessee's own case. 10. Under section 234C and section 234B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lity of interest in respect of first instalment of advance-tax as well as in respect of second instalment of advance-tax, interest would be chargeable in respect of Rs. 1,65,978 for a period of three months for the default of first instalment of advance-tax and the interest for this very sum would be chargeable under the second part of section 234C for non-payment of second instalment of advance-tax till the date of payment (the amount of Rs. 1,65,978 being 20 per cent of the tax payable having emerged with sum of Rs. 4,14,942 being 50 per cent of the tax payable). As already explained, there being a requirement of making 50 per cent of the tax payable by 15-12-1990 which includes 20 per cent payable by 15-9-1990 there would be no justifica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the difference between the amount paid in each such instalment and the amount which should have been paid, having regard to the aggregate advance-tax actually paid during the year; and (ii) in the case referred to in clause (b), for the period during which the payment of advance-tax was so deferred." The above section clearly provides for levy of interest per annum for the period during which payment was deficient. The CBDT having clarified that section 234C replaced section 216 the contention raised on behalf of the assessee that the interest is chargeable only for the period of default not exceeding three months gets credence. 13. Section 234B also provides for levy of interest @ 2 per cent per month to the date of determination ..... X X X X Extracts X X X X X X X X Extracts X X X X
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