TMI Blog2005 (2) TMI 430X X X X Extracts X X X X X X X X Extracts X X X X ..... sue raised in the present appeal is against the charging of interest under section 234B. By relying on the decision of the Apex Court in the case of Central Provinces Manganese Ore Co. Ltd. v. CIT [1986] 160 ITR 961, it was argued that the appeal deserved to be dismissed in limine as not maintainable. In the opposition, ld. counsel for the assessee submitted that the Charging of interest under section 234B cropped up by virtue of the order under section 154 and hence the appeal was maintainable. 5. I have heard the rival submissions and perused the rival material on record. The facts of the case clearly point out that the assessee has objected to the chargeability of interest under section 234B in total. It is the case on behalf of the assessee that he is not liable to interest at all. It is true that the only ground in the present appeal is against the charging of interest under section 234B but the chargeability of interest has been assailed in totality. In the aforesaid decision, the hon'ble Supreme Court has held the appeal as not maintainable unless the assessee claims to be not liable to interest at all. Since the assessee in the present appeal is challenging the levy of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... DR invited my attention towards amendments carried out in sub-section (1) and Explanation 1 to section 234B by the Finance Act, 1995 and 2001 with retrospective effect from 1-4-1989. It was contended that the charging of interest under section 234B on the assessed income has been legalised by these amendments with retrospective effect from the date of insertion of section 234B itself. The summary of his other submissions was the reiteration of the reasons recorded by the first appellate authority in the impugned order in negativing the assessee's claim in this regard. 7. I have heard the rival submissions and perused the relevant material on record in the light of precedents cited before me. The first question, which arises for my consideration is to decide as to whether the assessee was liable to pay interest under section 234B at all? It is noticed that the interest was charged by way of order under section 154 rectifying the order passed under section 143(3) on 29-1-2001. On the perusal of the said assessment order, it is noticed that the Assessing Officer, at the end, has mentioned, 'interest under section 234B is charged'. After giving the specific finding in the assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this section. It was only pursuant to the direction in the assessment order for charging interest and the interest omitted to be charged in the demand notice, that the Assessing Officer resorted to the provisions of section 154 for rectifying the mistake in not charging interest. Even the hon'ble Supreme Court in the case of Ranchi Club Ltd. has held that the specific direction giving reference to the section is necessary in the assessment order and in the absence of such reference to the section, under which interest was to be levied, the same was not chargeable through notice of demand. In the instant case, the prescription in the case of Ranchi Club Ltd. was duly complied with as the Assessing Officer had referred to the charging of interest under section 234B in the assessment order. In the light of this discussion, I am satisfied that there is no merit in the submission of the ld. AR that the interest under section 234B was not at all chargeable for non-mentioning of the specific section. 8. The next contention of the ld. AR is that the interest, if at all chargeable, should have been charged on the income as determined under section 143(1) and not as determined on regular a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hese sections is chargeable on the basis of tax on returned income or assessed income has become a subject-matter of litigation. It is proposed to clarify that the assessee shall be liable to pay interest under the said sections with reference to tax on the assessed income and not on returned income. It is further proposed to clarify that for the purpose of section 140A, interest payable under sections 234A and 234B shall be computed with reference to tax on returned income. The proposed amendments will take effect retrospectively from 1st April, 1989." Thereafter, Circular No. 14/2001 was issued to explain the provision of Finance Act, 2001. Vide para 67 it has been observed as under: "67. Modification of provisions relating to interest chargeable in certain cases: 67.1 Under the existing provisions of sections 234A and 234B of the Income-tax Act, interest is levied for defaults in furnishing return of income and in payment of advance tax respectively. Recently, the issue whether interest under these sections is chargeable on the basis of tax on returned income or assessed income has become a subject-matter of litigation. 67.2 With a view to avoid litigation, the Act has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lar assessment is made under section 143(3) or under section 144, then the income computed on processing of return under section 143(1) stands obliterated and the income determined on regular assessment holds the field for all practical purposes. It is further important to note that sub-section (1) of section 234B has prescribed the period for which the interest is to be charged on the assessed tax. It has been mentioned in two stages - viz.(i) where the income is determined under section 143(1), then from 1st of April next following such financial year to the date of determination of total income under section 143(1) and (ii) where regular assessment is made, then up to the date of such regular assessment. On going through the language of sub-section (1), it becomes vivid that where a regular assessment is made, then the date of determination of total income under section 143(1) becomes irrelevant for the purpose of charging the interest. It is a settled legal position that an Explanation is to be read alongwith the section to which it is appended. Explanation only explains the ingredients of the main section. On a harmonious reading of Explanation 1 with subsection (1) of section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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