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2024 (1) TMI 24 - AT - Income TaxComputation of interest u/s 234A - date on which the quantification of interest liability under section 234A is to be taken - Assessee pleaded that interest u/s 234A was paid by the assessee on 27/09/2021 itself though the return was filed a bit late, but that too within the time allowed by the CBDT for filing of the returns - According to the assessee, as on the date of paying the taxes on 27/09/2021, the interest liability under section 234A of the Act was less than Rs. 1 lakh and, therefore, such payment of taxes shall be construed to be before the due date - HELD THAT:- As decided in PRANOY ROY ANR ANOTHER & INDIA METERS LTD. [2008 (9) TMI 150 - SUPREME COURT] interest under section 234A of the Act could be levied only by way of compensation to compensate the Revenue in order to avoid it from being deprived of the payment of tax on the due date and, therefore, such interest would be payable only in a case where tax has not been deposited prior to the due date of filing of the income tax return. We are in agreement with the submission of the learned AR. The clarification No. 1 of the circular is not clear as to the date on which the quantification of interest liability under section 234A of the Act has to be taken. But, when we read the circular as a whole in the light of the decision of the Hon’ble Apex Court in the case of Prannoy Roy (supra), the reasonable inference is that if the assessee deposits the taxes at a date at which the interest liability under section 234A of the Act, does not exceed Rs. 1 lakh, such an assessee is entitled to the extended period of due date and, therefore, any return of income filed thereafter will not fasten any additional interest liability. We direct the AO to verify whether the taxes paid by the assessee as on 27/09/2021 took care of the interest liability till such date, and if it is so, to delete the addition made. Grounds of appeal are allowed accordingly.
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