TMI Blog2013 (5) TMI 15X X X X Extracts X X X X X X X X Extracts X X X X ..... ose of adjustment against the tax paid under section 140A has to be computed with respect to assessed tax determined on the basis of total income declared in the return. but only for the limited purpose of adjustment of payment made u/s. 140A against interest payable under section 234B while making computation of interest payable by the assessee which has to be computed with respect to the total income determined in regular assessment as per the definition of assessed tax given in section 234B. Thus the orders of AO under section 154 and the CIT (A) are bad in law. The order under section 143(3) originally passed by AO has correctly worked out the interest under section 234B which has to be upheld. Therefore order u/s 154 passed by AO canceled - Assessee's grounds are allowed. - ITA No.1668/Mum/2010 - - - Dated:- 10-4-2013 - Shri B. Ramakotaiah And Dr. S. T. M. Pavalan,JJ. For the Petitioner : Shri P. J. Pardiwala and Shri Nishant Thakkar For the Respondent : Shri Pravin Varma and Shri Mohit Jain, DR ORDER Per B. Ramakotaiah, A. M. This is an appeal against the order of the CIT (A) dated 24.12.2009 against the order u/s 154 passed by AO. Assessee has raised ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onths 18,54,34,968 x 34 x 1% = 6,30,47,889 2. On Rs.20,79,69,377 i.e. Rs.18,54,34,968- Rs.4,05,13,480(SA Tax paid on 21.01.08)+Rs.6,30,47,889 (interest under section 234B Upto January 2008 on assessed tax From 1.2.08 to 27.3.08 = 2 months = 20,79,69,377 x 2 x 1% = 41,59,387 Therefore interest under section 234B 6,72,07,276 3. It was submitted before the CIT (A) that for the purpose of computing interest under section 234B for the period subsequent to the payment of self assessment tax on 21st January, 2008, AO has added the entire interest of Rs.6,30,47,889 chargeable under section 234B on assessed tax upto January 2008 (being date of payment of self assessment tax) and reduced there from, self assessment tax (SA Tax) of Rs.4,05,13,480 paid on 21st January, 2008. This has resulted in charging of interest under section 234B on Rs.20,79,69,377 i.e. Rs.18,54,34,968 - Rs.4,05,13,480 (SA Tax paid on 21.01.2008) - Rs.6,30,47,889 (Interest under section 234B upto January, 2008 on assessed tax). 3.1 It was further submitted that had assessee not paid SA Tax in January, 2008 interest would have been charged by AO on Rs.18,54,34,968. Therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceptable. If the statutory provision results in an absurdity or mischief not intended by Legislature, the Court should import words so as to make sense out of the provisions also does not merit acceptance considering the fact that on a plain reading of the provisions the legislative intent which is discernible cannot be said to result in an absurdity. As noticed that the Explanation under section 1of Section 140A of the Act specifically provides that where the amount paid by assessee under the said sub section falls short of the aggregate of the tax and interest payable under sub section (1), the amount so paid shall first be adjusted towards the interest payable as aforesaid and the balance, if any, shall be adjusted towards the tax payable. 2.3.2 In light of this specific provision under the Act, I do not find any infirmity in computation of interest chargeable under section 234B of the Act. Reliance is placed on the decision of Sea Pearl Enterprises v. DCIT (2007) 294 ITR 374 (Ker) held that interest under section 234A and section 234B is charged on assessed income and not on income returned by assessee and amendment made to Explanation to section 234A and 234B by Finance Act, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rritory outside India referred to in that section; and (v) any tax credit claimed to be set off in accordance with the provisions of section 115JAA the assessee shall be liable to pay such tax together with interest payable under any provision of this Act for any delay in furnishing the return or any default or delay in payment of advance tax, before furnishing the return and the return shall be accompanied by proof of payment of such tax and interest. Explanation.--Where the amount paid by the assessee under this sub-section falls short of the aggregate of the tax and interest as aforesaid, the amount so paid shall first be adjusted towards the interest payable as aforesaid and the balance, if any, shall be adjusted towards the tax payable.] (1A) For the purposes of sub-section (1), interest payable,-- (i) under section 234A shall be computed ... (ii) under section 115WK shall be computed ... (1B) For the purposes of sub-section (1), interest payable under section 234B shall be computed on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid falls short of the assessed tax. Explanation.--For the purposes of this sub- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he tax paid , and interest thereafter shall be calculated on the amount by which tax paid under section 140A together with advance tax falls short of the assessed tax. It may also be noted that under section 140A the assessee is liable to pay tax on the returned income together with interest payable under the provisions of section 234A, 234B 234C of the Act. Further the Explanation to section 140A provides that incase tax paid under section 140A falls short of the tax payable including the interest, then the tax paid shall be first adjusted towards interest payable under section 234A, 234B 234C. Section 140(1B) also provides that interest under section 234B for the purpose of section 140A shall be computed on the amount by which advance tax paid falls short of assessed tax and for this purpose the assessed tax has been defined to mean the tax on total income as declared in the return as reduced by tax deducted/collected at source etc. Thus incase the payment made under section 140A falls short of tax payable u/s. 140A including interest, then tax paid is to be first adjusted towards interest payable under section 234B. 3.6.1 The limited issue raised in this appeal is whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ore, we agree with the submission made by ld. A.R that the interest payable under section 234B for the purpose of adjustment against the tax paid under section 140A has to be computed with respect to assessed tax determined on the basis of total income declared in the return. But this is only for the limited purpose of adjustment of payment made u/s. 140A against interest payable under section 234B while making computation of interest payable by the assessee under section 234B,which has to be computed with respect to the total income determined in regular assessment as per the definition of assessed tax given in section 234B. The assessee has also followed the same procedure with which we agree. The order of CIT(A) confirming the method followed by the AO is therefore set aside and the claim of the assessee is allowed". 7.5 Respectfully following the same, we hold that the orders of AO under section 154 and the CIT (A) are bad in law. The order under section 143(3) originally passed by AO has correctly worked out the interest under section 234B which has to be upheld. Therefore we cancel the order u/s 154 passed by AO and the order of CIT(A) on the issue. Assessee's grounds are a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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