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2015 (6) TMI 57 - ITAT MUMBAI

2015 (6) TMI 57 - ITAT MUMBAI - TMI - Levy of interest u/s. 234B - payment of advance tax on estimated basis - assessee accounted the said merchant banking income on actual realization basis/receipt basis and claimed that this is as per consistent method of accounting followed by the assessee right from the beginning - Held that:- There is no quarrel on the point that charging of interest u/s. 234B is mandatory but firstly it is to be determined whether the assessee has committed default in paym .....

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the assessee and is consistent with the practice followed by the assessee right from the beginning which was accepted by the revenue for earlier years. Accordingly, we delete the interest levied u/s. 234B. - Decided in favour of assesse. - I.T.A. No. 302/Mum/2011 - Dated:- 26-3-2015 - Shri Vijay Pal Rao And Shri N.K. Billaiya JJ. For the Appellant by : Shri Pradip Shroff For the Respondent : Dr. P. Daniel Special Counsel ORDER Per Vijay Pal Rao, JM: This appeal by the assessee is directed again .....

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tice. 3. The ld. Commissioner of Income tax(Appeals) has erred in law, and on facts in concurring with the levy of interest u/s.234B of the Act. . 2. At the time of hearing the ld. AR of the assessee has submitted that the assessee does not want to press Ground No.1 and 2 and the same may be dismissed as not pressed. The ld. DR has no objection if the Ground No.1 and 2 are dismissed as not pressed. Accordingly ground No.1 and 2 are dismissed as not pressed. 3. Ground No.3 is regarding levy of in .....

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tent method of accounting followed by the assessee right from the beginning and was accepted by the Department from the AY 198788 to 199192. The Assessing Officer while completing assessment u/s. 143(3) dated 30.3.1995 computed total income of the assessee on accrual basis. The assessee challenged the action of the Assessing Officer by filing the appeal before CIT(A) but could not succeed as CIT(A) confirmed the action of Assessing Officer vide order dated 1.12.1986. On second appeal before this .....

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cer did not accept the contention of the assessee and accordingly request of the assessee to reduce interest u/s. 234B was turned down. The assessee challenged the action of the Assessing Officer before CIT(A). The CIT(A) has confirmed the chargeability of interest u/s. 234B by holding that the same is mandatory in nature. 3.1 Before us, the ld. AR of the assessee has submitted that the issue is covered by the judgment of the Hon'ble Jurisdictional High Court in the case of Prime Securities .....

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n nature. He has further submitted that remedy for reduction/waiver of penal interest is only to seek relief before the CIT. he has also relied upon the orders of authorities below. 4. We have considered the rival submissions as well as relevant material on record. There is no dispute that the assessee has been consistently offering income from merchant banking on actual realization basis/ receipt basis right from the assessment year 198788. The Revenue has accepted the income offered by the ass .....

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ies Ltd. Vs. ACIT(Inv.) (supra), while considering the issue of levy of interest u/s. 234B has discussed the provisions section 234B elaborately and held in para8 to 10 as under : 8. Now, if in the light of these rival submissions the provisions of law are perused, it becomes clear that the appellant would not be liable to pay interest under section 234B of the Act. Section 234B, especially subsection (1) thereof which is relevant for our purpose reads as under: 234B. (1) Subject to the other pr .....

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determination of total income under subsection (1) of section 143 and where a regular assessment is made, to the date of such regular assessment, on an amount equal to the assessed tax or, as the case may be, on the amount by which the advance tax paid as aforesaid falls short of the assessed tax. 9 Perusal of the above provisions shows that liability to pay interest arises on failure of the assessee to pay advance tax under section 208 or advance tax payable under section 210 is paid less than .....

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appellant paid the advance tax it had estimated its income and liability for payment of advance tax in accordance with law that was in force. Therefore, it is obvious that there was no failure on the part of the appellant to pay advance tax in accordance with the provisions of sections 208 and 209. So far as the judgment of the Supreme Court in the case of Ghaswala [2001] 252 ITR 1 is concerned, the Supreme Court was concerned with the powers of the Settlement Commission in granting waiver of i .....

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f statutory interest mandatory. It is for this purpose that the court proceeded to decide that even the Settlement Commission which was vested with the vast power had no power to waive the interest payable under these provisions. Going by this interpretation of sections 234A, 234B and 234C as given by the Constitution Bench of the Supreme Court, it is clear that the interest is payable in case the advance tax is not paid in consonance with the law in force at the time when the advance tax is pai .....

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e of payment of advance tax has committed any default or that payment of advance tax made by the appellant was not in consonance with law. The Division Bench of this court in its judgment in the case of the appellant, referred to above, has held that the return filed by the appellant was in consonance with law and there was only a formal defect and the moment that defect was cured, the return related back to the original date. In our opinion, when the Supreme Court in Ghaswala's case [2001] .....

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in payment of advance tax when itactually paid it, the appellant cannot be held liable to pay interest under section 2348. In so far as the observations in the order of the Tribunal, that the appellant should have anticipated the events that took place in March, 1992 are concerned, in our opinion, they have no substance. In our opinion, it is rightly submitted that it was not possible for the appellant to anticipate the events that were to take place in the next financial year and pay advance ta .....

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