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GAUTAM VINOD DAFTARY Versus DEPUTY COMMISSIONER OF INCOME-TAX

Levy of interest under sections 234B and 234C - contention of the learned authorised representative has been that interest under section 234C should have been computed only for a period of one month from March 16, 2007 to March 31, 2007, because the liability for tax has accrued after the date for payment of third instalment, i.e., after March 15, 2007 - Held that:- The Assessing Officer is accordingly directed to compute the interest under sections 234C and 234B following the decision of tin th .....

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ssessment tax paid before the due date of filing of return - Decided in favour of assessee for statistical purposes.

Also taking into consideration the decision of the hon'ble Gujarat High Court in the case of Bharatbhai B. Shah v. ITO [2013 (10) TMI 1025 - GUJARAT HIGH COURT] and decision of the learned Commissioner of Income-tax (Appeals)-5 in the case of brother of the assessee namely "Sh. Bharat Vinod Daftary" - I. T. A. No. 7220 /M/ 2013(assessment year 2007-08). - Dated:- 29-7-2 .....

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. In the circumstances and facts of my case, the learned Commissioner of Income-tax (Appeals) has erred in : a. confirming charging of interest under section 234C at ₹ 4,51,054 instead of the duly chargeable interest under section 234C at ₹ 1,20,855 by erroneously relying on the proviso to section 234C and erroneous interpretation of law. b. confirming levy of interest under section 234A at ₹ 6,09,775 which is not chargeable in point of law and payable since the tax due as per .....

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law on the provision of sections 234C and 234A. e. not correctly considering the calculation of interest under sections 234C and 234A. 2. The appellant crave leave to add, delete or substantiate any grounds of appeal at the time of hearing." 3. The brief facts of the case are that the assessee had filed return of income for the assessment year 2007-08 on March 18, 2008. Order under section 143(1) was passed on December 2, 2008. The assessee filed appeal against the said order on the issue o .....

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en paid by the assessee before the due date of filing of the return ; following the Supreme Court decision in the case of CIT v. Pranoy Roy [2009] 309 ITR 231 (SC), he directed the Assessing Officer (hereinafter referred to as the AO) not to charge the interest under section 234A after verification of the facts whether all the tax on returned income has been paid by the assessee before the filing of the return. In relation to the issue of levy of interest under sections 234B and 234C, the learne .....

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ns 234B and 234C of the Act. Against the said order giving effect to the Commissioner of Income-tax (Appeals)'s order, the assessee again filed an appeal before the Commissioner of Income-tax (Appeals). 6. The contention of the assessee with regard to the levy of interest of ₹ 4,51,056 under section 234C has been that the interest should be charged only at ₹ 1,20,855. That the long-term capital gain had accrued to the assessee on March 28, 2007, i.e., after March 15, 2007 when th .....

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,20,855 has been duly considered and reflected in the return of income and computation of income. Reliance was placed by the assessee on the decision of the Rajasthan High Court in the case of CIT v. Smt. Premlata Jalani [2003] 264 ITR 744 (Raj). It was further submitted that the capital gain income was received by the assessee by actual realisation only on April 5, 2007 and the same was credited in the bank account of the assessee on the said date. In view of the above, it was submitted to char .....

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hich had been fully paid by self-assessment tax and in fact the assessee had paid excess self-assessment tax resulting in refund due to the assessee. 7. The learned Commissioner of Income-tax (Appeals) however agreed with the view of the Assessing Officer that the benefit of the proviso to section 234C is available to an assessee, only if the assessee pays the taxes arising out of the capital gains as part of the remaining instalments on or before March 31, of the financial year. Thus the assess .....

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interest under section 234C as per the provisions of the law. He also upheld the levy of interest under section 234B observing that as per the computation there was a shortfall of ₹ 84,378 in the payment of taxes as on July 31, 2007, i.e., on the last date of filing of the return. The learned Commissioner of Income-tax (Appeals) also upheld the findings of the Assessing Officer to the effect that interest under section 234A is not charged only in the event of the assessee having paid full .....

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We have heard the rival contentions of the learned representatives of the parties. The assessee had received long-term capital gains on March 28, 2007. The contention of the learned authorised representative has been that interest under section 234C should have been computed only for a period of one month from March 16, 2007 to March 31, 2007, because the liability for tax has accrued after the date for payment of third instalment, i.e., after March 15, 2007. 9. The Assessing Officer however, ha .....

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e of computation of interest under section 234C wherein it has been held that liability to pay tax by way of advance tax in case of capital gains arises only after the transaction has taken place. The learned authorised representative has further relied on the decision of the hon'ble Gujarat High Court in the case of Bharatbhai B. Shah v. ITO [2013] 355 ITR 373 (Guj) in relation to the issue of levy of interest under section 234A wherein it has been held that interest can only be charged on .....

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o. IT-50/12-13 has allowed the claim of the brother of the assessee observing as under : "The assessee has also relied on the decision of the hon'ble High Court of Rajasthan in the case of CIT v. Smt. Premlata Jalani [2003] 264 ITR 744 (Raj) wherein it has been held that liability to pay tax by way of advance tax in respect of transactions resulting in capital gains arises only after the transaction has taken place and that prior to that date there is no liability to advance tax on inco .....

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in the case of Smt. Premlata Jalani [2003] 264 ITR 744 (Raj). The asses see has computed the interest at ₹ 1,32,567. Apparently, the computation given by the assessee appears to be correct. Neverthe less, the Assessing Officer may verify and charge it accordingly. 4.2 As regards the interest chargeable under section 234B, it is noted that the Assessing Officer has computed the amount at ₹ 5,42,106 whereas as per the computation given by the assessee this amount should be ₹ 5,0 .....

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directed to re-compute the interest under section 234B also. 4.3 As regards the interest chargeable under section 234A, the assessee has relied on the decision of the hon'ble Supreme Court in the case of CIT v. Pranoy Roy [2009] 309 ITR 231 (SC) and submitted that the Assessing Officer ought to have taken the self-assessment tax paid before the due date of filing of return. The Assessing Officer is accordingly directed to recompute the interest under section 234A as per the decision of the .....

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