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2016 (2) TMI 264 - ITAT HYDERABAD

2016 (2) TMI 264 - ITAT HYDERABAD - TMI - Interest under S.234B and S.234C - non payment of advance tax - whether CIT(A) has erred in deleting the interest charged u/s. 234B ? - Held that:- We are concerned with the previous year commencing on 1.4.2009 and ending on 31.3.2010. As per the decision in the case of Ajantha Pharma Ltd. V/s. CIT (2010 (9) TMI 8 - SUPREME COURT) assessee was entitled to deduction under S.80HHC for the purpose of computation of book profit under S.115JB of the Act, and .....

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urts have held that interest under S.234B and S.234C need not be charged merely because there was variance between book profit computed based on retrospective amendment. The Learned Departmental Representative has not placed any decision of the higher forum wherein a contrary view has been taken on this issue. Having regard to the circumstances of the case, we are of the view that the order passed by the CIT(A) does not call for interference. - Decided against revenue - ITA No. 1965/Hyd/2014 - D .....

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ing the interest charged u/s. 234B of the IT Act. 3. The learned CIT(A) ought to have appreciated that though the relevant amendment to Sec.115JB was brought through Finance Act, 2011, the assessee has failed to file the revised turn of Income withdrawing the 80HHC claim from the book profit till the issue is noticed in the scrutiny proceedings. 4. The CIT(A) ought to have appreciated that the charging of interest u/s. 234B is mandatory which is with reference to assessed tax an there is no othe .....

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the Act. Though the return was originally processed under S.143(1), it was later on taken up for scrutiny by issuing a notice under S.143(2). During the course of examination, the Assessing Officer noticed that the assessee reduced an amount of ₹ 3,15,18,576 from the book profit towards deduction under S.80HHC of the Act whereas no such deduction under S.80HHC was admissible from book profits. When called upon to explain, the assessee company submitted that the deduction was claimed in the .....

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lso be noticed that the Assessing Officer disallowed derivative loss of ₹ 50,49,000 debited to the Profit & Loss Account on mark to market basis, stating that it was only a notional loss until the contract is settled. He also further disallowed a sum of ₹ 26,65,090 by applying Rule 8D of the IT Rules, by observing that the expenditure was incurred for earning dividend income, which is exempt under S.10(23) of the Act, and therefore, it attracts disallowance under S.14A of the Act .....

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aw that the advance tax paid by the assessee company fell short of the income as per the amended law, and therefore, by no stretch of imagination, it can be held that there was any default on the part of the assessee in payment of advance tax in accordance with provisions of S.208 to S.210 of the Act, and consequently, the Assessing Officer erred in charging interest under S.234B and234C. Assessee also challenged other disallowances. 5. The learned CIT(A) observed with regard to disallowance of .....

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derivative loss was to be allowed as deduction, if the transaction has matured. He therefore, set aside the disallowance. On these two issues, Revenue has not filed any appeal. 6. With regard to the main claim of the assessee about non-chargeability of interest under S.234B and S.234C of the Act, the learned CIT(A) relied upon the following decisions to observe that interest arises only upon default, and hence, it is in the nature of a quasi-punishment and in such an event, merely because when l .....

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ate authority has no power to cancel such interest charged by the Assessing Officer. 8. On the other hand, learned counsel for the assessee relied upon the decision of the Hon'ble Karnataka High Court in the case of Quality Biscuits (284 ITR 434) to submit that interest under S.234B and S.234C cannot be charged if the income is assessed as per MAT provisions, and, at any rate, assessee could not have anticipated retrospective amendment to discharge the tax liability as per the amended provis .....

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