SUNDEEP FOUNDATION,MUMBAI vs. EXEM. WARD 2(3), MUMBAI, MUMBAI

PDF · subscribers
ITA 3107/MUM/2026Status: DisposedITAT Mumbai12 August 2026AY 2018-196 pages
AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that interest under section 234C is leviable only on the returned income and not on the assessed income. Since the returned and assessed income was 'NIL', no interest under section 234C was chargeable.

What were the facts?

The assessee trust declared 'NIL' income and claimed exemption under section 10(23C). Despite the 'NIL' assessed income, interest under section 234C was charged. The assessee argued that no interest is leviable when the income and tax liability are nil.

What were the issues?

Whether interest under section 234C is leviable when the returned and assessed income is 'NIL'. Whether the charging of interest under section 234C is based on returned income or assessed income.

Which sections of the Income-tax Act were involved?

Section 234C,Section 10(23C),Section 143(1),Section 143(3),Section 144B

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI

Before: SHRI CHALLA NAGENDRA PRASAD & SHRI MAKARAND VASANT MAHADEOKAR

Pronounced: 12/08/2026

PER SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER: This appeal is filed by the assessee against the order of the learned CIT(A)-NFAC, Delhi, dated 22.01.2026 for the assessment year 2018- 19.

2.

The assessee raised the following grounds of appeal:- “Under the facts and circumstances of the case and in law: Charging of interest of Rs.6,82,145/- under section 234C of the Income-tax Act, 1961 (the Act) although assessed income and tax thereon is Rs.Nil 1. The CIT(A) erred in confirming charging interest of Rs.6,82,145/- under section 234C of the Act although assessed income and tax thereon is Rs.Nil. 2. The CIT(A) erred in confirming charging of interest by referring to provisions of non- existent sub-section (3) of section 234C of the Act. 3. The CIT(A) erred in confirming charging of interest by referring to following case laws which are non-existent: ACIT v. Dawoodi Bohra Jamat (2017) 88 taxmann.com 217 (Mum) Pr. CIT v. Supertek Ltd. (2020) 428 ITR 99 (Guj) The aforesaid grounds of appeal are without prejudice to one another. The appellant-trust craves leave to add, to amend, to modify, to alter, to substitute and / or to delete all or any of the aforesaid grounds of appeal at or before the hearing.” 3. The assessee has also raised the following modified grounds of appeal:

“Under the facts and circumstances of the case and in law, the ground of appeal no. 01 is being modified as under: Charging of interest of Rs.6,82,145/- under section 234C of the Income-tax Act, 1961 (the Act) although the returned income and assessed income and tax thereon is Rs.Nil 1. The CIT(A) erred in confirming charging interest of Rs.6,82,145/- under section 234C of the Act although the returned income and assessed income and tax thereon is Rs.Nil. The aforesaid modified ground of appeal alongwith original ground nos. 2 & 3 are without prejudice to one another. The appellant-trust craves leave to add, to amend, to modify, to alter, to substitute and / or to delete all or any of the aforesaid grounds of appeal at or before the hearing.”

4.

Learned Counsel for the assessee referring to Ground No. 1 of the grounds of appeal submitted that the Ld. CIT(A) erred in confirming the charging of interest under section 234C of the Act, although the returned income and the assessed income is ‘NIL’. Learned Counsel submitted that the assessee filed return of income declaring total income at ‘NIL’ after claiming exemption under section 10(23C) of the Act. Since the returned income was ‘NIL’, there was no tax liability and, therefore, no interest was payable thereon. Learned Counsel submitted that an intimation under section 143(1) of the Act was passed on 18.03.2020, wherein the income was computed at Rs.3,80,45,699/- and interest of Rs.6,82,145/- was charged under section 234C of the Act. Subsequently, the assessment was completed under section 143(3) read with section 144B of the Act on 20.04.2021, accepting the ‘NIL’ income returned by the assessee after allowing exemption under section 10(23C) of the Act. However, interest under section 234C of the Act was erroneously charged at Rs.6,82,145/-, though the assessed income was correctly computed at ‘NIL’.

5.

Learned Counsel placing reliance on the decision of the Mumbai Bench of the Tribunal in the case of Navajbhai Ratan Tata Trust vs. ADIT(E), (2022) 140 taxmann.com 157 (Mumbai-Trib.), submitted that the Tribunal held that if the assessee, at the relevant time of deposit of advance tax, had ‘NIL’ taxable income, there was no liability to deposit any advance tax and no interest would be chargeable under section 234C of the Act. Learned Counsel further placing reliance on the decision of the Delhi Bench of the Tribunal in the case of Genpact 3 India (P) Ltd. vs. ACIT (OSD), reported in (2025) 174 taxmann.com 691 (Delhi – Trib.) submitted that the Tribunal held that interest under section 234C is to be charged only on the returned income and not on the assessed income.

6.

On the other hand, the learned DR supported the orders of the authorities below.

7.

Heard rival contentions and perused the orders of the authorities below. We find merit in the submissions of the learned Counsel for the assessee. In the case of Navajbhai Ratan Tata Trust vs. ADIT(E) (supra), the Tribunal held as under:

“7.3 We have considered the rival submissions and perused the material available on record. As per provisions of section 234C of the Act, interest is levied either on failure to pay the advance tax by the assessee or on shortfall in payment of advance tax as compared to tax due on returned income. Further, under the provisions of section 208 or section 209 of the Act, advance tax is to be computed on the estimated current income of the assessee and in case such income is not taxable, there is no liability imposed on the assessee to pay any advance tax. In the present case, as the assessee trust at the relevant time of deposit of advance tax had NIL taxable income, there was no liability to deposit any advance tax. Consequently, no default can be attributed to the assessee for non-deposit of advance tax while estimating its income. Further, it is pertinent to note that section 234C refers to the term 'returned income' in comparison to section 234B which refers to the term 'assessed tax' for imposing interest. In the present case, it is not in dispute that returned income in case of assessee trust was NIL. As only in the case of default/shortfall in payment of advance tax as compared to tax due on returned income, interest is chargeable under sections 234C of the Act. Thus, we hold that no interest is chargeable under section 234C of the Act in the present case. The AO is directed to delete the interest levied under section 234C of the Act. Accordingly, ground no. 7 raised in assessee's appeal is allowed.” 8. Similarly, the Delhi Tribunal in the case of Genpact India (P.) Ltd. v. ACIT (supra), held that interest under section 234C is to be charged only on the returned income and not on the assessed income. Admittedly, in the case of the assessee, the returned income as well as the assessed income is ‘NIL’ after allowing the exemption under section 10(23C) of the Act. In these circumstances, no interest under section 234C of the Act could be levied. Thus, we direct the Assessing Officer to delete the interest levied under section 234C of the Act. The grounds raised by the assessee are allowed.

9.

In the result, the appeal of the assessee is allowed.

Order pronounced in the open court on 12/08/2026

Sd/- Sd/- MAKARAND VASANT MAHADEOKAR CHALLA NAGENDRA PRASAD ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai, Dated: 12/08/2026 Prabhat Copy to: SUNDEEP FOUNDATION, 118 JOLLY BHAVAN NO. 1 ,10 NEW 1 MARINE LINES CHURCHGATE, MUMBAI-400020, MAHARASHTRA

EXEM. WARD 2(3), MUMBAI, MTNL TEL EX BUILDING, CUMBALLA 2 HILLS, PEDDAR ROAD, MUMBAI-400026, MAHARASHTRA

3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE

More judgments on Section 234C

All 6,043 judgments and leading authorities on Section 234C →

Recent GST High Court judgments

Search GST case law →