GODREJ PROJECTS NORTH STAR LLP ,MUMBAI vs. DEPUTY COMMISSIONER OF INCOME TAX CIRCLE41(2)(1), MUMBAI

ITA 4258/MUM/2025Status: DisposedITAT Mumbai10 September 2025AY 2024-2513 pages
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What did the Tribunal hold?

The Tribunal held that the adjustment made by the AO while processing the return under Section 143(1) was incorrect. It noted that the assessee's calculation of interest under Section 234B at the time of filing the return of income was in accordance with the provisions of the Act. The Tribunal respectfully followed the ratio laid down in the coordinate bench decisions of Oasis Landmarks LLP vs. DCIT and Patson Transformers Ltd. Vs. Deputy Commissioner of Income Tax. These decisions established that interest under Section 234B is to be calculated as per Section 140A(1B), which provides that interest is to be calculated on the assessed tax (returned income) reduced by advance and ad hoc payments of tax. The Tribunal found that calculating interest under Section 234B at the time of ad hoc tax payment on April 30, 2024, by the AO was not sustainable. Therefore, the interest calculated by the assessee at the time of filing the return of income on October 28, 2024, was to be considered correct. Consequently, the Tribunal directed the AO to delete the demand arising from the incorrect calculation of interest under Section 234B, amounting to INR 1,65,348. Ground No. 2 raised by the appellant was allowed, while Ground No. 1 was dismissed as general.

What were the facts?

The assessee, Godrej Projects North Star LLP, filed its return of income for Assessment Year 2024-25 on October 29, 2024, declaring a total income of Rs. 24,93,27,370. The return was processed under Section 143(1) of the Income Tax Act, 1961, resulting in a demand of Rs. 1,50,630. This demand arose because the tax paid by the assessee after April 1, 2021, but before filing the return, was adjusted first towards interest under Section 234B, and the balance towards tax payable. The assessee, aggrieved by this, appealed to the Commissioner of Income Tax (Appeals) [CIT(A)], who upheld the order under Section 143(1). The assessee then filed an appeal before the Income Tax Appellate Tribunal (ITAT). The disputed amount of interest under Section 234B is stated as Rs. 1,51,086 in one ground of appeal, and the CIT(A) noted interest charged at Rs. 3,22,400.

What were the issues?

1. Whether the levy of interest under Section 234B of the Income Tax Act, 1961, is erroneous and unwarranted, considering the Assessing Officer (AO) Centralized Processing Centre (CPC), Bengaluru, exceeded his jurisdiction. 2. Whether the intimation issued under Section 143(1) of the Act is illegal and without jurisdiction as it raises a debatable issue. 3. Whether the self-assessment tax paid on April 30, 2024, and October 28, 2024, should be apportioned first towards interest, as held by the AO and CIT(A), or towards regular tax, as contended by the assessee. Assessee's Contentions: The assessee contended that the AO CPC exceeded jurisdiction in levying interest under Section 234B. It argued that the intimation under Section 143(1) is illegal as it raises a debatable issue. The assessee submitted that self-assessment tax paid after April 1 of the Assessment Year should be treated as regular tax, provided there is no default in payment of interest under Sections 234A, 234B, and 234C at the time of filing the return. The assessee relied on the decision in Oasis Landmarks LLP vs. DCIT (ITA No. 580/Mum/2024 dated 21.11.2024) and Patson Transformers Ltd. Vs. Deputy Commissioner of Income Tax (2006) 6 SOT 673 (AHD). It also argued that tax paid before filing the return cannot fall within the purview of Section 140A, and thus sub-section (2) of Section 140A cannot be applied. Revenue's Contentions: The revenue relied on the orders of the lower authorities, specifically the CIT(A)'s decision that when self-assessment tax is paid after April 1 of the relevant Assessment Year, the payment is first to be appropriated towards interest and only thereafter towards regular tax. The revenue's contention was that the CPC had appropriately applied the self-assessment tax paid by the appellant by first computing and deducting interest under Section 234B and 234C.

Which sections of the Income-tax Act were involved?

Section 250,Section 143(1),Section 234B,Section 140A,Section 234A,Section 234C,Section 208,Section 210,Section 147,Section 153A,Section 115JAA,Section 115JD,Section 90,Section 90A,Section 91

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Income Tax Appellate Tribunal, “G” BENCH, MUMBAI

Per Padmavathy S, AM: This appeal by the assessee is against the order of the Commissioner of Income Tax (Appeals)/Addl./JCIT(A)-1, Vadodara [In short 'FAA'] passed under section 250 of the Income Tax Act, 1961 (the Act) dated 25.04.2025 for Assessment Year (AY) 2024-25. The assessee has raised the following the grounds of appeal:

1.

The Appellant LLP objects to the tax determined payable.

2.

The Appellant LLP objects to the erroneous levy of interest under Section 234B of the Act for the year under consideration. It is respectfully submitted that

The order continues below.

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