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Facts
The assessee, Hind Elastomers Pvt. Ltd., filed its return for AY 2021-22 on 12/03/2022, paying self-assessment tax by 30/12/2021. The CPC levied interest under Section 234A for the period 01/01/2022 to 31/03/2022, despite the tax liability being discharged before the extended due date.
Held
The Tribunal held that interest under Section 234A cannot be levied for a period subsequent to the full discharge of self-assessment tax liability, especially when the return is filed within the extended due date granted by the CBDT, irrespective of the tax payable amount exceeding Rs. 1 lakh.
Key Issues
Whether interest under Section 234A is leviable for the period after the self-assessment tax liability is discharged, even if the return is filed within the extended due date.
Sections Cited
143(1), 234A, 140A, 139
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Income Tax Appellate Tribunal, ‘E’ BENCH
आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal, filed by the assessee, is against order dated 31/01/2024 passed by the ld. Addl./JCIT (Appeals)-2, Jaipur, whereby an adjustment made under Section 143(1) of the Income-tax Act, 1961 for the assessment year 2021–22 has resulted in the levy of interest under Section 234A to the tune of Rs. 2,08,950/–. 2. The sole grievance of the assessee is whether interest under Section 234A can be levied for a period subsequent to Hind Elastomers Pvt. Ltd., the discharge of the entire self-assessment tax liability when the return of income has been filed within the extended statutory timeline granted by the CBDT.
The facts relevant to the issue are that the assessee, a private limited company, e-filed its return of income on 12/03/2022 declaring a total income of Rs. 7,82,40,470/–. The Centralised Processing Centre (CPC), in its intimation dated 28/03/2022 under Section 143(1), accepted the returned income in toto. However, a demand arose solely on account of interest computed under Section 234A for a period of five months from November 2021 to March 2022, notwithstanding that the entire self-assessment tax had been paid on 30/12/2021.
The ld. CIT(A), while noting the assessee’s reliance upon the extension of the due date for AY 2021–22 up to 15th March 2022, nevertheless invoked CBDT Circular No. 17/2021 dated 09/09/2021 to hold that such extension was not applicable to cases attracting Explanation 1 to Section 234A where the amount of tax payable exceeded Rs. 1 lakh. Relief was thus denied and interest under Section 234A was upheld for the period from 01/01/2022 to 31/03/2022.
We have considered the rival submissions, perused the material placed on record, and duly examined the statutory provisions as well as the binding circulars issued by the CBDT. At the outset, it would be apposite to first examine the relevant circulars which bear directly upon the controversy before us. For the sake of ready reference, the relevant portion of Circular No. 17/2021 reads as under:
“The due date of furnishing of Return of Income for the Assessment Year 2021-22, which is 31st October 2021 under sub-section (1) of section 139 of the Act, as extended to 30th November 2021 vide Circular No. 9/2021 dated 20-5-2021, is hereby further extended to 15th February, 2022.”
Clarification 1: It is clarified that the extension of the dates as referred to in clauses (9), (12) and (13) of Circular No. 9/2021 dated 20-5-2021 and as referred to in clauses (1), (4) and (5) of this Circular shall not apply to Explanation 1 to section 234A of the Act, in cases where the amount of tax on the total income as reduced by the amount as specified in clauses (i) to (vi) of sub-section (1) of that section exceeds one lakh rupees."
The CBDT again by Circular No. 01/2022 dated 11/01/2022 further extended the due date to 15th March 2022 reiterating the same caveat. The operative part is in the following terms:
On consideration of difficulties reported by the taxpayers and other stakeholders due to COVID and in electronic filing of various reports of audit under the provisions of the Income-tax Act, 1961 (the Act), the Central Board of Direct Taxes (CBDT) has decided to further extend the due dates for filing of Income Tax Returns and various reports of audit for the Assessment Year 2021-22. The further details are as under: The due date of furnishing of Return of Income for the Assessment Year 2021-22, which was 31st October, 2021 under sub-section (1) of section 139 of the Act, as extended to 30th November, 2021 and 15th February, 2022 by Circular No.9/2021 dated 20th May 2021 and Circular No. 17/2021 dated 09.09.2021 respectively, is further extended to 15th March, 2022; It is also clarified that the extension of the dates as referred to in clauses (12) and (13) of Circular No.9/2021 dated 20.05.2021, clauses (4) and (5) of Circular No. 17/2021 dated Hind Elastomers Pvt. Ltd., 09.09.2021 and in clauses (4) and (5) above shall not apply to Explanation 1 to section 234A of the Act, in cases where the amount of tax on the total income as reduced by the amount as specified in clauses (1) to (vi) of sub-section (1) of that section exceeds rupees one lakh.
The import of these circulars is that the due date for filing the return may have been extended, but where the tax payable exceeds Rs. 1 lakh, interest under Section 234A shall be computed from the original due date unless such tax is already paid before that date.
In the present case, the assessee had by 30/12/2021 discharged its entire self-assessment tax liability under Section 140A and had already paid interest under Section 234A up to that date. Thereafter, there was no outstanding tax upon which further interest could accrue. This position is well settled. CBDT Circular No. 2/2015, issued in the wake of the judgment of the Hon’ble Supreme Court in CIT v. Prannoy Roy (309 ITR 231), clarifies that no interest under Section 234A is chargeable on self-assessment tax paid before the due date of filing the return of income.
Once the tax liability on which interest is to be computed stands fully discharged, there is no statutory mandate to levy interest for any subsequent period. The legislative intent and the CBDT’s own clarifications make it abundantly clear that such a levy would be unsustainable.
We therefore hold that the levy of interest under Section 234A for the period from 01/01/2022 to 31/03/2022 is without authority of law and the same is directed to be
In the result, appeal of the assessee is allowed.
Order pronounced on 11th August, 2025.