SAMOSARAN YARNS P.LTD,MUMBAI vs. ASST CIT 1(3)(1), MUMBAI

In this appeal, the only issue raised by the assessee is the amount of interest charged u/s 234A of the Act.

In brief, the relevant facts are that assessee is a company incorporated under the provisions of the Companies Act, 1956 and is, inter- alia, engaged in the business of trading and manufacture of yarn. For the assessment year under consideration, it filed its return of income on 31.03.2015 declaring an income of Rs.4,71,51,221/-, as against the due date of filing of return on 30.11.2014. In the intimation u/s 143(1) of the Act, the Assessing Officer, inter-alia, levied interest u/s 234A of the Act of Rs.5,28,420/-. Against such a levy, the grievance of the assessee is that while computing the interest chargeable, the Assessing Officer has not given credit for the self-assessment tax of Rs.1,51,28,080/- and Rs.3,44,870/- paid on 31.01.2015 and 31.03.2015 respectively. In other words, as per the assessee, the Assessing Officer has wrongly charged interest u/s 234A of the Act for the period 01.12.2014 to 31.03.2015 on the total amount of self- assessment tax paid whereas the assessee should be held liable for payment of interest u/s 234A of the Act only for the period commencing 01.12.2014 till date of payment of self-assessment tax. The CIT(A) has dismissed the contention of the assessee primarily relying on the judgment of the Hon'ble Supreme Court in the case of CIT vs. Anjum M.H. Ghaswala 252 ITR 1 (SC) to contend that the levy of interest u/s 234A of the Act is mandatory in nature.

Before us, similar pleas have been advanced by the assessee, and in support of his proposition, the learned representative relied upon the following decisions :- i) B.R. Machine Tools Pvt. Ltd. vs. ACIT, dated 16.04.2014 (ITAT-Mumbai);

On the other hand, the ld. DR appearing for the Revenue has relied upon the orders of the authorities below and contended that the interest has been correctly charged by the lower authorities u/s 234A of the Act upto the date of filing of the return of income.

We have carefully considered the rival submissions. It is a quite well- settled proposition that interest chargeable u/s 234A of the Act for delay in filing of return of income is compensatory in nature inasmuch as it is to compensate the Department for the delay in payment of self-assessment tax which is payable prior to the filing of the return. It is in this light that the Cuttack Bench of the Tribunal in the case of Epari Sadasiva Rao (HUF) (supra), by referring to the judgment of Hon'ble Delhi High Court in the case of Dr. Prannoy Roy vs. CIT, 254 ITR 755 (Delhi) (which has since been approved by the Hon'ble Supreme Court in 309 ITR 231 (SC)) observed that the interest envisaged u/s 234A of the Act was not intended to be a penalty or punishment for delay in submission of return, but was compensatory in nature as the Revenue was deprived of timely payment of self-assessment tax. The Mumbai Bench of the Tribunal in the case of B.R. Machine Tools Pvt. Ltd. (supra) also noted that while calculating the interest chargeable u/s 234A of the Act, the assessed tax is liable to be reduced by the amount of tax paid before filing the return of income. Similar proposition has also been M/s. Samosaran Yarns Pvt. Ltd.

In the result, appeal of the assessee is allowed for statistical purposes.