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Facts
The assessee, a foreign trust and non-resident, filed an appeal against an order that dismissed its rectification application. The core of the dispute is the levy of interest under section 234C of the Income Tax Act on income from Indian government securities.
Held
The Tribunal held that for the purpose of calculating 'tax due on the returned income' under section 234C, any income on which tax is deductible at source, even if not deducted, must be excluded. Therefore, interest under section 234C cannot be charged.
Key Issues
Whether interest under section 234C of the Income Tax Act is chargeable on income from Indian government securities where tax was deductible at source but not deducted by the payer.
Sections Cited
154, 234C, 143(1), 196D, 194LD, 89, 90, 90A, 91, 115JAA, 115JD, 209(1)(d), 234B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “I” BENCH, MUMBAI
This appeal is filed by Templeton Income Trust Templeton Global Bond Fund [the assessee/appellant] for Assessment Year 2023 – 24 against the appellate order passed by the Commissioner of Income Tax (A) – 58, Mumbai [the learned CIT – A] dated 23/3/2024 four Assessment Year 2023 – 24 wherein the appeal filed by the assessee against the rectification order passed under section 154 of (i) any tax deductible or collectible at source in accordance with the provisions of Chapter XVII on any income which is subject to such deduction or collection and which is taken into account in computing such total income;
According to that explanation for working out tax due on the return of income, any amount of income which is included in computation of tax on which tax is deductible is required to be excluded for the purpose of chargeability of interest under section 234C of the Act. Though the learned CIT – A has considered the provisions of section 209 (1) (d) of the Act but has forgot to look into the provisions of explanation 1 of section 234C of the Act. This is also contested by the assessee as per ground number 2 of the appeal.
The above provisions of section 234C and one half different than the provisions of section 234B of the Act which were considered by the honourable Supreme Court in case of Mitsubishi Corporation (supra). According to the provisions of explanation one of section 234B for the purpose of working out tax due, only amount of interest on which tax is deducted is to be considered as tax payment whereas in explanation 1 of section 234C, for working out the tax due on return income, even if the tax is not deductible but is deductible, same are required to Order pronounced in the open court on 07/10/2024.