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Income Tax Appellate Tribunal, DELHI BENCH: ‘F’ NEW DELHI
Before: SH. H.S. SIDHU & SH. O.P. KANT
ORDER
PER O.P. KANT, A.M.: This appeal by the assessee is directed against the order dated 11/11/2013 passed by the Ld. Commissioner of Income-tax (Appeals)- XVII, Laxmi Nagar , Delhi for assessment year 2010-11 raising following grounds: “1. That the learned CIT (A) erred in upholding the levy of interest u/s 234A and 234B of the Act without considering the amount of Income Tax paid on various dates during the period April 2010 to March 2011, totaling to Rs. 1,20,00,000/- as per details submitted during the course of hearing, without appreciating the spirit of various judge ment of honourable Supreme Court and High Court, specially the case of Pranoy Roy 309 ITR 231 (SC) where in it was held that interest is compensatory in nature.
2. That the learned CIT (A) erred in upholding that interest u/s 234A amounting to Rs. 9,45,492/- been rightly charged, in spite of holding that interest will not be chargeable on the amount of tax paid before filing the income tax return.
3. That the learned CIT (A) erred in not directing of assessing officer categorically that interest u/s 234B of the Act should be calculated after giving due credit of taxes paid by the appellant on various dates during the period April 2010 to March 2011, amounting Rs. 1,20,00,000/-.
4. That the order of CIT (A) is not based on correct facts and judicial precedents relied upon by the appellant and therefore deserve to be set aside.”
2. The facts in brief of the case are that the return of income for the year under consideration was filed on 28/03/2011, declaring income of Rs.4,64,15,807/-. The case of the assessee was selected for scrutiny and notice under section 143(2) of the Income-tax Act, 1961 (for short “the Act”) was issued and served within stipulated period. In the scrutiny assessment completed under section 143(3) on 15/02/2013, the total income was assessed at Rs.4,64,43,585/- after making a disallowance of Rs.27,778/- to the returned income. In the Income Tax Computation Form (ITNS-150) issued alongwith the assessment order, the interest under section 234A amounting to Rs.9,45,497/-, under section 234B amounting to Rs.14,21,911/- and under section 234C amounting to Rs.13,93,308/-was levied. Aggrieved with the interest levied under section 234A and 234B of the Act, the assessee filed appeal before the learned Commissioner of Income-tax (Appeals). The assessee submitted that interest under section 234A was levied on entire assessed tax, Rs.1,57,58,192/- and no consideration was given to self-assessment tax paid after the due date of filing of return and up to the date on which return was filed. The assessee relied on the decision of the Hon’ble Delhi High Court in the case of Dr. Pranoy Roy Vs. CIT 251 ITR 755 (Del), which has been approved by the Hon’ble Supreme Court in the case of CIT Vs. Pranoy Roy 309 ITR 231. The learned Commissioner of Income- tax (Appeals) did not agree with the submission of the assessee and sustained the levy of interest under section 234A of the Act, however, on the issue of levy of interest under section 234B of the Act, the learned Commissioner of Income-tax (Appeals) directed the Assessing Officer to recalculate the interest as per law after considering the submission of the assessee. 2.1 Aggrieved with the above findings of learned Commissioner of Income-tax (Appeals), the assessee is in appeal before the Tribunal raising the grounds as reproduced above.
In respect of grounds No. 1 and 2 of the appeal, the learned Authorized Representative of the assessee submitted that due date of filing of the return of income in the case of the assessee was on 30/09/2010, whereas the assessee filed return on 25/03/2011. Out of the tax due of Rs.1,57,76,732/- on the returned income of Rs.4,64,15,805/-, the assessee paid Rs.95,00,000/- before the due date of filing of return and the balance tax was paid in the month of January, and March 2011. The assessee computed interest of Rs.3,25,094/- under section 234A of the Act, whereas the Assessing Officer levied interest of Rs.9,45,492/- under section 234A of the Act at the rate of 1% per month on the total tax payable over assessed income, for the period from the due date of filing of return to the date of filing of return, without taking into account the tax paid by the assessee under section 140A of the Act. 3.1 The learned Authorized Representative in this connection relied on the decision of the Hon’ble Delhi High Court in the case of Dr. Pannoy Roy (supra), further affirmed by the Hon’ble Supreme Court, wherein it is held that, interest being compensatory nature cannot be levied under section 234A of the Act, even if the taxes paid beyond the financial year 234A shall be payable on the tax due after reducing the amount of taxes already paid before the due date of filing of return and, thereafter, from the date of payment of tax till the date of filing of return after reducing the amount of such tax so paid. Further, the learned Authorized Representative relied on the following decisions: (i) Sachin Jain versus DCIT(2012) 13 ITR(Trib) 161 Delhi (ii) Mrs Sheela JaiSingh versus ACIT (2007) 13 SOT 617 (Mum.) (iii) Nitin Murali Raheja versus assistant Commissioner of income tax (2007) 105 ITD 414 (Mumbai). (iv) Tarika Exports versus assistant Commissioner of income tax (2011) 129 ITD 365 (Ahd) (v) Epari Sadasiva Rao (HUF) versus assistant Commissioner of income tax (2012) 18 ITR(Trib.) 569 (Cuttack) 3.2 The learned Authorized Representative submitted that in view of the above case laws, the interest under section 234A of the Act on the assessed income, should have been charged at Rs.3,25,901/-only. 3.3 On the other hand, the learned Departmental Representative relied on the orders of the authorities below and submitted that interest under section 234A of the Act has been computed correctly by the Assessing Officer. 3.4 We have heard the rival submission and perused the relevant material on the record. We find that in the case of the assessee the due date of filing return of income was 30/09/2010, whereas the return was filed on 25/03/2011. During the relevant period, the interest under section 234A of the Act is chargeable at the rate of 1% for every month or part of the month comprised in the period commencing on the date immediately after the due date of filing of return to the date ending on the date of furnishing of return. There is no dispute between the parties on the period of charging of interest under section 234A of the Act. The dispute is in respect of the amount of tax on which interest was to be charged. The Assessing Officer has charged interest on the entire amount of assessed tax of Rs.1,57,86,177/- for the period from the due date of filing of return to the date of filing of return. As against the above computation of interest under section 234A by the Assessing Officer, the assessee paid the taxes on the returned income and calculated the interest under section 234A amounting to Rs.3,25,094/-as under:
INCOME TAX DUE AT NORMAL RATE 1,39,24,742 Add: Surcharae @10% 13,92,474 - 1,53,17,216 Add: Education Cess @3% 4,59,516 1,57,76,732 Less: TAX DEDUCTED AT 27,985 Total Tax Payable 1,57,48,747 Add: Interest 234A 3,25,091 234B 9,59,850 234C 7,95,312 2,080,252 1,78,29,000 Less: Tax Paid u/s 140-A . 21/4/2010 16,00,000 22/4/2010 4,00,000 11/5/2010 20,00,000 19/6/2010 20,00,000 14/7/2010 20,00,000 28/7/2010 15,00,000 10/1/2011 25,00,000 15/3/2011 4,00,000 17/3/2011 15,00.000 25/03/2011 39.29,000 1,78.29,000 Tax Payable (0)
Month I. Tax Due I.. Tax Paic During Interest Month 234A Apr., 10 1,57,48,747 20,00,000 N.A. May, 10 1,37,48,747 20,00,000 N.A. Jun., 10 1,17,48,747 20,00,000 N.A. Jul., 10 97,48,747 35,00,000 N.A. Aug.,10 62,48,747 N.A. Sep., 10 62,48,747 N.A. Oct., 10 62,48,747 62,487 Nov., 10 62,48,747 62,487 Dec., 10 62,48,747 62,487 Jan., 11 62,48,747 25,00,000 62,487 Feb., 11 37,48,747 37,487 Mar., 11 37,48,747 37,656 Total 3,25,094 3.5 So the dispute before us is whether the taxes paid under section 140A of the Act by the assessee are to be reduced from the assessed tax for the purpose of computing interest under section 234A of the Act. We may like to reproduce relevant part of section 234A of the Act as under: “Interest for defaults in furnishing return of income. 234A. (1) Where the return of income for any assessment year under sub-section (1) or sub-section (4) of section 139, or in response to a notice under sub-section (1) of section 142, is furnished after the due date, or is not furnished, the assessee shall be liable to pay simple interest at the rate of one per cent for every month or part of a month comprised in the period commencing on the date immediately following the due date, and,— (a) where the return is furnished after the due date, ending on the date of furnishing of the return; or (b) where no return has been furnished, ending on the date of completion of the assessment under section 144, on the amount of the tax on the total income as determined under sub-section (1) of section 143, and where a regular assessment is made, on the amount of the tax on the total income determined under regular assessment, as reduced by the amount of,— (i) advance tax, if any, paid; (ii) any tax deducted or collected at source; (iii) any relief of tax allowed under section 90 on account of tax paid in a country outside India; (iv) any relief of tax allowed under section 90A on account of tax paid in a specified territory outside India referred to in that section; (v) any deduction, from the Indian income-tax payable, allowed under section 91, on account of tax paid in a country outside India; and (vi) any tax credit allowed to be set off in accordance with the provisions of section 115JAA or section 115JD. Explanation 1.—In this section, "due date" means the date specified in sub-section (1) of section 139 as applicable in the case of the assessee. Explanation 2.—In this sub-section, "tax on the total income as determined under sub-section (1) of section 143" shall not include the additional income-tax, if any, payable under section 143. Explanation 3.—Where, in relation to an assessment year, an assessment is made for the first time under section 147 or section 153A, the assessment so made shall be regarded as a regular assessment for the purposes of this section. Explanation 4.—[* * *] (2) The interest payable under sub-section (1) shall be reduced by the interest, if any, paid under section 140A towards the interest chargeable under this section.”
3.6 In the case in hand, there is no dispute for reducing the tax deducted at source from the assessed tax. The dispute is restricted to the self-assessment tax paid by the assessee before the due date of filing of return as well as after the date of filing of the return. 3.7 In the case of Dr. Pranoy Roy (supra), the entire tax due on the returned income was paid before the due date of filing of the return of income, but the return was filed after a delay of 11 months from the due date of return. The Hon’ble High Court in para-21 of the judgement observed as under:
“21. In the instant case, tax has been paid although no return has been filed. The revenue, therefore, has not suffered any monetary loss. We, therefore, are of the opinion that in this case if the doctrine of purposive construction is not taken recourse to, the same would betray the purport and object of the Act. If the aforementioned construction is not resorted to, we will have to read a penalty provision in section 234A, which was not and could not have been the object of the law for the reasons stated hereinbefore.
It is further well known that in case of doubt or dispute, taxation statute must be liberally construed. We, therefore, are not in a position to assign stringent meaning to the words advance tax as submitted by Mr. Khanna, learned counsel for the revenue.” 3.8 Further, in para-27 of the judgment, the Hon’ble High Court held as under: “27. We are, therefore, of the opinion that interest would be payable in a case, where tax has not been deposited prior to the due date of filing of the income-tax return.”
3.9 The Hon’ble Supreme Court in the case of CIT Vs. Pranoy Roy and Anr. ( supra) in para-7 of the judgment, has held as under: “7. Since the tax due had already been paid which was not less than the tax payable on the returned income which was accepted, the question of levy of interest does not arise. Thus, we find no merit in this appeal and the same is dismissed.”
3.10 Thus, it is evident that the interest would be payable in a case where taxes not been deposited prior to the due date of filing of income tax return. 3.11 In the case of the assessee, part of the tax due has been paid before the due date of filing of return and the balance has been paid after the due date of the filing of the return of income. 3.12 In the case of Sachin Jain Vs. Deputy Commissioner of Income Tax (supra), also the assessee paid the entire self-assessment tax in the month of November, 2006, whereas the return of income was filed on 26th November, 2007. The Tribunal in para-10 of the order held as under: “……………… In the instance case, the returned income and assessed income are not same. There is a difference of Rs.8,273/-. Since the assessee has paid tax on returned income on 2.11.2006, in our considered opinion, the interest u/s 234A will be chargeable form the due date of filing the return to November, 2006 on assessed income. Since the assessee had paid tax of Rs.13,84,774/- in November, 2006, interest u/s 234A from December, 2006 to November, 2007 when the return of income was filed, will be payable on the assessed tax after reducing the amount of tax paid at Rs 13,84,774/-.The AO is directed to compute the tax payable u/s 234A accordingly.” 3.13 In the above case entire self-assessment tax has been paid after due date of filing of return of income and hence the assessee was directed to pay the interest under section 234A of the Act on assessed tax from the due date of filing of the date of self-assessment tax paid and for the period from date of self-assessment tax paid to the date of filing of return, on the assessed tax reduced by the self-assessment tax. 3.14 In the case of Mrs. Sheela Jai Singh (supra), the assessee paid a sum of Rs.2,44,704/- on 25th of April 1996. The Assessing Officer held that the amount paid was not in the nature of advance tax paid and, therefore, no benefit of the amount paid was given out of the assessed tax for the purpose of computing interest under section 234A of the Act. The Tribunal following the decision of the Hon’ble Delhi High Court in the case of Dr. Prannoy Roy directed the Assessing Officer to give credit for the said sum paid on 25th of April 1996, while working out the interest payable under section 234A of the Act. Thus, we find that in this case also the entire self-assessment tax was paid before the due date of filing of the return. 3.15 In the case of Nitin Murali Raheja( supra), also the self-assessment tax of Rs.8,30,000/- was paid by the assessee on 30/06/2000 i.e. before the due date of filing of the return of income and the Tribunal directed to give credit of the said amount while calculating interest under section 234A of the Act. 3.16 In the case of Tarika Exports (supra), the Tribunal concluded that interest under section 234A of the Act is not chargeable from the first day of next financial year to the due date of filing of return and hence tax paid before the due date of filing of return has to be excluded while computing interest under section 234A of the Act. 3.17 In the case of Epari Sadasiva Rao (HUF) (supra) also, the Assessing Officer was directed to rectify the claim of levy of interest under section 234A of the Act in accordance with the decision of the Hon’ble Delhi High Court in the case of Dr. Prannoy Roy (supra). 3.18 The finding of the Hon’ble Supreme Court in the case of Dr. Prannoy Roy (supra) has also been noted by the Central Board of Direct Taxes (CBDT) and the Circular No. 2/2015 has been issued on 10/02/2015, which reads as under:
“Circular 2/2015 F. No. 385/03 /2015-IT(B) Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes (CBDT) North Block, New Delhi 10 th February, 2015 Subject: Chargeability of Interest under Section 234A of the Income-tax Act, 1961 on self-assessment tax paid before the due date of filing of return of income- regarding Interest under Section 234A of the Income-tax Act, 1961(hereinafter the Act) is charged in case of default in furnishing return of income by an assessee. The interest is charged at th specified rate on the amount of tax payable on the total income, as reduced by the amount of advance tax, TDS/TCS, any relief of tax allowed under section 90 and section 90A, any deduction allowed under section 91 and any tax credit allowed in accordance with the provisions of section 115JAA and section 115JD of the Act. Since self assessment tax is not mentioned as a component of tax to be reduced from the amount on which interest under section 234A of the Act is chargeable, interest is being charged on the amount of self-assessment tax paid by the assessee even before the due date of filing of return.
It has been held by the Hon'ble Supreme Court in the case of CIT vs Prannoy Roy, 309 ITR 231 (2009) that the interest under section 234A of the Act on default in furnishing return of income shall be payable only on the amount of tax that has not been deposited before the due date of filing of the income-tax return for the relevant assessment year. Accordingly, the present practice of charging interest under section 234A of the Act on self-assessment tax paid before the due date of filing return was reviewed by CBDT.
3. The Board has decided that no interest under section 234A of the Act is chargeable on the amount of self-assessment tax paid by the assessee before the due date of filing of return of income.
4. This Circular may be brought to the notice of all officers for compliance.
Hindi version shall follow. Sd/- (Sandeep Singh) Under Secretary to Government of India” 3.19 Thus, we find that the CBDT itself has accepted that no interest under section 234A of the Act is chargeable in respect of the self- assessment tax paid before the due date of filing of the return. 3.20 In view of above judicial pronouncement and the circular issued by the CBDT, we direct the Assessing Officer to give credit for self- assessment tax paid of Rs.95,00,000/- before the due date of filing of return of income, while computing the interest under section 234A of the Act. 3.21 Further, for the credit amount of Rs.25,00,000/- paid in the month of January, 2011 by the assessee, the learned Authorized Representative has cited the decision of the Tribunal in the case of Sachin Jain(supra). In the case of Sachin Jain (supra), the self-assessment tax was paid in the month of November, 2006 i.e. after the due date of filing of the Return and the return was filed in November, 2007. The Tribunal in the case directed the Assessing Officer to compute the interest under section 234A for the period from December 2006 to November, 2007 on the amount of assessed tax after reducing the amount of self-assessment tax paid in November, 2006. 3.22 We find that in the judgment of the Hon’ble Delhi High Court in the case of Dr. Prannoy Roy(supra) in para 27, it is clearly held that interest would be payable in a case where tax has not been deposited prior to the due date of filing of the income tax return. Further, Hon’ble Supreme Court also in the case of Dr. Prannoy Roy (supra) clearly held that when the tax due had already been paid, which was not less than the tax payable on the returned income which was accepted, the question of levy of interest does not arise. Thus, both the Hon’ble Delhi High Court and Hon’ble Supreme Court has held that credit of only self-assessment tax paid before the due date of filing of return has to be allowed while computing interest under section 234A of the Act. 3.23 Since Hon’ble Delhi High Court, being the jurisdictional High Court’s, whose decision in the case of Dr. Pranoy Roy (supra) is binding on us, thus, respectfully following the above decision, we hold that interest under section 234A of the Act would be payable by the assessee, on the assessed tax of Rs. 1,57,58,192 /- reduced by the self-assessment tax of Rs.95,00,000/- paid before the due date of filing of return, for the period from 01/10/2010 to 25/03/2011. Accordingly, the ground of the appeal is allowed partly.
In ground No. 2 the assessee has raised the issue as the learned Commissioner of Income Tax (Appeals) has not given the categorical direction that interest under section 234B of the Act should be calculated after giving due credit of taxes paid by the assessee on various dates during the period April, 2010 to March, 2011, amounting to Rs.1,20,00,000/-. 4.1 The learned Authorized Representative of the assessee reiterating the grounds submitted that the learned Commissioner of Income-tax (Appeals) should be allowed to issue a specific direction in this regard. 4.2 On the other hand, the learned Senior Department Representative submitted that the Assessing Officer has already been issued direction by the learned Commissioner of Income-tax (Appeals) to recalculate the interest as per law and, therefore, the direction given by the learned Commissioner of Income Tax (Appeals) is appropriate and no further direction is required to be issued by the Tribunal in this regard. 4.3 We have heard the rival submission and perused the relevant material on the issue in dispute. We find that learned Commissioner of Income-tax (Appeals) has already issued the direction to the Assessing Officer to consider the submission of the assessee and recalculate the interest as per law. In our opinion, the direction given by the learned Commissioner of Income-tax (Appeals) for considering the submission of the assessee and decide the issue in accordance to law, are appropriate in the facts and circumstances of the case and no further direction from our part is required on the issue in dispute. In view of the directions given by the learned Commissioner of Income Tax (Appeals), the assessee will be getting sufficient opportunity of hearing before the Assessing Officer on the issue in dispute. Accordingly, the ground of appeal
raised by the assessee is dismissed.
5. In the result, the appeal of the assessee is partly allowed. The decision is pronounced in the open court on 16th Nov., 2016.