1. This appeal by the assessee is directed against the order of the learned CIT (A) in confirming the interest levied under s. 234A of Act without considering the self-assessment tax paid at Rs. 1,50,000.
2. The assessee filed the return for the assessment year under consideration on 28th March, 1994 determining taxable income at Rs. 2,17,267. The assessee paid Rs. 13,283 as TDS only. While processing the assessment, the AO charged interest under s. 23A on an amount of Rs. 2,03,984 after giving the deduction of Rs. 13,283 paid as TDS. The assessee has not paid any advance-tax. Aggrieved by the above intimation, the assessee approached the AO contesting that the interest under s. 234A has not been properly worked out on the ground that the credit for self-assessment tax payment of Rs. 1,50,000 paid on 27th July, 1993 was not considered while computing the interest under s.
234A of the IT Act, 1961. The AO rejected the assessee's claim holding that section only speaks of advance-tax paid and the tax deducted or collected at source and not of self-assessment tax paid by the assessee. Aggrieved by the above order, the assessee approached the learned CIT (A).
3. Before the learned CIT(A), relying upon the decision of the Supreme Court in the case of Central Provinces Manganese Ore Ltd. vs. CIT (1986) 160 ITR 961 (SC), the assessee contended that the interest was chargeable only to compensate the Revenue for withholding of the money due to the Government and by that principle, since the assessee had paid self-assessment tax in July, 1993 such self-assessment tax should have been considered as tax paid or received from the assessee. It was further contended that to that extent, the assessee should not have been regarded as having withheld the money due to the Revenue. The assessee also relied upon the decision of the Hon'ble Madras High Court in the case of CIT vs. Royal Textiles (1979) 120 ITR 506 (Mad). The learned CIT(A) rejected the assessee's claim holding that s. 234A is quite clear and that only the advance-tax and tax deducted or collected at source have to be adjusted from the tax determined under s. 143(1) (a) or the regular assessment for the purpose of levy of interest. He, therefore, held that the self-assessment tax will not fall under either of the above categories. Aggrieved by the above order, the assessee is in appeal before the Tribunal.
4. The learned counsel, Shri R. V. Loya, for the assessee, submitted that the principle behind the levy of interest is to compensate the loss to the Revenue by withholding the tax due to it, and not to penalise the assessee. For this proposition, he relied on the decision of the Hon'ble Supreme Court in the case of Ganesh Dass Shreeram vs.
ITO (1988) 169 ITR 221 (SC). Thus, the learned counsel contended that since the assessee had paid Rs. 1,50,000 under s. 140A on 27th July, 1993, by way of self-assessment tax, it should have been taken into consideration before levying interest under s. 234A of the Act. The learned Counsel, relying upon the decision of the Punjab & Haryana High Court in the case of CIT vs. Atlas Cycle Industries (1989) 180 ITR 319 (P&H), contended that in whatever manner the tax is paid, it shall be taken note of in calculating the interest. Applying this analogy, the learned counsel submitted that whatever interpretation given by the Hon'ble High Court of s. 215 is applicable to s. 139(8) and the same view was taken by the Tribunal, Amritsar Bench, in the case of Smt.
Promila Bajaj vs. ITO (1994) 51 ITD 532 (Asr). The learned counsel for the assessee contended that the principle applied by the Bench in the case reported in (1994) 51 ITD 532 (Asr) (supra) is also equally applicable to s. 234A for the reason that the wordings in both the sections at the relevant point of time were the same. Sub-s. (8) of s.
139 stipulates that the tax payable on the total income should be determined from the regular assessment as reduced by the advance-tax, if any, paid and any tax deducted at source. Sec. 234A inserted by the Amendment Act, 1987 w.e.f. 1st April, 1989 is also identically worded.
It stipulates that the interest shall be chargeable on the amount of the tax on the total income as determined under sub-s. (1) of s. 143 or on regular assessment as reduced by the advance-tax, if any, paid and any tax deducted or collected at source.
5. Opposing the above contention, the learned Departmental Representative submitted that where the section is without ambiguity, nothing can be implied and added. Sec. 234A contemplates only two deductions for the purpose of computing interest for default, i.e.
advance tax and tax deducted or collected at source.
The self-assessment tax paid under s. 140A, the learned Departmental Representative contended that cannot be considered along with the TDS and advance-tax, while computing the income for the purpose of levy of interest under s. 234A of the Act.
6. We have heard the rival submissions and gone through the orders of the Revenue authorities and also the decisions relied upon by the learned counsel for the assessee. The Hon'ble Supreme Court in the case of Central Provinces Manganese Ore Ltd. vs. CIT (supra), held that interest is levied under s. 139(8) or s. 215 of the IT Act, 1961, because by reason of the omission or default mentioned in the respective provision, the Revenue is deprived of the benefit of the tax for the period during which it has remained unpaid. In other words, the apex Court held that it is compensatory in nature. The same view has been taken by their Lordships again in the case of Ganesh Dass Shreeram vs. ITO (supra). Indirectly, this will lead to a conclusion that if there is no tax due to the Revenue, there is no scope for levy of interest as and by way of compensation. Keeping the above principle in mind, going through the decision of the Punjab & Haryana High Court in the case of CIT vs. Atlas Cycle Industries (supra), wherein their Lordships held that in whatever manner the tax is paid, it shall be taken note of in calculating the interest, the Tribunal, Amritsar Bench, in the case of Smt. Promila Bajaj vs. ITO (supra), held that the interpretation of s. 215 is equally applicable to s. 139(8). We have seen that the wordings of ss. 139(8) and 234A are similar. The principle laid down by the Hon'ble High Court if could be extended to s. 139(8), it is also equally applicable to s. 234A. Therefore, we are of the view that the learned Revenue authorities were not justified in excluding the self-assessment tax paid under s. 140A on 27th July, 1993, for the purpose of computing interest. In any case, the issue is highly debatable and is beyond the scope of s. 143(1) (a) of the Act.
In the case of Khatau Junkar Ltd. vs. K. S. Pathania (1992) 196 ITR 55 (Bom), the Hon'ble Bombay High Court held that the disallowance of the claim for deduction can be made only on the basis of the information available in the return and in the documents and accounts accompanying it, in other words, the claim is solely prima facie inadmissible.
Whether, self-assessment tax payment is includible or not for the purpose of computing interest under s. 234A, being highly debatable issue, it was beyond the scope of s. 143(1)(a).
7. In the light of the above discussion, we direct the AO to recompute the taxable income for the purpose of computing interest under s. 234A of the Act and not to exclude the self-assessment tax under s. 140A paid by the assessee on 27th July, 1993.